I realize I didn't directly answer your question in my last response. Yes, continue paying your rent; whether the owner pays the mortgage with it or not has nothing to do with your agreement with your landlord.
See the link below for the most recent laws affecting renters of properties that are facing foreclosure.
I know from one of your previous posts that you want to purchase a home. Feel free to call me to discuss how to best position yourself to do so (credit restoration, etc.); you may be able to purchase the home you are currently renting (provided you like it enough to buy it).
Also, find out from your landlord if they are short-selling the house because they can't afford the payments, or because they just don't want it anymore. The reason I say so is that if the payments are the problem, they may be able to modify their loan to reduce their monthly payment, without having to short sell the house.
As the owner of a rented property, there is virtually no benefit at all to the homeowner from short-selling, so if you let them know they may be able to reduce their payments and keep the property, they may be really grateful.
I can provide you with a reliable loan modification attorney to refer your landlord to. Or, just mention it and pass along my number to them: (909) 957-4343.
the owner will not be "pocketing" anything, all proceeds from the sale go to the bank
as far as rent, IF you have a NOTORIZED contract FILED with your local clerk of court, you will continue to rent during the duration of the contract
if you dont, get ready to pack, cause, it all up to the new owner