Maybe this answer is too late; but hopefully you have already started the Loan Modification process or at least, talked to a professional about your options, whether it is the folks at HOPE like Tistan mentioned, a Realtor who is well versed of and can talk you through the different options, or your tax attorney or tax accountant who is up to the current real estate trend and treatment, etc.
Personally, I would recommend checking into Loan Modification with your lenders first and see what they can/will do. I have heard of quite a few successful loan modifications recently, which is encouraging! If that does not work, Short Sale is usually your next step. Foreclosure or Deed-In-Lieu are next. But this all depends on your specific situation and should be evaluated carefully.
Please feel free to contact me (415) 717-0293 if you still have questions. Although I am very successful in short sales, my preference is to help my clients keep their home (why we buy home in the first palce). I am very good at consulting my clients and will be happy to chat with you.
Frank Howard Allen Realtors