That's right, its the American Dream, take 2. Short sale that home while making all payments on time! Yes, lenders are doing it. Walk right in to a new property with a lower price and a lower rate. Yes We Can.....get a new FHA mortgage and thanks to our great government the tax liability on the sale is waived courtesy of the Mortgage Forgiveness Debt Relief Act of 2007. Assuming decent credit with no late payments and documented income a new mortgage is very possible. Don't let a good short-seller go rent somewhere when they just might be able to buy again in the best of times when prices AND rates are low.