What happens when a property is sold for less than the amount owed and there is a second mortgage?

The spouse's name was not on the 1st loan but the name was on the deed.

I don't see how the sale can close, unless all the liens and mortgages are paid?

The title cannot be transferred, while there is a lien in place against the property.

Depending on the type of sale. If it's a repossession, or sale back to the first mortgage holder, the 2nd mortgage holder loses their position. If it's a lien sale, the first mortgage is satisfied first, 2nd mortgage 2nd, etc. I concur with "prog" I don't see how the sale can proceed with the mortgages being satisfied. The buyer may assume the 2nd, but I don't think escrow will close, unless the 2nd mortgage holder settles for a partial payment.

Yes, it can not sale at a standard sale without it being paid, But in a other sale, they will normally come after the lender for payment if not fully paid.

A foreclosure or a bankruptcy or a tax lien sale is the only way I see it being sold without the second lien being sold