Any Mortgage/Foreclosure gurus?

Every state is different. In AZ you can pretty much just walk, that is what I did. AZ has a non-recourse law, no lender can pursue you. We walked away from our house there, never even got a single letter from either one of the mortgages. Might have a tax issue with the IRS. For a while there was a rule in place, something to the effect of mortgage debt forgiveness or something of that nature. Pretty sure it is no longer in place. A lot of folks might question you for walking. Screw em. Sometimes bad things happen to good people. I had a neighbor in AZ get all over me for walking, claiming i was killing the values in the area. Did not matter that at that time there was 14 other houses in our hood in foreclosure. Funny thing is he just had his house foreclosed on. Keep in mind the obvious credit issues you will be creating, but in time that to will pass. Have not read all the comments, so this might have been mentioned already. A short sale. For a long time everyone claimed they were the answer. I contacted a short sale specialist in AZ before deciding to walk, he told me not to bother with it. He told me that getting your lender to agree to it is not very easy. In the long run the hit on your credit report will be the same, especially if you have a second mortgage. BK used to also be a way out, but thanks to the changes in 05 (?) it is not that simple any more.