Hi Shug: No, mortgages do not have to be current to start a short sale.
If you have not done so already, please do sit down with an agent who has a lot of experience and expertise in Short Sale to discuss your specific situation and the options you might have, as well as walk you through the steps that you will go through, what to watch out for and the consequences of each steps and what to expect in the end. .
The agent should have experience dealing with different lenders; and preferably, the one who handles the short sale themselves so they understand how critical each step is and what a bank means when they ask for certain things. They can inform you of the progress and the discussions they might have with the lenders on your behalf.
This is already an extremely stressful situation for you, getting the best and most knowledgable agent in short sale to help you is truly critical.
Frank Howard Allen Realtors