As I've indicated previously I have met (and I greatly respect) Mike Finn and I also admire his obvious contempt for shaky developer practices.
That being said, the wrinkle in the OP's situation which cannot be ignored in assessing the situation, is that there is still associated outstanding loan debt.
In all likelihood, the lender is a third party entity (not Diamond itself) which considerably complicates (and significantly diminishes) any prospects for either successful negotiation or litigation. I wish the OP well, but am unconvinced that ponying up for attorneys will mitigate the harsh reality of the loan debt.
Foreclosure on a "paid up" ownership may not result in any consequences, depending on the practices and energy level of the individual resort / chain.
Defaulting on a loan obligation is, however, a different kettle of fish and is virtually certain to have negative credit report consequences (for seven years).