At some point you need to get rid of your baggage. You definite

cannot keep putting more money in this house. I suggest you either short sale or foreclose on it. The banks will not take it until years later at the speed they are foreclosing on homes now. They have no motivation to put more debt on their books right now. So you get to live there mortgage free for many months. You deserve it. Holding it long term will not make sense here. You will work your ass off yet your house will still be under water for many many years. Your hard earned money can be put towards better use, a better investment somewhere down the road. Plus you already have another house. You can rent that out until the sheriff kicks you out and move into that house.

We are all in this market together...there is no crystal bal..you make decisions and then make new ones based on the information you have.

You are totally right. Those wall street people/realtors/lenders made money from you the moment you settled on the house. There should be no guilt to talk about here. Not from you.

You were young and stupid and made a wrong decision. Who hasn't made a mistake? That's how you learn. Lessons don't come free. It's time for you to move on from this mistake and focus on how to make your money working for you in the next deal.