bobb78
Throw emotion out the window, this is now a business decision.
My advice, don't make any more payments, list with a broker subject to a short sale.
What is the lender's options, short sale or end up with another reo. Check value, $63k may be to high, make an offer for 20% less then your value or theirs, whichever is lower. Line up a lender now, the bank will want you to show them the money.
Don't become a casualty of the initial problem.
Worst case, foreclosure,your stepdaughter gets some free rent for as long as she can, gets rid of a debt load she can't handle, later rents a place she can afford, or moves in with you for awhile, or you assist with her rent for awhile while the dust settles (e.g. co-sign lease), or last resort files BK (if bank won't forgive deficiency or other factors).
Doesn't have to be the end of the world, can be a new start.