Many people get foreclosed on simply because they don't respond to the banks letters. Banks do not want to foreclose, despite your experiences. If you are in the process and need help, hire an experienced agent or attorney.
Foreclosure may be due to overspending but typically it is not! Foreclosure most often happens as a result of a variable loan program they took, job loss or unforeseen illness in the family. Sometimes it is due to divorce. Yet other times it is due to taking the equity out in a good market and now due to a down market owes more than the house is worth.
A short sale is simply the bank allowing you to try and sell your home at market value and forgiving the excess debt owed. You walk away and start a new chapter in your life. You may or may not qualify.
You have options. A short sale is one option, a loan modification is another and a deed in lieu is another. A loan can simply be restructured to allow you to keep your current home. Each bank sets its own standards according to your individual situation and their specific policies.
Hire an agent who really cares about you and your options!
Call for details and a confidential interview.