Megan,

This sounds like a pretty frustrating situation! I've been involved in similar situations that I wont bore you with now, but you have your work cut out for you. You can't do anything unless the Credit Union releases the lien.

I am assuming that the Credit Union is in at least second or third position. If that is the case, they really don't have much of a leg to stand on, unless the property is actually worth more than what first position needs to be made whole and any other liens in front of the Credit Union. If the home doesn't sell, and it goes into foreclosure, is there a chance that the Credit Union will get anything? Usually not.

What you (preferrably your agent) need to do is contact the loss mitigation department of the Credit Union and go through the same short sale process with them and show them proof that this home is not worth what is owed and that they need to reduce their payoff in part or entirely and release the lien.

If they don't remove the entire payoff amount, go back to Wells and let them know that there is a problem and that you now need Wells to make up that difference. It's unlikely that they will, but it depends on a variety of factors. Best case scenario, the Credit Union accepts little to no payoff and Wells lowers even further to accomodate.

Worst case, neither company yields to the other and the property goes into foreclosure, in which case, Wells gets less and the Credit Union gets next to nothing if anything at all.

To be honest, there are a ton of ways this could play out and your agent should know what to do. These are somewhat rudimentary steps for an experienced agent that usually produce sales. You do have an agent right?

If not, you really should be seeking the counsel of an agent who is experienced with these types of issues. If you aren't currently under contract with an agent, please feel free to contact me so that you can get this lien removed and closed on your new property!