Definitely get off deed ASAP, talk to attorney, you do not want to be a party to fraud if in fact this is a parent situation doing strategic default after recent refinance. Why would a relative put you on deed? As an heir, you inherit the asset and the liability of taxes and HOA's.
Seen this scenario before, don't think you can be a tenant there until it formally forecloses, especially after recently being removed from deed and claim to an arms length lease transaction. If you are paying rent to relative, who stopped paying mortgage and trying for short sale approval, and you were formerly on deed the lender will find out when they do title work.
You should be able to get your name off of the deed before the short sale. Since you're not attached to the loan, then your credit will be okay. However, it would be best for the person that is on the loan to short sale. I do short sales for my clients every day. Feel free to contact me at any time. 818-903-2040
Sara Mehrpouyan CDPE
Specializing in Short Sale & Foreclosure
Dre License #01712757
Keller Williams Realty
Is the property needing to be short sold in the Van Nuys area? I have successfully completed 99% of the short sale listings I've taken, the average agent has a 30-50% success rate, notice how no other agent has answered your question after a few hours since you posted it? This is because most agents don't want to deal with short sales or don't know how to.
I have closed short sales up to a 300 mi radius of where I live, I'd be happy to talk to you about your situation further & tell you how to do the quitclaim deed transfer.
Shoot me an email directly, I don't look back on this same Trulia posting for answers after mine.
Emily S. Knell
Realtor Since 1996
Realty ONE Group
Short Sale Listing Agent w/ 99% success rate