[quote=Tillers]Of the two short sales I know of that went through, both were “inside” jobs. One of them:

The listing agent owns the house. She list’s it but won’t show it or work with anyone on it. Except for her fiance. So, she ends up selling it to him and they move in, then get married. So she essentially was able to keep her house that she already had been living in several years prior (she was renting it out in the meantime) at a substantially lower price.

.[/quote]

If he’s smart, he thanks her and kicks her out.
Now he has a great deal on a house and can meet younger women with better job prospects.

Seriously, the deal is the banks need to
work to eliminate conflicts, such as
you describe,

if a Short Sale is proposed, they need to check
that the Listing agent was selected randomly,
and they need to keep offer windows open and judge value against market conditions.