Don't panic yet. The first person you should be asking is your agent. Depending on where you saw the status change could be meaningless. Short sales are by definition distressed properties. The vast majority in my experience are not paying a mortgage and haven't for a long time.
It is possible that the bank could foreclose in the midst of the negotiations, so it would be good to get what you've seen to your agent, who should in turn pass it along to the listing agent or negotiator.
I've had a short sale I listed have several auction dates get scheduled then later postponed, but the negotiator at the bank needs to be made aware.
I also had a townhouse my buyer was purchasing get foreclosed in the middle of the process. The law firm handling the negotiations didn't get in touch with the foreclosure department at the lender involved.
I wrote a blog piece called, The Anatomy of a Short Sale. These are multifaceted transactions and are not for the faint of heart. I've attached a link to it below.