We brought all outstanding bills current on the home had a lawyer draw up papers to have the property transferred. 2 months have passed, money all used up and they have not packed up one box and don't plan on moving anytime soon.

I have outstanding credit.

It can be tough to show the tenant caused the problem.Also include verbiage that says you can apply money received from tenant to outstanding charges in the order you choose. 

And it's unlikely that a lender will approve a short sale if the market value is higher than the outstanding principal of the mortgage.Having said that, I don't think the situation is nearly as dire as you think it is.

QUESTION: will banks do deals to get it off their books if the offer is less than the outstanding loan amount, or will they NOT because the retail value is significantly above the loan amt and they will wait to see if they can make money on it instead?

Josh, I enjoy your lightheartedness and that is what has helped BP remain outstanding.

I just got lazy and didn't do my own due diligence and thats a lesson you'll never forget.My PM though is outstanding in my book.

You need an attorney involved to do a title search and make sure there are no outstanding liens and that the legal description is the right property.

What if there is an outstanding mortgage balance 3x the value?  

If people have trouble getting money from the start how does someone pay the regular 3%, 3.5%, 5%, 20% downpayment to get a regular house loan.Those are outstanding terms for hard money.For investment properties, you're looking at 25-30% down for a conventional loan.