“We feel like we were not well informed by the mortgage company nor the real estate agent that this may happen. We were made to feel that once the short sale was completed, we would be in the clear and was basically told this would be so by the real estate agent.”
The lender is the one with whom you had the loan contract. Thus, remarks made by the real estate agent really don't help you—his or her job is simply selling the property, not representing the mortgage company with regard to your mortgage liability. If the mortgage company made false or misleading statements to you to induce you into the short sale, then perhaps you might have a fraud or misrepresentation claim against the mortgage company. My guess is, though, that the mortgage company never came right out and told you your debt would be satisfied. What they likely told you was that it would avoid the negative consequences of a foreclosure, which is true. If you made the assumption from statements like that that your wouldn't owe them anything after the short sale, then that problem falls on you. Did you ever ask the mortgage company directly if you’d owe anything after the sale?
Your biggest problem, really, is that the documents involved in the short sale apparently specifically said they could come after the balance. Did you read those documents before signing them? You should always take the time to read those documents and understand them, or take them to an attorney for an explanation of what the contract says. Had you done that here, you’d have known what the deal was.
Note that a foreclosure would have also resulted in you still owing the balance of the loan. But a foreclosure would have (1) probably ended up with a lower sale price on the home, leaving you with a bigger deficiency to pay, (2) left a negative notation of the foreclosure on your credit report, and (3) ended up adding more to your liability for the attorneys fees and other costs for the lender to do the foreclosure. So, given that outcome under foreclosure, would you still have let it go to foreclosure rather than short-sale had you known you’d owe the deficiency? My guess is that you probably would not have done that. Bankruptcy might have been your better option, though there is no way to know for sure without knowing your entire financial situation.