I am letting my house go back to mortgage company because I cant afford any longer. What are the steps I should take?
Have you pursued a modification to make it more affordable? This is the first step I would take. Call your mortgage company's loss mitigation department and ask for a modification.
If you truly wish to walk away call your bank and tell them you wish to do a deed-in-lieu of foreclosure. This is less of a hit on your credit, although still a hit. You basically give the mortgage company your deed before they foreclose, saving you and the bank time and money. You also save your credit from having late payment recorded on it, on top of the foreclosure. To do this merely call your bank and say, "I wish to give you the deed to my house, via deed-in-lieu of foreclosure." They will send you the proper form to perform this and you will be all set. Think about it very carefully before doing it though. There is no turning back!