First, I want to say that I understand your frustrations. We purchased our "starter" house in 2006 - an attached home in a less than desireable area. That's all we could afford to buy at the time, and we thought that buying was better than renting. We thought it was an investiment and that in 3 years we could sell at a gain and buy a bigger house in a better area.
Here we are 6 years & 3 kids later and we are now upside down on our mortgage. We tried (unsuccessfully) for 2 years to sell our house at a loss -- an over $30,000 loss -- and nobody would even come LOOK at it.
When we purchased our home in 2006 we were preapproved for almost DOUBLE the amount that what we eventually purchased a home for. We knew we couldn't afford more so we didn't spend it. We did everything right -- never missed a payment or paid late -- then when we try to sell, the market is crap because the BANKS chose to give out loans that people couldn't afford. But guess what, the banks are getting bailed out and those of us who did what we knew was right are getting screwed.
So, we made some choices. We decided to rent our home for a year and either rent or buy another house for ourselves. We will sell our 1st house, now an income property, at a loss and then we can claim that loss on our taxes.
Our new house will not be anything close to what we could get if we weren't carrying 2 mortgages, even though -- AGAIN -- we were pre-approved for way more then we could afford to pay.... glad to see the lenders have learned their lesson!
To be honest, if H & I were not required to have security clearences for our jobs, we would have probably walked away from our first house.
So, I understand where you are coming from.
I have no real advice since it seems like you can't afford to sell your house at a loss, like we plan on doing. Good luck, I hope it works out for you.