You may want to check with a real estate attorney on possible ramifications. California is an non deficiency state which means that a bank cant come after you if this was your primary home and the loans that you had on it were the original purchase. There may be rules on occupancy and taxes that need to be considered too. Unfortunately, I am not an attorney and my real estate license prohibits me from going into any specifics with you. If you cant find an Attorney to speak with there is a website I can refer you to. They have been on CNN, MSNBC, etc... and they can give you specific advice according to the state that you live. You can find them at http://www.youwalkaway.com
It sounds like you dont feel comfortable with this, and understandably so. Not sure if there are any possible legal ramifications in getting involved, but if you just dont feel right about it, don't do it.