Legal Question in Real Estate Law in California

That is not a legal question. You'll have to ask them. I would bet they will, however. I don't know of any lenders who will just ignore non-payment or suspend payments just because you have the property listed for sale. You should also be aware that if you have less than 50% equity and you have a second, the second holder is unlikely to agree to anything anyway, since they would get nothing from the sale. Other than bankruptcy, your only real option may be to stop paying on the second, but keep current on the first, and see if the second forecloses. They may or may not depending on whether they want property with a first on it that is more than the property is worth.

You need to ask those questions of your lenders. Every lender is different, every day and in every deal. Personally, don't hold your breath about getting a short sale approved, few are. Also pursue other options like deed in lieu. Decide for yourself whether to continue paying money on a property you are going to lose and get nothing out of. This is the proverbial 'money down a rat hole'. Plus your credit score is going to become zilch no matter what option you do.