I know you have an agent and it is extremely inappropriate to continue to post questions here on the site to "second guess" your agent. Talk to your agent and get the information directly from the agent regarding your contract.
Please know that I am not trying to "pick nits" in this response, but I do have some questions:
1. I am going to assume that you have chosen, as you have in the past, to use the listing agent to represent you in this transaction. Is that what happened here?
2. In looking at your history, I see you've asked almost 100 "general buying" questions of the forum here at Trulia. I remember answering about 10-20 of your questions in the past, and have always recommended that you purchase a home by employing your own agent, why do you feel that you don't need to hire an agent even now?
Hollie, if I recall correctly, very early on when you first started posting questions, you mentioned that you had purchased homes in the past without using an agent and had done so successfully and had made money. As a result, you felt that you did not need an agent in the future to assist you. We all did warn you, however, that--with your penchant for distressed housing--these were not the same types of home purchases as you may have encountered in the past, and that you needed or would eventually need your own agent to guide you through the rigors of these more complex home purchases.
Well, unfortunately, that time has come...you need your own agent, and if you've signed a contract with the listing agent to purchase the distressed home, you need to communicate with THAT agent regarding your concerns.
First, please understand that this is not "sour grapes", its just that we can no longer assist you as this would be interfering with an existing agency relationship. You have an agent--talk to that agent. If you don't like what the agent is telling you, talk to the agent's broker. If the agent's broker is not helpful, then you need to hire an attorney and fight this out in court.
Second, if you are using the listing agent--as you have in the past--to represent you, then in all likelihood that agent has added some stipulations to the purchase contract that may protect his/her first client (the seller) and you may find that you've forfeited your right to the deposit if you cancel without cause. Again, these are issues to discuss with the agent in your contract.
Third, the preliminary report that you were provided before you purchased the home (or that you should have looked at before you made an offer) will list the total number of loans on the property. While the agent may not have verbally told you this information, if you were provided with a copy of the preliminary report, you were given "notice" of the number of loans on the home.
Finally, I encourage you again to find an agent to help you. While I know it's extremely easy for you to use Trulia's site to ask and get answers to plenty of questions, truth be told, its neither fair to the volunteer Realtors who answer questions here nor appropriate to utilize this free resource constantly. If you have a specific real estate question, you need to ask your Realtor or the agent involved. If you don't know what the answers are, you need to get an attorney involved. Simply using this site to circumvent ever having to hire your own agent is, as my friend used to say, stepping over quarters to pick up pennies. If you want to continue to purchase distressed property, especially now, as the landscape in that area continues to change and to become far more restrictive than it has in the past, you should either become your own expert through formal training and education or hire an expert to represent you.
P.S. John Juarez is probably the most correct answer you've received especially since the deposit being required now is a big "tip off" that the contract may be written in a manner that does not allow you to cancel without loss of funds.
Be careful how you do it though, you do not want the seller or their agents getting the idea they can keep your deposit.
Consult your agent, but if you do not have one give me a call.
My agent didn't tell me there is a 2nd lender.
He let me submit deposit to title company now.But the short sale addendum states that the initial deposit will be deposited into escrow within three business days after approval.
All the best to you.