Is it possible WAMU will lower my principal?

[Donna J]

We have an investment property that we bought in 2004. We had an adjustable rate mortgage, so we refinanced in 2006 to a fixed rate, because we were to afraid of what the rate would be if we waited longer. We have a first and second mortgage. Both are thru Washington Mutual. We are current on all payments and have a 800 credit score.

The FMV of the property is about half what it was in 2004. Our first WAMU mortgage is for $315K, the second with WAMU is for 23K. The last condos in the same building like ours, went for 190K-226K with the 190K being the most recent sale. I believe they were short sales and foreclosures. The lowest priced one is listed for $245K and it hasn't sold for months.

My question is: Is there any chance WAMU would lower my principal to FMV and let me keep the property? I have spoken with them about a short sale and they have told me to list the property at FMV. If my principal amount could be the same as a new buyer's will be, on short sale, I could afford to keep it.

If this is impossible, we do plan to sell short. There are so many SS and foreclosures, it will take years before the value comes back, if ever. There is overbuilding in the area, too. I do rent it an do well enough that if my principal was lowered, I would be able to come out on it.

Thank you!