Pam; First are you working with an agent for your short sale, or are you doing it yourself? The second can come after you, but if it goes into foreclosure, they are going to probaly lose even more. By law the first holder must give the second some compensation. I would call the second and try to negotiate a deal with them, but also have them, if there agreeable, to give you a release before you close. You dont have to sell the home, but its better than foreclosure. If you get foreclosed on you have have to wait for five years before fannie mae will approve a loan for you. Four years if you do a deed in lieu, and only 2 years if you do a short sale. All will require 10% down, and atleast a 680 credit score.