Stuck with house, had to move out of state.

[Joel Fraser]

I am new to the forum and hoping you all can help me with my situation. We were living in NM and purchased a home in Dec of 2005. We took out a home equity line of credit in sept 2006 for remodeling. We thought we would be in the home for a long time. My husband got transferred with his job from NM to CA, so we had to move. We put our house in NM on the market in May of 2007 and moved in with my parents in CA to wait for it to sell. We continually dropped the price until it was at the point of what we owed on the house. It sold on a lease/purchase in Feb 08 and we then purchased a home in CA. The lease/purchase then fell through when the guy quit paying. We hired a lawyer to regain the house back. Now it is back on the market and now it is not worth as much as we owe. We have maxed out all of our credit cards and used up our savings trying to keep that house afloat, but now there is no more money to pay for it. We are looking at all of our options, but I am not sure what to do. We had it assesed by a property manager and he said we could maybe get $1400/month renting it. Our 1st mortgage payment is $1800. Then we would have to hold on to the house until the market goes back up and we could sell if for more. We are thinking of doing a deed in lieu, but how does that work if you have 2 mortgages? I have tried to contact citimortgage (1st mortgage), but they refuse to talk to me since we are technically not in default yet. I have tried the free credit couseling numbers from the hud site, but since this is no longer our primary residence they won't help me either. I would like to try and get the HELOC transferred into a non secured loan and drop the price drastically on the house and hopefully in would sell and we could payoff the first, but with both mortgages we don't qualify to do that. I feel stuck between a rock and a hard place with no where to go. I am worried that since NM is a judicial foreclosure state that if it goes through there they will come after our house in CA as an asset for the judgement agaist us. I don't want to jeopordize the house we live in now. Any one have any ideas? I was going to try and call bank of america (HELOC) today with the market analysis from my realtor to try and see if we can work something out with them.