The banks have made loan modifications very difficult.  Sherry Belcher of ReMax Golden Empire Realty in Southern California reported in this months's NAR Realtor's magazine: "I've worked in the loan servicing business for 18 years, and real estate is my passion.  The way I see it, most people are forced to do a short sale simply because the banks won't modify their existing loan.  I've have seen several instances in which struggling borrowers try to work with the banks, only to learn that the banks won't even consider a loan modification request until the mortgage is three months behind.   Crazy!