One of the many obstacles to resolving the housing mess is that so many people during the boom used their houses as piggybanks, taking out second mortgages and helocs that were often originated by different banks from the originator of the first lien mortgage. In order to do a short sale–or much of anything short of foreclosure–you need to get the second lien holder on board. This is even harder than getting your first mortgage holder to help you, since there’s usually nothing in it for the second guy in line except a sure and certain loss. The Obama administration has made some efforts to pull the second lien servicers into the process, but the results have been even more pitiful than the single-loan modification process.
This was a problem in the Great Depression, too, though the conflict was less between banks than between individuals who often issued or bought individual mortgages as investments.
Read more from the Atlantic
Its tough in the beginning but you can make a nice profit by buying a home waiting for the home to increase in value then selling it for more then you paid. Its like a stock on a much larger scale.