i asked the bank to let me refinance the house at the current market value

[Montcounty]

they said i was dreaming, is it bet? ok so they will take the house back on a forclosure becasue i can't no longer pay for the loan. By going into foreclosure they are loosing more than just refinancing the house with me at the current market valuse is this reasonable for them and me?. The bank told me i was dreaming. He said they would write the loan as a loss and the will still have the house as an asset to sell letter on and still be in the winning side. can somebody tell me if what i am trying to do makes any sence.
correct me if i am wrong but congress passed a law forgiving up to 250k if you sell the house on a loss, why do people keep saying that the IRS is going to come after me for a loss