I am not a a lawyer my following answer is based on my opinion & experience & 100% success rate closing short sales with 2nd lien lien holders.
In conjunction with the above statement: No there is no law, each lender has their own guidelines & each Individual deal is different. Each short seller is different with their other assets, income etc. & the 2nd lien holders also base their decisions on what to demand for "payoff" to the 2nd lien based on those factors. Each bank who holds a 2nd lien decides what to demand to release their lien as "paid in full" & allow the short sale to occur.
I want to give you an answer that starts off with "Typically 2nd lien holders ask for X" but I really can't even do that.
If you would like a more thorough answer to your Own unique situation whether you are in fact on the buyer end of a short sale or if you are the seller, please shoot me an email directly, I don't look back on this same Trulia thread for answers posted after mine.
Emily S. Knell
Realtor Since 1996
Realty ONE Group
100% Short Sale Success Rate in CA