Typically when a short sale is negotiated a Release and Cancelation of the Mortgage is filled with the other paperwork of the sale by the title company or closing agent. Depending upon the county it may take time to be recorded in public records.


If I were involved with a short sale I would make sure I had a copy of that Release and cancellation of the Mortgage when it is recorded. That way there would be no dispute later with any third party as to the dissolution of the Mortgage. It is a relatively simple but an  effective document. That  copy should be kept and shown to any third party to prove a short sale was completed including credit reorting companies.

 I would not wait for a federal judge to trough out a lawsuit as to much time and damage can be done in the mean-time.