My brother-in-law is upside down on his mortgage (owes more on the mortgage than the home is worth). The only advice I can give is to see if you can finance an affordable house that would also pay off the existing mortgage. It's really unlikely, but if you're persistent you might find something.
In the meantime you can build equity by paying extra (make sure you denote that the extra money goes to principle); but only if you plan on being in the home for a few more years. It's amazing what an extra hundred or so dollars a month can do for your equity.
One thing that bothers me: 12.75% for 30 year mortgage is hard for me to believe (even on a relatively small amount). That's an early 80's Reaganomics rate. How did you get that? Was your credit really bad? I'd see if you can get them for predatory lending.
There ARE solutions out there. You may want to talk with these guys:
http://www.naca.com/index.jsp. I know they are really geared for first-time home buyers but they may be able to help you find a way out. We bought our first house through them and it was a pretty decent experience.
Good luck.
Doug