In today's economy many homeowners are hurting and are upside down in their house. Some have tried loan modifications and many have failed at that attempt. Some have clearly just walked away thinking that is/was their ONLY options. WRONG, WRONG, WRONG, WRONG, and WRONG again! In the bible it says "my people perish for lack of knowledge".
Let's start out by saying foreclosure is NOT an option. Now that we have our mind made up on that. There are other options such as doing a short sale. Many have heard the horrible stories about the process but that is ONLY when done by an inexperienced agent who does not communicate effectively throughout the process and themselves don't know everything to do. When done incorrectly it can leave a bad impression of short sales being long & done wrong.
However when done correctly it can save money & credit over time. I myself have on the listing side completed short sales with Bank of America, Wells Fargo, Ocwen, Wachovia, JP Chase, GMAC, Saxon, EMC, ASC, GreenTree, and the a few other smaller banks. The home owners were thrilled I saved them from foreclosure. Doing a short sale is put on your credit with the difference of the sale being put on as being "satisfied". But unlike a foreclosure that sits on your credit for ten years a short sale sits for 2 years.
A short sale is a smart alternative to foreclosure. Do not just walk away because of frustrations or constant denials. As long as you have breath in your body you have a will to get something done. The saying is where there's a will, there's a way. Let me just add where there's an agent with skills (Damon The Agent) there's a way also.