can we do a deed in lieu?

[Mike]

In 2005, my husband and I bought a house that we planned to live in but never did. Instead, a house that we had admired for ages was foreclosed on soon after we'd taken out a mortgage on the first house. We knew it was a lot to handle but couldn't pass up the opportunity. We ended up buying our dream house from the foreclosing bank and figured we could sell the first house with no problem. We were wrong. The house sat on the market for over a year with no interest. We finally could not handle paying the mortgage, taxes, etc. on an empty house and rented it. We had a hard time finding a tenant that could afford the rent and the rent payment still doesn't cover our expenses. It has been rented for almost 2 years now and the lease expires at the end of November. They don't want to renew and we know, given our past experience, that we will not have an easy time trying to sell the place or find another tenant. We paid $255,000 for the house when we bought it and it was appraised at $262,000. We owe about $195,000 on the house. We feel that we'd be lucky to get $250,000 for it in today's market and that it might take months or even years. Our payments are over $2,000 a month, not to mention utilities, repairs, etc. while it sits. A real estate agent would take at least 6% off the top of any sale. I guess you see where I'm going with this. It seems a loosing proposition to continue with it. Is a Deed in Lieu appropriate in our situation? Would any of our other assets be at risk with a Deed in Lieu? We do not want to jeopardize our dream home or anything else by taking this course of action. If a Deed in Lieu is appropriate for us, should we engage an attorney before talking with the bank? Any help and or advice would be greatly appreciated.