However, just because a lien holder agrees to the short sale does not mean that the lien holder also waives all rights to come after the borrower later for a deficiency judgment. Unless, the short sale approval letter specifically states that it's a release of all claims by the lien holder, the borrower will have to expect that the lien holder will try to collect the remainder of the loan after the short sale has closed. I am assuming you are representing the sellers and if you have not already done so, I would highly recommend that the sellers seek legal and tax advise before they sign any short sale agreements.
Good luck to you and your clients.
I am not sure that I understand your question correctly but I will give it a shot. Here are my scared thoughts on the matter.
1. Unless the 1st lien holder is being shorted, I would argue that their approval of a sale doesn't matter. The secondary lien holder is the one who really needs to approve a short sale.
2. If there isn't a short sale and all liens will be paid in full, neither party needs to approve the sale. They simply need to provide a payoff amount.
3. To begin your work on the short sale with the 2nd lien holder, you are going to need to show that the offer price is fair and that the seller truely has hardship.
4. If the 1st is short that means the 2nd will get nothing, and you really have your work cut out for you. My money says they won't approve it in this case.
From what you're writing it appears that you're dealing with a short sale, you are the seller, and the 1st lienholder has agree to the short, but not the second...
Chances are (from my experience) the second won't agree and you will be forced to foreclose. The reason that the 2nd won't agree is that they will most likely not get anything from the proceeds of the sale.
I know it's not the answer you're looking for...but that's how it goes from my experience. Short sales with seconds are rarely worth the time/effort.
Your best bet at this point is to discuss with a local real estate attorney and go from there.
If I can be of any further assistance, please don't hesitate to contact me at http://www.HernandoLuxuryHomes.com - I'm happy to help!