Another situation that people need to watch out for is the way in which a lender releases the lien. In some cases the lender will accept the short sale AND release the owner from the deficiency and in other cases the lender will accept the short sale BUT they will ask the owner to sign a new note that is basically unsecured but does obligate the owner to repay the deficiency.
I am a little surprised that this is happening. If the mortgage is not a first, then it is recourse.. which means that banks can go after the previous owner on a deficiency judgement. The banks only have to either threaten to push for or push for foreclosure to break the logjam.
They might also be able to take the approach of a version of reduced deficiency for keys..
