I have dealt with USAA on a previous short sale and they were quite challenging to deal with. Fortunately my clients had a small balance with them on the second and actually ended up converting the second to a non secured loan at a fixed low rate to complete the sale. That client also had several other services with USAA and had moved all of them out of the USAA umbrella so to speak prior to undertaking the short sale.

It is a tough call for you VC. One thing I would say though, if you do walk away, which indeed may be more financially prudent, it is not likely you will be buying a home soon no matter how well it is priced. So for those saying you instantly make 150k in equity, they are wrong. Now you may somehow be able to pull a rabbit out of your house and buy a new home now and then let your other home go into foreclosure and short sell it. That is another issue altogether.