What is the best option for us?

we have a home that is worth way under what we owe on it. we recently had to completely gut the bathroom and re-do it because of black mold. in doing this project we got behind on our mortgage. we have a first and a second mortgage but they are both with the same lender. we just recieved notice that they are putting us into foreclosure. what do we do? with our other expenses there is no way we can afford to catch up and still make all of our bills and the mortgage company (bank of america) will not do a loan modification because our debt to income is in the negative. in our economy and neighborhood our home is not likely to sell even in a short sale...should we do a deed in lieu of foreclosure? and are they likely to allow that? we have no 401 k, no savings accounts and no other properties!! will they make us pay the difference after sale if we do a dil? also, how long do we have to get out of the house after we do a dil?