Any Mortgage/Foreclosure gurus?

It's a lose/lose scenario. If you continue to work off your existing model, you're going to struggle for quite a while. If you walk away, your credit is jacked for the next 7 years (at least). Unless you plan on paying everything with cash moving forward, walking away may not be the ideal solution. Plus, if you walk away just to screw the bank, ask yourself "are you really screwing them?" It's not like Bank of America will go out of business if you walk away. They will just re-sell and refinance the property.

Personally, I would move into the house and live out of it while your paying the mortgage. If you're really struggling, rent out a room.