Whether or not the bank will pursue a deficiency depends upon the type of loan you have, as well as the terms of the short sale. If you have an FHA loan, and you are accepted into the FHA Pre-foreclosure Program, the lender is required to waive the deficiency in the event an acceptable offer is submitted, accepted, and closed. I have done MANY short sales, and none have my clients have ever been asked to make a contribution where their only assets were 401K or life insurance. I am an attorney as well as a realtor, but that being said, beyond what I have stated above, each case is different, and there are just too many variables to fully and accurately answer your question without more information. I act only as a realtor on my short sale transactions, and do not dispense legal advise. That second lien could be a concern if they are unwilling to accept the settlement offered by the first lien holder. They frequently do, but not always.