My credit union rejected our plan to short sell our home…now what?

First of all, I’m 55, have always paid my bills on time and have never asked for any assistance. Here is my problem. I bought a home in Florida for $ 145,000 in 2008. I moved from that home in early 2010 to north Florida and I’m currently renting. Since I moved, I’ve been renting out the former home. The market is so depressed that I’ve always lost money because of management fees, lawn and pool maintenance and repairs. Now, the taxes have risen and the insurance has gone up and my escrows are increasing….which, of course, increases the mortgage payment…and now I’m losing even more money. I called my realtor and told her I wanted to sell the house and she said the market is horrible and that I could only get around $ 90,000 for a house that I owe $ 130,000 on. So, I told her that I want to short sell it. She found a buyer in a few short weeks and they made an offer and we’ve been waiting on my credit union (mortgage holder) to approve it. Well, my credit union says that with the surplus income that I have, they will agree to the short sale but only if I will give them $ 500 a month for the next 7 years, oh, and that is after I sell the house for $ 80,000…so I will be paying them about 75% of the “short” amount on the mortgage…and, giving them the house to sell to the buyer that we found for them. Are they serious? I realize that it was I who bought this house and I agreed to pay for it but after the economy tanked and the market took a dump…the government assistance from this administration has been gratuitous. So why not me? I listen to people at work, on tv and on finance shows talking about how they are being allowed to get out of their upside down mortgages and basicly walk away from their homes. What makes them different from me? Anyway, my question is… now that the credit union has said no to our “walk away” short sale (with a ridiculous demand of $ 42,000)… what are my options? Can they have me arrested? Will they take me to court and garnish my wages? What is the most probable thing that will happen here if I just say, “I don’t want this house, I have a buyer for you at a 35% loss which is the current avg downslide of the national market, and I’m not giving you any money.” I mean, I’ve paid them almost $ 27,000 in interest in 4 years! I know my credit would be hurt (it has always been between 775 and 810) but I’ve always paid my bills on time and I’m just asking for the same opportunities that are given to others in this country. Can anyone give me some answers and accurate advice? I truly appreciate all who respond…thanks.

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