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"Short sales were very rare back a couple, three years ago," said Zandi, "and now they're increasingly common."

The National Short Sale Center was able to get the lender's ear and work out a deal so the company would accept a short sale buyer, and let Bruce off the hook.

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Through the short sale process, the pain continues. Melanie Bruce had to write a "hardship" letter to her lender, ironically, sharing more financial information to get out of the loan than she did getting into it.

"I had to show surprisingly little to get the mortgage," said Bruce. "So yeah, inversely, when you write this letter of hardship you are really getting into your personal life."

"It is with great embarrassment and regret that I write this letter, as I have always prided myself on being responsible," Bruce said in the letter.

The lender approved a buyer at $66,000 less than the original purchase price.

"I paid $325,000 for it, and the house just sold for $259,000," Bruce said. "It's a real blow to your self-esteem. You could pull out my credit [and see] that everything is paid on time. This is the first blip on my credit report. You see this on the news and you think, 'Well, at least I'm not alone.' But it doesn't change the fact that you're in this situation. It doesn't change the fact that you have to make this decision. And your dream of owning a house has now fallen apart."

In three more weeks, Melanie Bruce and her family joined another burgeoning trend -- they're becoming renters and will walk away debt free.

"It's amazing what you can get for $1,000," she said. "There is one place with this granite kitchen and upgraded countertop. It's beautiful."