What can be done to make this Short Sale happen?

As a realtor, for the past two years I have been working with lender, Saxon Mortgage, to complete a short sale for my clients, the Sellers. The Sellers vacated the property, moved into a rental home and have not made a mortgage payment for two years. All requested information has been completed and submitted with a contract to purchase (At least 5 different offers). Initially approval letters came after purchaser had requested a release of contract. Foreclosure and auction was to take place @ January 2009, but the property was pulled and an additional 60 days was given to complete a short sale. Since that time 3 offers were submitted. The first of the three was withdrawn by purchasers. The second was approved by Saxon if the Sellers would pay $4,600 to the Mortgage Insurance (purchased by lender, Saxon Mortgage). Since the sellers have no money and can not pay the requested amount, the MI request was past on potential buyers. By the way, MI was never mentioned with the previous approvals. The Seller did not have mortgage Insurance due to the type of loans (80/20). Saxon stated that the money could not be included as part of the Contract to purchase the home loan. Any money paid had to be separate. A reduced amount was offered by the realtor (brokers) but not accepted by Saxon. The purchasers could not obtain a lender that would permit a purchase with funds that could not be included as part of the contract or financing. The case was closed by Saxon. We now have the third Short Sale offer submitted April 28, 2010 presented to Saxon. All requested documents have been submitted. A BPO was order by Saxon and submitted June 4, 2010. It was then decided that the BPO had to be re-evaluated and an additional 60 days would be given to extend the foreclosure. (I had been of the understanding that once a foreclosure has been stopped, the process starts over again. No further communication concerning foreclosure or the fact that we were back into foreclosure has received by the Sellers since January 2009.) The final response from Saxon as of 6/18/2010 was that the investor not Saxon Mortgage, who I believe to be the Underwriter, does not do Short Sales. No information would be given as to why or what more could be done by the Sellers in order for the bank to approve a Short Sale.
Is this type of run around acceptable or legal? Shouldn’t this Short Sale information be made known upon immediate receipt of request or offer? Doesn't a Short Sale approval come from the Bank? How long can the bank drag this out? The Sellers would like to bring some closure to ownership and their mortgage debt. Please give suggestions as to what we could do to expedite this matter. I am waiting for clarification and answers from Saxon.