Contact your lender. Explain that you cannot make your mortgage payments or sell the home and that you'd like to transfer the property as a deed in lieu of foreclosure.
Put the house on the market for at least 90 days. Laws vary from state to state, but in most places you will need to have listed the house for three months, have no liens and have made the offer to the mortgage company on your own.
Pack up everything in your home and take it out of the house. Clean the house from top to bottom.
Ask that your remaining mortgage debt be forgiven even if the auction of the home doesn't bring as high a price as you owe. It's possible that your mortgage lender will agree to this since you aren't able to make your current mortgage payments. If they do, ask them to sign an agreement that says the mortgage will be forgiven after the auction.
Attend a meeting with your mortgage holder. They will prepare forms that transfer the deed from you to them. After that, they'll arrange a sale to settle your balance.
- home sweet home image by David Dorner from Fotolia.com