There`s always those guys that go around a buy from people in a situation like yours.
it`ll be at a discount.
But anything might be better than totally letting it go at a complete loss.
the house is colateral for both loans.
I do not believe they can forclose on the home if you default on the second loan,
but they will put a lien against the property.
This lien will be the first thing satisfied if the proprty is sold.
So you would not be free of a negative equity situation until/if the housing market rebounds.
Contact a legit debt management company to help negotiate with the lenders.
they do not want antoher forclosed property on the books.
there have been some recent government programs that may help you if you are not already late on your payments.
in the end,
you may need to be prepared to walk away from the property.