Whatever the situation is, in a "non-judicial foreclosure" whatever happens is with your written agreement rather than a court order, and the paperwork you signed at the time should either show that you did agree to this, or that it's contrary to the agreement and improper (if, for example, it was agreed in those documents that you would surrender the property in exchange for the full discharge of both loans, which is an extreme example that I think is unlikely).  I would not be at all surprised if the unpaid balance, between the two loans, was converted to unsecured debt, because the exact same thing would happen in a judicial foreclosure, except that it would be converted to a deficiency judgment rather than being entirely unsecured.