Thank you all for your thoughtful and informed responses. We really like the home and will pay the liens as they presently stand and hope the bank will accept the appraised value of the home. If so, this will offset the additional pay out. Anything else popping up will be an absolute deal breaker.
In the event we lose the home, we walk away better informed about the pitfalls of short sale. Believe me, we did not see this coming as everyone was on board except the seller and his lack on integrity.