Hi Theresa. Usually, the first lien holder will pay a small amount to the second lien holder and the second will accept that and agree to the short sale because the second knows that it will not fare better in a foreclosure. The amount to be paid to the second is usually negotiated with the first lien holder before they issue the approval letter. I have had the second demand $3,000 and the first offered $1,500 instead and the second ended up taking it. The reason why the first pays something to the second is because the seller usually does not have any money to bring to the table.
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.