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Whether the loan is recourse or not, in executing a short sale it is essential the debt is forgiven as a part of the deal. Banks are a lot more cooperative these days as they stand to lose more financially in a standard foreclosure. Typically the first lien holder (Trust Deed) settles for a certain amount, and the second and third settle for a fraction of the obligation.
An experienced Broker will know how to negotiate on behalf of the seller and absolve the debt.
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