Natalie, the real question here is, why do you have to ask this question in a forum?
I hope you are not negotiating yourself or basing you decisions hearsay, these are important matters and you need the guidance and advice of qualified real estate, legal and financial experts looking out for your best interests. You can't possibly think you can out think or out smart the bank.
For example, even though our agents have plenty of training and specialization in that area (just one of our offices averages 100 closed sales per month with over half being short sales), we have an attorney and specialized staff handling all short sale negotiations because the information you provide, an answer you give during a phone call under undue stress can cost you a fortune!
I wouldnâ€™t dare to think that I could make a judgment call and give you advice with such limited information about your situation. What professional can take the possibility of having to make payments for 5 years so lightly?
I can't stress this enough, I urge you to sit down with qualified professionals and carefully plan and execute a strategy to deal with your situation, and providing more incorrect answers and information or losing more time will not help you. If you are working with a realtor or broker and you donâ€™t feel you are getting enough or proper guidance, you should let him or her know and give them the opportunity get you in touch with the right people right away.