This property WAS in arrears and the auction winner WOULD have been able to present a short sale offer to the seller and, if they accepted, have that offer presented to the lender for their approval. The listing expired 12/01/2009 but apparently the broker hasn't gotten around to removing it from Trulia.
Here is a link to an explanation of the foreclosure/short sale process so that you can better separate the wheat from the chaff, http://homebuying.about.com/od/4closureshortsales/u/Short_Sa
The paper is part of an excellent online primer that you should bookmark for future reference.
If you're seriously searching in Marin use the MLS to view the largest database of active listings, http://greathomes.org/.