Co-signed on FHA Mortgage, Prime Applicant Filed Bankruptcy, What should I do?

[chrish61]

I have a good income, low debt and a pretty good fico score (736) considering the following. In 2008 I co-signed on an FHA Mortgage for my cousin to help her get back on her feet after divorce. She filed bankruptcy in 2011 and has not made a payment since just before her bankruptcy. Property has been vacant since bankruptcy.

B of A told me not to make payments bc they would not be credited properly. I would like to get short sale approval and get the thing sold for the highest dollar. Estimated deficiency $20K.

Should I continue to wait and just let the home foreclose? If that ever happens. Or should we try a FHA approved short sale?

[ShanetheMortgageMan]

Sorry to hear the person you co-signed for couldn't keep up with the payments.  If it was me, I'd try and get the short sale taken care of... as with a foreclosure there are additional costs that could add to the deficiency amount, and not sure of the laws in your state, but in some states the lender can go after the borrowers for a deficiency judgment.  Also, personally it just feels better to me if I helped the lender sell the property rather than letting them do it all on their own.  If you are torn between the two, I'd recommend you consult a real estate attorney who can advise on the matter.  For more specific advice you may want to list what state the home is located in.