Can the mortgage company sue for deficiency?

I am in California and have two loans on a home with the same company. If the bank does a non-judicial foreclosure, will it be applicable to both loans, or can the second loan still come after me and try to collect?

I have a first mortgage with Chase and a 2nd with Saxon mortgage. We currently have an offer on the sale of our home and we are trying to do a short sale with Chase. They are supposed to give us an answer regarding the short sale by 2/22/08. Unfortunately the offer that we received is not enough to give Saxon anything, and Chase has stated that they are going to get paid first and they don't care about the 2nd. Our realtor is hoping that they will give Saxon something so that they don't come after us. What do you think will happen in this situation?

Question: We are trying to work with ASC who has the first and HomEq who has the second. We were in a payment plan with ASC but they had us paying $3000K per month on top of the $831 to HomEq to make 3 monthly payments then go into a loan modification with the payments the same. We made 2 of the 3, then had a medical issue with our daughter that caused an unexpected financial burden in April plus I do not get vacation or sick pay so my income was less for the month. I notified ASC, explained the situation, and was told that if we did not make that last payment then we will break the plan and would have to start all over again but nothing was a guarantee. I have been very diligent in talking with them weekly thru this process, documenting each and every phone call. So I sent them new updated financial information for the month of April and explained again the situation that lead us to not being able to make that months payment and why my income was less. They then sent us a letter stating that they do not have any workout options for us now, it was denied based on the info we supplied them. They did not take into consideration the time I had to take off work which was why my income was less in April. So I have faxed them more information asking them to help us stay in our home. We owe 464K plus fee's between the two mortgages, according to the market analysis we just received, the FMV of our home is 254K-328K. We are very upside down like many & have been told to stop the bleeding and get out NOW. But we want to stay, we cannot afford $3800 per month especially knowing that we do not have a chance to make any income off this property for 10-15 years down the road, its frustrating. I have asked the companies to reduce the principal, they laugh; I have asked them to make the monthly payment affordable for us so that we can all have a win-win situation, I have faxed them housing information on houses that have sold and those on the market, along with letter from several real estate agents regarding the bleeding we are putting ourselves through. We love our home, but have recently discovered that not only did the broker not do 100% documented income but the appraiser did not use a home two doors away, built by the same builder that sold just months before we purchased for 20-30K less! We have been told we can sue these two, but that takes $ and time, we do not have that kind of time. Also, when we first go 3 months behind with ASC, we offered to pay all up, but was advised by ASC not to do that because we needed a loan modification for the rate that is to adjust in Jan 09.

We are very confused, plus we are trying to figure out if our loan is a recourse or non recourse loan and if we fall under judiciary or non judiciary for the State of Nevada, as it has both. How do we tell?

We want to stop the bleeding, but also continue to live in our home with the feeling of purchasing, not renting and that this home will eventually have equity.

We have a second home, that Chase has approved a loan modification after almost 1 year of us not making payments. They have been very easy to work with. We are now waiting for the papers, that is the hold up. We have considered, doing a short sale or deed in lieu of foreclose on our primary residence or possible foreclosure if all else fails, and moving back to our second home which is just 2 minutes away, and much more affordable.

Please some words of wisdom and advice.....