[QuayzyCrazy]

Personally, I would go for a loan modification and use your rental income and the negative cash flow as your hardship. Maybe tell them sternly that you are walking away if you don't get this mortgage modified.

Moe, am I understanding you correctly? Basically, I'm getting that if you were me, you would try to contact Wachovia to defend Property A with a Loan Modification. According to what I read in the loanworkoutfactssheet. pdf by fannie mae, a modification is a change in the terms of a morgage loan to make it more affordable. See below.

Description

A modification is a change in the terms of a mortgage loan to make it more affordable. Typically, a modification involves making one or more of the following changes:

1. Change the mortgage loan type (ARM to FRM)
2. Extend the mortgage loan term (e.g., from 30 to 40 years)
3. Implement a below-market step rate for 2 to 3 years
4. Capitalize delinquent P&I into the loan balance
5. Implement a temporary or permanent reduction in interest rate

Eligibility

A borrower is eligible for a loan modification if he/she:

1. Has a permanent financial hardship
2. Has expenses that exceed current income but not following the modification

Terms and conditions

Fannie Mae approval is required by submitting a request via HSSN – Workout Profiler.
MI written approval is required.
A modification does require an MBS loan to be removed from its pool:

1. A loan in a "special servicing option" pool must be reclassified prior to modifying it
2. A loan in a "regular servicing option" pool must be repurchased by the lender in order to modify it

In order to remove a loan from its pool for purposes of modification, the loan must have been in a continuous state of default for at least four consecutive monthly payments
To execute the modification:

1. Prepare the Loan Modification Agreement (Form 3179, 3161 or 3162, as applicable) and obtain the signature(s) of the borrower(s)
2. You may only sign the Loan Modification Agreement for an MBS loan after the loan has been reclassified
3. Obtain subordination agreements from junior lienholders and record the modification if required by Fannie Mae in its written approval of the modification
4. Submit original agreement to document custodian within 30 days