Hidden costs in short sales

Home Sale Hindsight

Q: I’m about $150,000 upside down on my house, and I have been trying to do a short sale. I had a contract to sell it to a buyer who is well-qualified and has been waiting patiently for several months while we awaited approval from my mortgage lender. (I have two mortgages, with two different lenders.)

Anyway, we got an approval on the first mortgage, but on the second mortgage they refused to allow the short sale with anything less than 30 percent of what I owe them. The first mortgage lender refused to sign off on the short sale, though, if the second lender got more than a flat $5,000. This left about $15,000 between the two, and my agent couldn’t break the impasse.

I don’t understand this — I’m on the verge of foreclosure, and my second won’t get anything if I lose the house, because my negative equity in the place is more than I owe them. What am I missing here? Was there anything we could have done differently?