My two current bank negotiations and I'm taking the rest of the day off!!!!!!!

Any advice I am currently negotiating with banks on behalf of two different clients.  Both clients have good to excellent credit and up to date on their payments.

Client number 1    not my actual client.

    Nice old man who is 81 years old with COPD.   Needs an inhaler every time he needs to use the stairs or packs a box.  He just remarried his ex-wife last December.  He is an inventor who has lost $180K last year.

Problem:

    He has two loans out on his walkup condo.  The first is easy, it is for 76K.  The second is for $108 K.    There is $184K in debt against the home and the home is only worth $148 K .  Client does not have money to bring to closing table and really needs to move to place without stairs.  I started short sale proceedings.  Hardship being health, limited income and debt.  I am only talking to the second since the first is very well covered.  The second is willing to make the difference and unsecured note at 1%.  The client is relieved.   I think the bank should split the difference with the man and make him pay 1/2 on the unsecured note and forgive the rest.  Despite being an inventor has no real assets other then his condo.  Any ideas........

Client #2     not actual family..

    Father is a laid off construction worker (common in my area- due to lack of housing starts).  Mother works at Albertsons (a local grocery chain).  They have 4 children between them.  They live in 1144 sq ft (3 bed, 1bath),  sort of crowded.  They have a first and second mortgage.  They actually have at least $10k equity.  The problem is that they have a bad interest rate on both loans and a prepayment penalty on the first of $2K.  When I met them they were contemplating refining their home and selling it (waste of $5k if you ask me).  I am trying to negotiate with the first to 1) remove the prepayment penalty and/or reduce the interest.  This family qualifies for a mortgage of $119K if the house is either sold or rented.    This would give them another bedroom, another bathroom, 300 more sq ft plus a garage (Life is cheap in little towns in Idaho).  Their options are

1. Stay in house until hubby can find work.
2. Rent house and buy another (they have to cover mortgage plus 25% more to get to zero rental loss by bank standards.
3. Sell house and pay atrocious prepayment penalty. 
   
4. Get real estate agent to renegotiate the loan and then make decision.