Short Sale canceled-should we go to foreclosure?

[pookey]

I'm wondering if anyone else has had this happen. We have 2 rental properties in Short Sale. The first of the two just got canceled due to "insufficient offer."

Thanks to info on this forum I found the e-mail address of the President of BofA and wrote to her; got a reply from her office within 24 hours (on Friday). Then today (Monday) a person from her office called and said that their appraisal came in substantially higher than the offer and that they won't take an offer less than FMV as determined by their appraisal.

Their FMV estimate is way high - we were going to sell it in 2006 before the RE crash and the value the RE agent gave us at that time was close to what BofA is saying FMV is now.

Being about 3 months into the SS process I'm thinking a deed in lieu or letting it go to foreclosure are our only options.

It does have a HELOC on it as well and it has been re-financed, so it is all recourse debt. My understanding is that a DIL might leave us open to the HELOC holder to come after us.

But we are in CA so my understanding is that a non-judicial foreclosure would not leave us with a deficiency to deal with.

Any comments would be appreciated - I'm just floored that they said they would not accept an offer less than FMV - at 85% of their FMV we "might" be able to generate an offer, maybe even at 90% though doubtful - but there's no chance we'd get their FMV.