I would be happy to analyze your situation. I would with a former Asset Manager for Citibank and given the current state of the economy a lender would much rather conduct a short sale than have to spend the money to foreclose. You may contact me through my Trulia profile.
Plus with a short sale your credit score won't go down as much. Having good credit isn't just about purchasing Real Estate.
Please let me know if you have any questions.
I agree with Blaison that you may want to check out an attorney and accountant to make sure you understand the full ramifications.
One thing that you need to understand is whether the loan on your home is a recourse or non recourse loan (purchase money instrument). if you have a purchase money instrument the lender cannot obtain a deficiency judgement (except with FHA and VA loans since Federal law supersedes state law - California Principles or Real Estate by Walt Huber).
Usually non recourse loans are the loan you took out on your primary residence not a refinance. This means that in a non recourse loan if there is a foreclosure the lender would not have the recourse to attach other assets or get a deficiency judgement.
Unfortunately many people have refinanced and now have recourse loans or 2nd or 3rd loans which means that the lenders may very well have the ability to get a deficiency judgement if you the value of the house is less the loan amount.
There is also an issue on whether you could be taxed on any debt that is forgiven for example in a short sale.
Real Estate agents can't give legal or accounting advice. I think you can see why it makes sense to talk to an accountant or attorney who has experience with short sales, loan modification and foreclosures can review your documents, really understand your situation and give advice for your specific situation.
I was just at a seminar where an attorney said that he had seen an increase in problems where banks are so overwhelmed and the staff may not be knowledgeable and where banks had attempted to collect on non-recourse debt.
In this situation I think you can see why it makes sense that getting good advice and really knowing your rights now can save you money and headaches later.
Oh...and they should not be able to lien your other home....but an attorny would be able to advise you best.