Can we short sale our house under the military clause even though it is no longer our primary home and we are no longer in the military. We bought it while still in the military.

If by "military clause" you are referring to the Homeowners Assistance Program (HAP), then you must meet ALL the eligibility requirements: (1) owned home prior to 7/1/2006, (2) have permanent reassignment to a new duty station outside a 50-mile radius of former station, (c) received PCS orders between 2/1/2006 and 9/30/2012, (d) the home was formerly your principal residence, and (e) you suffered at least a 10% home value loss between 7/1/2006 and the date of application to the HAP program (both a 10% loss of values in the community and a personal 10% loss).  In addition, the program does not cover 2nd mortgages.  If HAP funds are available, then the sale is not treated as a short sale.  Instead, HAP funds are sent to the closing to pay off the first mortgage.  The formula for determining how much money the HAP program will provide toward paying off the first mortgage can be found in the powerpoint program available at hap.usace.army.mil.  The program is good while funds last.