Short Sale

Jorge DeMattos, 45, just completed the short sale on his home in Pembroke Pines, Fla. — a process he and his real estate agent, Edward Goldfarb, say took 17 months and eight separate offers.
DeMattos began pursuing a short sale after he was laid off two years ago and his income plunged from $46,000 to $26,000 a year.
Chase Bank, his mortgage servicer, rejected the first offer, which was $14,000 over what was then fair market value, according to Goldfarb.
On the next seven offers, the bank took months to respond. Each prospective buyer got tired of waiting and canceled the contract. The eighth offer, accepted in May, was $24,000 less than the first one that Chase rejected in February 2008, Goldfarb says.
"Chase made it very difficult. I had to stop paying the mortgage. It was so frustrating," says DeMattos, who now lives with his sister in Kissimmee, Fla. "We would put the paperwork in, and they would never give a definite answer. Buyers waited for months."
DeMattos says he owed $355,000 on his mortgage. The short-sale price was $225,000.
But really, does any of this make sense to you? How does someone making $46k a year get a loan for over $350,000? He said he owed $355,000 so his initial loan had to be for more than that. Just using that figure, that’s $2,000 a month not including taxes or homeowner’s insurance. As much as I hate taxes and tax forms, I actually spent a little time and figured out that with his $46k salary, $18,000 interest deduction, and Social Security payments, dude pulled in roughly $3,250 a month if he had his W-4 filled out properly with the correct number of deductions. If he claimed 0 it would be $2,880 a month. I figured property taxes on the lower amount, $225,000, would be roughly $5,000 a year and homeowner’s insurance at $500, making his total monthly payment $2,450. So 75% of his take home income is going to his mortgage? That’s freaking insane!!!
So who’s fault is it, this DeMattos who borrowed more than he could afford or the bank who gave him the loan?

(from an article in USA Today)