Do you have to refinance to get her name off the mortgage?
Can you afford the payments as they are now if she would sign it over to you? I don't know all of the real-estate legalities, but I am guessing the bank explored all options with you? They probably won't let her out because they want BOTH of you on the hook for the money.
Can you afford to take the loss and sell it?
Have you looked into the government programs for people who are underwater aon their mortgages? I know there are programs in place for people in that situation.
I know nobody wants to do this, but as a last resort, lots of people are just walking away from their homes and starting over. That puts you in a really bad place credit-wise though.
I know that none of these are good options, so just sit for a while and think about what you can live with.
