Short sales do not prevent the lender from getting a judgment against the homeowner for the deficit. In fact, even when it is agreed to in writing during the process of applying for the short sale, that the lender will not pursue future deficit judgments, sometimes they still do. In cases like that, the homeowner has to go out, obtain an Attorney and have them pop off a letter stating to the fact that they have a written agreement that the lender wouldnâ€™t do what they did and therefore the lender should rescind the action immediately.
In other words, unless the homeowner has it in writing that the lender wouldnâ€™t pursue the deficit judgment, then the homeowner maybe up a creek without a paddle. Even if they do, chance are they are still going to have to prove the validity of the agreement sometime in the future because most likely, the big old bank arenâ€™t going to have accurate records and pursue it anyways.
If the homeowner has an agreement, tell them to file it away in a safety deposit box at the bank because they may have to whip it out sometime in the future.