Thanks for the comments everyone! And to think that I was actually getting excited...
Well, one thing I cannot dispute: the $110K is actually interest free for 30 years (or however long it is before we sell). If we walk without repaying it, it's essentially living at $1400/mth mortgage in a home for which I used to pay $2500+. Plus the tax break. That alone seems pretty lucrative to me.
If they can't come after me for the 110K, Arizona being a recourse state, it's essentially principal write-off is it not? But I also see your points. At this point, I do not know what to do. I called WF and was told that they'd get back to me in a timeframe that could be anywhere from 2 weeks to essentially 2 months. Until they decide, they are willing to push back the foreclosure date (and let me live free).