As co-signor may I walk away from the mortgage?

I am sorry to hear of your plight. You are certainly aware I can only answer in generalities, given the lack of detailed information. You are liable for the mortgage note if you co-signed regardless of the property being underwater. If you attempt to simply walk away from the property you can most certainly anticipate that the bank will will seek to collect from you. The only manner in which your situation can be properly assessed is for you to bring all of the relevant documents, including the mortgage note or guarantee, for review. Additionally you should be prepared to discuss all of your assets and liabilities, including your retirement accounts etc. It is only after a full review that a firm opinion can be formulated.

This would depend on the laws in your state. For example in Texas there is code that specifically states pension plan accounts are exempt from collection, however, once the money is taken from the pension plan and given to the individual then it is subject to collection. You should talk to an attorney in your state that deals with debt collection and/or bankruptcy to determine the best way to handle this. Another option may be to contact the lender to discuss the possibility of a short-sale where the lender agrees to accept a certain amount for the property even though that is less than the amount owed on the note. You should still talk to an attorney in your area to discuss the consequences of such action.