I caught your post while browsing this website and thought I should provide you some answers to help.
I'm the RE/mortgage broker and our company provides the loan modification service (LM) to help homeowners save homes from foreclosures due to hardship, or mortgage shock... Our company is DRE approved for LM and work with bankruptcy, foreclosure attorney team for a complete solution to clients. Check out http://www.serviceloanmodification.com
For your questions, if 85022 is a recourse loan, yes, bank can go after your personal assets. No, if it's non-recourse (California law). If your bought home with a purchase money loan (not refinance, nor cash-out) usually it's a non-recourse loan. Check your note to confirm. In both short sale and foreclosure, a "profit" can report to you by bank for their loss (or your gain) if it's a recourse loan. Need to consult w/ CPA or tax advisor to work w/ IRS in that case. Short sale always is a better choice before foreclosure.
You might consider refinance 95134 to a low 30-year fix rate before get rid 85022 (damage credit).
If you need help refinance, LM, short sale, contact us firstname.lastname@example.org or email@example.com. (408)956-9230
Good luck -- Erica M Nelson http://(www.EricaNelsonEstates.com). Here's her contact info:
Elena Rivkin Franz | Pratt & Associates
1901 S. Bascom Avenue, Suite #350
Campbell, California 95008
(408) 369-0800 Main | (408) 369-0752 Fax