Cash out refi from hard money note after a short sale

[Winnie Mullins]

Hi All

I need some guidance here.  Purchased our 1st investment property back in April for $32K.  Got a hard money loan for $40K, 4 month term, for repairs in June.  The rehab started in June and was supposed to be done by the end of August, but the house wasn't finished until late October, and truth be told, we're still having some issues with our contractor...finish work, "brand new" heating unit isn't working.  The house appraised for $130K. We tried to go conventional but was told that we were denied (wasted the whole month of October on this refi) due to a short sale in 2013.  The fine print in Fannie Mae guidelines state that you have to wait a minimum of 4 years to get a mortgage after a short sale with no extenuating circumstances such as loss of income, illness, etc.  We had no extenuating circumstances, but had horrible tenants, no money for repairs and houses being sold for $30K down the street from our property which had a $200K mortgage.

What do we do now?  We are listing the house, but, it's November in New Jersey!  We're not in a hot area, so I'm expecting the house to sit for some months before it possibly sells.