Short Sale Frustration

I now understand why people begin to beat the crap out of their houses when they go into foreclosure. Not that I would be one of those people that would do that but I "get" how those people were feeling. We've struggled to make house payments for over a year now, roughly around when my hours got cut working for Stouse. At that time, we called the bank to see about getting our loan modified and were denied (a few times) due to the "inability to pay back the loan" (gee, really?!). About 6+ months ago I was laid off at Stouse, so making payments got even more difficult and we decided to short sale our home. At first we were just going to walk away but decided to go ahead and short sale it so that my credit wouldn't be as f*ed up (2 years vs 7 years). We got three offers on the house within the first two weeks and sent one in to the bank for approval. Now, there are a few departments that need to approve the sale before it is completely accepted. First is the bank and second is the mortgage insurance company. I just  got a call today from our Realtor and she informed us that our bank approved it but the only way the mortgage insurance company will accept the short sale is if we sign a promissory note in the amount of $15,000 paid over the next 10 years with no interest unless we're late or miss a payment.  I know that only equals $125 a month but it's for 10 years and that's still ridiculous to us. If we decide not to sign the promissory note then our house goes into foreclosure status. I understand that they would like to recoup as much money as they can, but at the same time it makes no sense to me that they would rather deny a short sale; in which they would be losing approximately $160k, and gain a foreclosure; in which they would stand to lose even more money, the house would sit unoccupied, unmaintained and stands the potential for break in's and squatters. Their method just seems too risky in this type of market and just irritates the hell out of us because we tried to avoid foreclosing only to have it happen anyways. This is about the time I started to feel like punching holes in the walls and ripping out sinks, plumbing, cabinets and the like. I won't, but I am tempted.

We talked this over and decided that we're not going to sign the promissory note and instead increase our monthly savings by $125 and in 10 years we'll actually have something to show for it. By then the foreclosure will be off my record and we'll be fine. If the bank doesn't want to work with me in this type of market, they can have the place, maintain it, and not profit a damn penny from it. I will say though, that it's kind of depressing to see all of our friends getting houses now that the market is better for them. We thought we were buying in a low market and it turned out to be just the beginning of the change in the market. Now we'll be screwed while prices are good, fantastic.

Live and learn.