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I have a short sale that B of A just denied. I'm located in California, which is a no recourse state as long as the seller has not refinanced.

The reason that the bank denied the short sale was because the seller has too much in the way of assets. But the sellers are getting divorced and the party who will be responsible for the property will have a mortgage payment well in excess of 50% of her take home pay. 

The sale is further complicated by the fact that the HOA in the building where the property is located is being sued and no lender will allow a loan against it. Therefore, only cash buyers are being considered.

The first loan on the property is owned by Freddie Mac - they are actually the ones that declined. I'm wondering if anyone else has run into this situation. My clients only alternative seems to be a strategic default. 

I've sent a note to our negotiator at B of A and escalated to his team lead and to their VP. I've pointed out the fact that they are leaving the seller with very little choice but to give the property back to them. Any other other suggestions would be welcome. You can write me directly at jim[AT]jimmalmberg.com.