To answer your other question: yes, the bank can seek a deficiency judgement against you for the balance owed. They can also release the lein but require you to liquidate other assets to pay all or part of the deficiency.
Loss of equity is not considered a hardship. Keep your good credit and stay in your home.
Is your home for sale at present. Have you been actively marketing your home? Have you done anything more than put a sign in the yard and maybe put it in mls.
So many sellers are treating the sale of a home like a garage sale. It takes some effort and know how to get a home sold in this market BUT......homes are still selling.
First, if you are extremely capable of afffording your home you have your answer to all of the other questions - you probably don't qualify for a short sale.
In order to entice the bank to work with you on a short sale, the seller must prove hardship. Basically all of the financial information that you would provide if you were applying for a loan will be required by the bank to make a decision about your hardship.
No hardship, no short sale. The banks expect us to honor our contractual obligation when they loan us money for a car or a house. Cars aren't worth a toot once you drive off the lot but you we still buy them and we are expected to pay the full amount of the agreed purchase price.
It's the same with a house - you agreed to pay and there were no contingencies in your loan documents for loss in value.
Why would you want a potential out? You bought the house for a place to live - doesn't it still serve that purpose?
We have all lost equity in our homes, but, just like it has always been in the past, this market will turn around and prices will begin to go up again.