Been denied a short sale based on income too high.

Apparently they have determined that you have the ability to pay back all or part of the money you borrowed from them. You can try to get help from a HUD certified housing counseling agency http://www.nfcc.org/FirstStep/firststep_03.cfm but ultimately it is up to the Servicer to agree or NOT agree to your request which essentially asks them to take less than you owe on the loan.

They used the same method your original Lender used to qualify you for a mortgage when you first purchased the house. If your husband gets paid bi-weekly, he actually gets paid 26 times a year. This might be where the extra income comes in. You might calculate his income as $1000 every two weeks - thinking x 24 and $2000 a month. As a lender, we would calculate him at $2166 a month.If he was paid on the 1 and the 15th, it would be 24 times a year at $2000 a month. Hope this helps!