A friend of mine went through a divorce some 5 years ago.

One outcome of that was a division of assets.

My friend - despite my strident warnings - bought into the Trump/Kiyosaki/Bush meme of "real estate always goes up". The result was that he cash out refi'd the house in order to pay off the ex's share of the house's value.

3 years later (2009), the 'real estate always goes up' meme was dead for him. He then attempted to sell the house under the 'staging' meme to at least break even, despite my urging him to just eat a $30K monetary loss and move on. I don't know how much he spent staging - probably $5K or so - but more importantly he as a single guy was living in a 4 bedroom house in a rural area and paying an average of $3K/month between mortgage, taxes, utilities, and maintenance.

Late last year he finally started considering a jingle mail. But before doing so, he tried a short sale.

The upshot? The bank's deal (just recently) was for him to catch up on back taxes (he'd stopped paying 6 months before), take a $30K principal only loan on, then permitted the short sale.

Not clear if the bank is going to hit his credit or not.

His view is that the $30K principal only loan is a safer bet than leaving himself open to gigantic fees tacked onto a judgement - his loan is apparently recourse due to the refi despite his state being non-recourse.

All in all, a very expensive and messy situation.