Check AZ foreclosure laws but if the loan is non-recourse (a simple quicky google search says AZ purchase money are non-recourse regardless of investor or OO.. check yourself) and no second liens and all that…
I’d try a short sale while paying as agreed. Offer the servicers that option saying it is that or foreclosure and neither party wins with foreclosure. Some servicers will take that offer and so if you get a buyer and you paid as agreed up to the end then your credit isn’t hit very hard. What really drops the FICO scores in the rolling late payments on foreclosures. Your credit hit will be a one off hit saying the account was paid off for less than full amount (I’ve heard that is only a 50-60 point fico hit but that would be something you need to investigate).
I think this option gives you the maximum FICO at the end and the maximum amount in the bank. I really wouldn’t risk too much more money on the condo than that but your desire to maintain a high FICO is up to you.
On your list of options I definitely wouldnt do #2 (I doubt anything will change in 40 months and so your back in the same spot) or #3 (putting most of your money into a depreciating asset) if we call my option #5.. then I think #5, #4, #1 are the order in which I would look at things. But #4 and #1 may switch due to desirable housing availability (not able to buy right now) or some other reason to maintain a high fico score.
