DO I TELL THE FIRST LENDER ABOUT THE 2ND MTG
I AM WORKING ON A SHORT SALE. THE BAL ON 1ST IS 139K. THE 2ND IS FOR 13K THE PROPERTY IS WORTH 145-150K. I CALLED THE 2ND AND TOLD THEM TO ACCEPT A SHT SALE OR THEY WILL NOT GET ANYTHING. I OFFERED THE 1ST 60K AND TOLD THEM THAT THERE IS AROUND 45-50K WORTH OF WORK. THEY ASKED ME IF THERE WAS A 2ND AND I SAID YES AND THEY SAID I WOULD HAVE TO HAVE THEM SHORT AS WELL AND TAKE CARE OF THE SECOND. WHAT DOES THIS MEAN AND DID I MESS UP BY TELLING THEM ABOUT THE SECOND? 
No. In my experience, if the house is in foreclosure, they already know about the second. They don't want the second to get full aount if they have to short. Just get the second to short and list it on the HUD.
The second should short for at least 50%. I had one short from 49K to 10K.
Good luck.
the lender who is countrywide wants the 2nd to release liens prior to closing is this standard procedure or will they allow me to pay it at closing? if i offer the first mortgage 60k on a contract and the 2nd mtg is shorting for 5k do i have to make my new offer 65k?
My purchase and sale agreement would read 65K, split 60, and 5. The first would accept a letter of confimation from the second stating a 5K agreement for release of lien to fund at closing. Then both should get their money at closing.