New to separation. Am I doing the right things?

[Tinman]

Roughenough, It is so much easier to give advice that to take it, at least that is how it is working out for me:-)

I think you should take a step back and think from your W point of view. I don't blame her for her concern with the roommate. My EW made some of the same comments. She was going to keep the house despite me and was going to get a roommate to try and keep up with the payments. I was very concerned. You really don't know what kind of person you are going to get as a renter and these are people who will have access to you and your kids.

The other thing she has a right to be concerned about is that her name is attached to that house and until you either refinance it or short sell it she will be tied to it. Unless it is in your name only.
I am a licensed realtor and a licensed home inspector. Not saying I know all the ins and outs of your situations or what the laws are in your state but you need to get a hold of a realtor that specializes in short sales or a lawyer that deals in real-estate law.
If I remember right there was a federal plan in place that forgave the difference for tax purposes but it ends at the end of the year. So if you were able to get it done sooner than later you might be safe.

If you have to have a roommate to afford the house then as hard as it is to hear you need to let it go. It will drive a wedge between you and your W. Not to mention you are starting out your new life (with or without W) in a huge hole.

The other thing is that in a short sale the buyer knows they are getting a deal and that along with that deal comes repairs. So not sure I would worry too much about it.

One other thing is that if you let it go to foreclosure or turn it back over to bank there is something that they sometimes do “cash for keys” . Sometimes the bank or the buyer will offer you a few thousand to get started in a new place. You can talk to your bank about it. Some banks are offering people this that are going into foreclosure and what they are finding is that it is cheaper to pay home owner few thousand to turn over keys (requires that you do a final walk with bank so they can verify home has not been damaged) that it costs them when home owner walks away from home and it sits empty and ends up getting vandalized.

Just food for thought. May not be what you want to hear.