Lenders can sue homeowners even after the house is foreclosed on or sold in order to recover for any remaining deficiency. A deficiency occurs when the amount you owe on the home loan is more than the proceeds from the sale (or auction) — the difference between these two amounts is the amount of the deficiency.
What if you have more than one loan?
If you have a second or third mortgage (or home equity loan or line of credit), those lenders must also agree to the short sale. Unfortunately, this is often impossible since those lenders won’t stand to gain anything from the short sale.