I think we are looking at at least 10% more losses in housing and possible as much as 20% with a long flat period in demand after that. Please keep in mind I an

I think we are looking at at least 10% more losses in housing and possible as much as 20% with a long flat period in demand after that. Please keep in mind I an not an economist nor is finance my trade, but I do listen to a lot of the economist that where right about the situation and have continued to be right. They see the bottom anywhere down to 20% more. If I personally where in your position, I would cut my losses now, given that you do not know what tomorrow will bring. Even if tomorrow brings a job, you are in a better financial position by walking. Especially if you have enough in savings to pick up another house once the market bottoms. To me you are in an ethically good situation to do it, and it makes the most financial sense. If it where me personally I would not seek to do a short sale as you have already chased it down to where you are at retirement funds, destroying yourself to honor an obligation should not be expected, which is a possibility because you will be responsible for payments while it is in short sale and demand is too far down to take the bet that it will sell soon. As well not that this should affect your decision, but foreclosures have taken several years to go through, with the mortgage fraud in some states they are virtually stopped and do not look to be starting up anytime soon. If you do choose to default, you will be in the home for a long time, you can utilize this time to rebuild your life. If you chose to vacate it, it would sit empty for that period, and in may cases the banks prefer that the owner remain in the home so that it is not stripped or vandalized while all the legal process is worked out. If you would like to talk more about it please email me, my email is in my profile. I had a good friend go through this situation, so I am familiar with the turmoil.