2nd trust deeds are recourse loans. The bank can go after you.

IRS gets you whether it’s foreclosure or short sale. The difference is only whether the lender can come after you for any difference owed: in a short sale they can’t. But come on, how many lenders will agree to a short sale? If the short sale puts them more than $50K at a loss, I think they would rather sell the house at auction. Privatebanker, any thoughts?