I second that your situation is not rare . . . many people own homes that are not currently able to be sold for the same price - many by a drastic amount.
At the risk of sounding rude, why is it that you think that the lender/lending community should forgive you the 100K?
And frankly - if you want to keep this house long term, why do you care what it is worth now? "Value" is a snapshot - 6 months from now, that snapshot will be completely different - and 6 months from that different still, etc.
If you can afford the payments, agreed to get the loan, understood it, have no hardship, and want to stay in the house . . . from their point of view, why in the world should they do anything at all? They are out the $500K already, and you are making the payments you agreed to make - they have no reason to change anything whatsoever. They are not going to approve a short sale, modification, or any other such thing.
In order to get away with not paying $100,000 that you borrowed (real money that someone had to pay and that is now a direct loss to the servicer), at the very least they are going to mark your credit report "This person borrowed 500,000 and only paid back 400,000" to warn the next lender that that is something that you are ok with doing and might do again. And there would be no reason a new lender to trust you . . . they are going to ask you why you did that, what terrible thing caused it . . .and I am not sure what you could say to explain it.
Selling to a family member without disclosing that it is a family member with the intention of buying the home back later at a cheaper price - that is, letting the bank take the fall but "keeping" the house in your circle of influence- is fraud. If an underwriter realizes that this home is being sold to someone that is known to you and that that information was not disclosed, the loan for your family member will be denied, and rightly so.
Again, forgive me my soap box - this is not intended to be mean, and is not a rant or rave at you specifically - but please understand that real estate is not guaranteed to increase in value.
Over time, on average, real estate usually appreciates . . . but in any given year, it may go up or down - sometimes in extreme fashion. No one assumes that their car will be worth what they paid for it a few years ago. . . no one assumes that the stock market is without risk . . . why do we as a population feel entitled to someone making it all better if our real estate value decreases? We as tax payers are paying directly when banks go under because owners feel that they are entitled to increased or level values - or preotection from loss - and this just isnt how it works. When you default on a loan due to decreased values, it contributes to the spiral effect . . . lower values, more defaults, more bank failures, more taxpayer bailouts, etc . . .
I understand that some people have no choice. They have lost their jobs. They received predatory loans that were poorly explained. Etc, etc., etc. If none of these fit your case - the only responsible choice is to pay the loan as you agreed to pay it.
If you can make the payments, and you want this particular house - stick it out. If you give up on this house because you don't think it will ever perform the way you wanted it to, then you will not be permitted to get another one under the same terms for a while. The lenders are kind of in a "fool me once, shame on you, fool me twice . . . ." spot. It is a trade off - you can get out of the loan, but it is at the cost of your financial reputation, at least in the short term. Action and natural consequence.
I have to agree that your adjustable rate may well adjust down to a rate under current market in the next round - you may find yourself paying less you your loan than others are paying on their smaller principal amounts. And if you plan to keep the home, the cost to service the debt is as important (dare I say more important?) than its value.
Let us know how you decide. Nothing personal, best of luck.