B of A Short Sale and FHA

[TimJS]

I am currently in quite the predicament. About 9 months ago I placed my home up for sale because my job was transferring me to another state. Once I had moved we ran into some serious problems. We found a house to rent and the landlord was foreclosed after 2 weeks of living in the home. We had 3 days to find a new place to live...this all happened within a few weeks of moving. Needless to say we had fallen behind on our mortgage payment because we had no emergency fund for this situation. We took loans foolishly to ensure we had a roof over our heads and could move while still maintaining a job.

The mortgage went without payment for several months and my realtor suggested a short sale. We had an intital offer which was about 70% of the homes value, this offer the bank declined. Up until a few weeks ago we had no offers. One offer came in and was about 85% of the homes value and we submitted another short sale package to the bank.

Today I found out that was declined because according to HUD, a FHA loan is governmert backed and the owners must occupy the residence. If we did not occupy the residence then we were not eligible for a short sale.

I am at a loss and very frustrated, we are financially ruined and the last thing I want is a foreclosure. The bank is now saying that a sale date has been set since the package was decined today. Is there any hope?