Want to stop paying 2nd - non recourse

[Joel Fraser]

Ok, I have a first and a second both used to purchase my primary residence. Having lost my job in the mortgage industry I was fortunate to find another at half the pay I was making for the last 5 years. I was able to get the second to "fix" the rate on the Heloc. My biggest problem is cash flow! I have three rentals that all run negative and one has an ARM adjusting in December. Between them all, there just isn't enough money to go around. The real answer may be to short sale one of the rentals although I hate to do that with the tax consequences. But if I have to pay income tax on the income from the short sale don;t I also have a capital loss I can deduct that far exceeds the amount of the short? - I'm losing more than the bank on this one. Two separate questions here I know but desparate to know my options....