We Don't Negotiate with Poor People

I had stopped making my mortgage payments at the beginning of the year. I knew that being three months behind would launch the foreclosure process. No surprise when I was notified of a foreclosure date scheduled for the first Tuesday in April. In the meantime, I found an investor/buyer that was willing to go through the nightmare of negotiating a short sale if I handled all the paperwork. So, at the end of March '10 I requested loan modification paperwork from my two lenders and was able to stall the foreclosure.  I knew that I didn't want a loan mod but that's where I had to start as far as the paperwork was concerned.  I filled out the request, provided my financials, a hardship letter, bank statements, my tax returns and an option to buy.  I submitted all this information to both lenders at the same time.

While I had no experience with short sales, I had been in real estate for over 20 years. I had heard about how hard it was to close a short sale and a lot of it has to do with the lenders involved.  After a lot of emails back and forth with the first lender I was told that their investor had a minimum requiring they net at least 85% of the appraised value, no problem. So, the first lender ordered an appraisal report. I met their appraiser and provided my own comps hoping to bring the value down to the offer amount. The appraisal came back in the range I had expected, no surprises. The fact that the value was close to 55% of what I owed, broke my heart.
Meanwhile, the second lender started shuffling my file around from department to
department where I started over each time and provided more and more
information each time. Every time I spoke with someone new, I submitted the same paperwork plus whatever else they wanted. To make a long story short, six months past before the 1st lender decided that they didn't want the 2nd lender to receive anything on the HUD statement! In order for that to happen I would first have to settle up with the 2nd lender before I could close with the 1st lender on any short sale. 
Well, that little distinction resulted in my file being transferred to yet another
department within the second lenders maze.  It wasn't just departments that changed, the criteria by which they could negotiate with me changed. At first, when we thought we could settle with both lenders on the same HUD at the same time, the minimum acceptable bid the 2nd would consider was 5% of the sales price due at closing, which I was able to get the investor to agree to pay.  When the departments changed and they realized that I couldn't close without settling with them first, the minimum bid became 35% of the balanced owed and it was due whether we closed or not. That decision, to shut out the 2nd lender, effectively killed my deal. The buyer was not going to pay anything up front with no guarantee of reaching a settlement with the 1st lender and I certainly didn't have that kind of cash or credit or access to it from family and friends.
Communications with both lenders ended as far as I was concerned after more than six months of emails and telephone conversations culminated with the 1st lender denying the 2nd lender to be on the HUD, then they wanted an additional $25,000 be added to the sales price plus they wanted to order a 3rd appraisal since more than six months had passed, it was just their policy I was told. I wasted 8 months trying to avoid a foreclosure and minimize the lenders' loss, and my own, to no avail. It’s been more than two months since everything fell apart, both lenders continue to call me; I continue to reject their calls. Neither has contacted me by mail or email nor have I heard from the foreclosing attorney.  I don't know what to think except that my file is sitting on
someone's desk under a pile. I thought they would've foreclosed in August, then in September and now it's the end of November! I could've been living in the house or rented it out or something while going through all this, instead, fearing foreclosure was imminent, it stands vacant and abandoned. 
My experience with this makes me think that neither lender really wanted to negotiate with me. I wish they had just said "we don't negotiate with poor people" and spared me these last eight months of anguish and uncertainty.