I have recently encountered a new twist in short sales and second mortgages. Although it is often difficult to get approval from a second mortgage holder, now it appears they are insisting that the owner sign a promissory note to pay back the second (or a portion of the balance). Especially if you took out a second mortgage or equity line to purchase or finance items such as cars, vacations, furniture etc.
Now you may be infuriated that your short sale will not go through if you do not sign the promissory note, but on the other hand, most promissory notes are 0%interest over many years, making the payments fairly affordable.
If you do not agree to sign the note, chances are you will lose the home to foreclosure and both the first and second will probably try to collect the deficiency after foreclosure.
As always, before you make any decision you should consult an attorney or accountant to determine the best course of action for you.
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