If you are in a trial modification I would recommend reading this article. The bottom line to me is that a modification is going to be better for your credit than a short sale or foreclosure.
http://money.cnn.com/2009/12/28/news/economy/loan_modifications_credit_history/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29
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