First lets look at the Short Sale aspect of the home! If the short sale is still priced higher than the surrounding homes, have your Realtor do a CMA on the home. This would be a comparision made from Three on the market now of same type, size, within less than a mile from the home. Homes must be similar to as best as possible with values added or subtracted as needed to equalize the homes! The same Should be done for Homes pending sale (in contract at the moment) 2 to 3 of these homes should be used if possible, and 3 homes also that have sold in the past 3 to 6 months. These homes will determin to best of ability what the short sale home is worth. You may also go for an Appraisal but this will cost money, which is a lack of since you have the home in short sale. Have your Realtor present offers of a fair price for the home to the financial institution with the note that price represents close to fair market value, see CMA attached for more understanding of home value. The Bank will more likely come to reality if you do this.
However!!!!! The bank does not have to accept any reasonable offer in a short sale, and if they it may take 3 to 4 months before they tell you that they have accepted the price offered! The price though is not a concrete number, but you have to let the bank know that there is no hope of sale if they do not accept less than price quoted on the MLS. Short Sales are just that sold short of amount owed!
Should the home go into foreclosure, you will lose the home and the bank will gain the property as agreed in you original contract for that loan, if you had been paying Mortgage insurance because it was an 80% loan or more, then you must remind the bank that you have paid this insurance and they may claim on it! The Bank will eventually sell the home and will get an amount for it! You may be resonsible for up to 5 years after that should the bank go after you for any money's lost in the transaction, basically the difference of the loan amount at foreclosure plus fees the bank paid for the foreclosure process! t is not likely that the bank will go after wages, Cars, or personal Valuables, but filing a chapter 13 may put your mind sat ease. Best bet is to sit down with a Real Estate Attorney about this matter, the consultaion should be free, but a few hundred dollars for Good advice can save thousands down the road. Please note that note any attorney for this matter, you need one that specializes in Real Estate Law, in Pasco and Hernando David Carter seems to be a good option. Anyway all the best to youon this matter, very sorry you had to lose your home. I see so much of this in the last few years and it breaks my heart to see decent Americans get caught up in the careless practices that the banks did this decade!