Strategic Default
A "Strategic Default" is where a borrower can make the mortgage payment but choses not to. This is happening more frequently because so many properties are severely underwater. Once the property is so far underwater that the borrower does not want to hold the property long enough for the value to recover, borrowers may decide it is no longer worth holding the property.
Lenders are becoming more sensitive to this situation and are more likely to deny the short sale because the borrower cannot convince them of their hardship. Just because the property is severely underwater, by itself does, not constitute a hardship in the lenders eyes.