I am a co-borrower/co-signer on a FHA loan that is underwater about 50k. No other loans on the property. Property meets Arizona requirements of being a single family home on a lot less than 2.5 acres and has been ex-daughter-in-laws primary residence for last three years. She is in trouble financially and is considering letting home either go into foreclosure or filing for bankruptcy and include the home.
What to expect from FHA? What to expect from IRS for deficiency?