Daily Q & A's

RE: Short Sales

I have a client that sold his primary home as short sale. The second mortgage company, which is a different lender from the first lien holder. The second mortgage has placed a collection of $74,548 on the credit report. Is it safe to say, that if approved as a short sale through the first lien holder, you still run the risk of the second mortgage company coming after you for the balance owed.

Unfortunately yes. 

The laws are different in each state.  In some states the lender can come after the borrower, in others not so. 
Many times you can negotiate with the second mortgage holder for a settlement of a fraction of  what is actually owed. In any case, you need an experience negotiator on your side. It is hard to imagine that the client closed a short sale transaction not knowing that the second mortgage holder could place a collection on his credit report afterwards.  Possibly someone didn't fully explain what was happening in his transaction.
The second holder could want payment, but it should be negotiated at the same time as the first.

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Jennifer