Short Sale Advice Need Help

[Mike]

Hi All, I was searching the web and came accross this website and have found it very informative so I just joined and figured I would see if someone here can give me some advice. Here is my dilemma: I currently own a 2nd property in south Florida. It is a condo and with the state of the market the value has gone down tremendously. I currently have a first mtg. with American Home for 1,654,000 and a second with national city for 213,000. I purchased the home for 1,712,500 in 8/05 and refied it in 09/06. The first mortgage is a neg am and continues to go up every month. Since aquiring this property my financial condition has changed and I am only making minimum payments at this time. I contacted AHM to modify but they said there is nothing they could do because I could not afford principal and interest. They offered me a short sale alternative. I spoke with my broker this weekend and she comp'd out the property and came up with 1,100,000. I called lender yesterday to ask what their tolerance was on a short sale and was told " whatever the market value is; is all you can sell it for". From my perspective it makes sense to just go ahead and unload it rather than have the principal continue to increase not to mention the fact that I cannot keep up with payments any longer. Here are my questions: 1. How do I handle this? I want to get an attorney involved does anyone here know someone in south Florida with "vast experience" in this? 2. What are implications to me and my credit? I have read that it shows up as a pre-forclosure sale on credit. Is this negotiable with the lender? I do want to purchase another property eventually. 3. I have read that there are tax implications as well. There is a supposed new bill that would waive this but this is a 2nd property for me not principal ( although I think mtg broker put it as primary). I have also read that if you are insolvent tax debt is forgiven. Lenders would be writing off close to 750K. 4. How does this work with 2nd with National City? They would not get anything in this scenario? I have never been in this situation before and am trying to make an educated decision. Please Help!