Can you short sale a house without approval of the 2nd mortgage?

Real Estate Broker/Owner with Regal Realty of the Treasure Coast LLC

Can I short sale a house without approval of the 2nd mortgage?

When you chose to do a short sale all mortgages are affected by this decision.

Many  homeowners are only concerned with the short sale of the 1st mortgage, but you can not short sale a house without the approval of the 2nd mortgage.

When you short sale your home and there is  a 2nd mortgage or even a 3rd mortgage they are all in the position to deny or approve the short sale.  If one mortgage holder disagrees with the short sale, or even the terms and conditions of the short sale then short sale is DEAD.  

The 1st  mortgage has the strongest position over the junior mortgages, but the 2nd mortgage also have power.  The 1st mortgage may determine as part of its approval that the 2nd mortgage can receive no more than "X"  dollars.  If the 2nd mortgage insists on holding out for "Y" dollars a greater sum than "X"  dollars there can be no short sale.

Often each mortgage holder will want to see what the other is offering. Therefore it is up to the short sale negotiator to supply these documents to the respective parties.

Therefore, it is not possible to short sale a house without approval of the 2nd mortgage.


Check out some of my other blogs:-

What is a short sale?

Can you short sale a house without approval of the 2nd mortgage?

Who pays the real estate commission on a short sale?  



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I am  certified from the National Association of Realtors for being a Short Sale and Foreclosure Expert. 

If your are looking to sell or purchase a home in South Florida CLICK HERE to contact me to assist you with your real estate needs.




Merline Pennant


Direct Line: (772) 985-7653





Re-Blogged 2 times:

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  1. Joe Jackson 11/18/2013 09:01 PM
  2. Winston Heverly 02/17/2014 09:24 PM
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Merline, I have seen some cases where 2nd mortgagee did not receive anything - and thought they don't have any 'say' in the short sale - so learned something new today.

However, I'd hand this over to the attorney - it's not my cup of tea to advice legally on these issues.

Nov 19, 2013 11:00 AM #26
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M
Merline - I don't know why people would think they wouldn't need approval from the second as well.
Nov 19, 2013 03:16 PM #27
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Calabasas CA

Short sales are always bring surprising situations.

Few days ago we got a call from a homeowner who had a trustee sale scheduled in 4 days. Somehow a bank postponed a foreclosure( 1st and 2nd with WF), now he does not want to start a short sale.....yet. Waiting for what?

Nov 19, 2013 03:41 PM #28
Michael Blue
Home Smart Realty West - Encinitas, CA
REALTOR - 760-889-8877, Encinitas/Carlsbad

I've had a few easy short sales, the first was not short and was getting full pay off only the second was short.  Of course with one short sale that created another problem because the second thought and correctly I will admit in an appreciating market they wait long enough,  make more money.

Nov 19, 2013 08:40 PM #29
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

Short sales are like Christmas morning...everyone with an interest in the process better be satisfied!

Nov 19, 2013 09:52 PM #30
Shannon Thomas
Selling Indy Metro, LLC - Avon, IN
Managing Broker, E-Pro, ABR,SRS, SFR

So true.  I had a very complicated one a couple of years ago that had a SBA loan for flood damage of over 30K. as a second.  The first lein holder would only pay so much to the second and the second (a government loan )would not drop the left over balance.  The sellers had to accept that they would still owe that amount after the shortsale of their property. Had to coordinate both parties to get it to close on time.  The wording on the paper work to SBA had to be exact or they would deny.  Closing docs had to be exactly worded or they would send back and after over a year of trying to get this done could of ended everything.  On top of that the buyers had a FHA 203K loan. 

Great article and so true.  Even though I closed 100% of my shortsale listings, I no longer do them myself.  They are horribly time consuming if your going to get them to close. 

Good luck and thanks again for the post

Nov 19, 2013 10:05 PM #31
Ron Aguilar
Continental Mortgage - Saint George, UT
Mortgage & Real Estate Advisor since 1995

I have had some sellers contribute to the 2nd demands to get the deal done. OK this is not common but its worth asking the question if its say less than 1K.

Nov 19, 2013 11:20 PM #32
Jordan Gouger
Keller Williams Realty Inc. - Austin, TX
Helping you to achieve your housing goals!

I'm curious to learn how to negotiate junior and other subordinate liens.

I am working with a seller right now on potential short sale that only has one lien, and so far that has been a smooth process. I would imagine the same process has to be done for each lien. 

Nov 19, 2013 11:35 PM #33
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

The more liens there are the tougher the deal to close and the more work that the agent or negotiator needs to do get get it resolved. None ar easy and those third party liens are always the toughest

Nov 19, 2013 11:57 PM #34
Morris Massre
Pembroke Pines, FL
Real Estate Instructor Broward County Florida

Those poor guys waiting second or third in line, even in an approval, usually get almost nothing from my experience.

Nov 20, 2013 01:57 AM #35
Dan Pittsenbarger
Keller Williams Western Realty - Bellingham, WA
Improving Conditions

Oh what fun it is to ride......

While we have had to deal with short sales in our area - we've still had the majority of sales be equity sales- even when distressed properties were at their peak. Kudos to all those agents working in areas where distressed sales made/make up the majority (and in some areas - practically all) of one's business. Short sales could be called "long sales subject to whim or change (regardless of common real estate practices in the area) at any time sales".

Nov 20, 2013 04:14 AM #36
Jim Miner
Miner Noh & Associates - Phoenix, AZ
Loan Modfication & Short Sale Specialist

Unless the second is being paid in full at COE.

Nov 20, 2013 04:34 AM #37
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Seconds (and even worse thirds) due make it harder.  People need to be aware of this.

Nov 20, 2013 07:25 AM #38
Travis "the SOLD man" Parker; Associate Broker
iXL Real Estate-Wiregrasss\ - Enterprise, AL
email: / cell: 334-494-7846

I remember this from a CE Class that I took, but a refresher/reminder is always helpful!

Nov 20, 2013 07:49 AM #39
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

The second, third or fourth would be impacted depending on the type of loan if they remain opposed to the short sale and might lose everything if it goes to foreclosure. Releasing the lien with a deficiency note is a better alternative, isn't it?

Nov 20, 2013 08:14 AM #40
Dee Toohey
Innovative Realty Solutions Group - Longwood, FL
Broker, ABR, AHWD, CIPS, FMS, ePro

Every single short sale is different. An agent got approval of a sale today but they want it to close Friday and the buyer is getting a loan.  Nothing surprises me with short sales.

Nov 20, 2013 09:11 AM #41
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team
We agree Merline, but is not just a second mortgage it's all liens that must be cleared on the property in order to complete the short sale HOA, builder, contractor all liens.
Nov 20, 2013 09:14 AM #42
Merline D Pennant - New homes, Short Sales and Pre-foreclosures
Regal Realty of the Treasure Coast LLC - Port St Lucie, FL
New City, New Towns, New homes

Thanks for the input Praful.

Christine, believe it or not some agent think that way too.

Inna he is just stallin for time to live for free.

Thanks Michael.

Yes Gary short sales can be surprising

Thanks for sharing Shannon.

Ron, it isgettingte deal done that is the key.

Jordan I would offer them no more than 3k. Let them know up front this will give you a good idea.

Ed you are so right.

Morris you are right.

Dan long sale is the appropriate word.

Jim the 2nd does not need to be paid in full.

Gene let the agent beware.

Travis glad to refresh your memory.

Kimo that is right.

Dee the agent has to go back to the neogtiator and tell them how stupid that approval timeframe is.

Bob everythng is negoitated.



Nov 20, 2013 10:40 AM #43
Ric Mills
Keller Williams Southern Az - Tucson, AZ
Integrity, Honesty, and Vast Real Estate Knowledge

In five years of doing short sales, I have found this to be absolutely TRUE.  I have even had homes go to foreclosure when the second or third declines to accept what the first lein in offering.  Even when they know, if it goes to foreclosure, they get "0" and no deficiency rights in our State.  Sometimes other "leins" show up and have to be dealt with and that is why we get a prelim title report on all SS listings. Surprises aren't fun.  SS are a lot of work on the listing side and take a lot of patience on the buyer side.

Nov 21, 2013 09:18 AM #44
Rodney Mason
Guaranteed Rate - Atlanta, GA
Licensed in AL, FL, GA, SC, & TN

I had one last month where the 1st and 2nd mortgage companies could not get together on their approval dates.  Every time we got one approval, the one other was expiring. 

I have another one right now where we are still waiting on the intial approval for the 2nd. Of course, the 1st will expire before we ever get the 2nd.

Nov 24, 2013 02:04 AM #45
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