Hello Everyone.  I'm a little new to this, and I have a pretty basic question.  Who decides how much of the sale proceeds are to be allocated to the second?

Here is my situation:

I represent the sellers who have a first with IndyMac of about $508k (not a Freddie or Fannie loan) and a second with SLS for about $60k.

We received a competitive offer at $400k.

Now I'm preparing the short sale packages to send into both lenders, and I want to include an estimated closing statement (HUD-1) that shows the allocation of sale proceeds to each lender. 

Should I tell the escrow agent to allocate 87% of sale proceeds (I recall reading that is the magic number that Wells Fargo will accept over on the Wells discussions board) and then take out commissions and fees and then have the rest go to the second?  When I worked this out, it showed $21K going to the SLS and I'm not sure how IndyMac will feel seeing that amount going to SLS.

Or do I just start by sending the package to IndyMac and see how much they will approve to SLS and then get a HUD-1 after I get the approval from IndyMac and then send in the SLS package?  That just seems like it will take a long time. I'm just not sure how it all works.

I would greatly appreciate any input that you guys can give me.  I want to submit just once if possible, in the correct order so that I'm not going back and forth with the banks with my Sellers in the middle.

Thank in advance,

Jason