What to do if I bought a house with my sister but she defaulted on the loan and it went into foreclosure?

Unfortunately, as long as your name is on the note as a co-owner or co-signor, you will continue to be liable for the full amount of the note.  This means that if she falls into default again, the same situation could occur again.  There are, however, a couple of things that you can do.  The first is to refinance the note in your name alone and take over care of the house if your sister isn't going to be responsible.  If your sister is going to be quasi- responsible, then you can always rent the house to her.  A second, but similar option, is to ask your sister to refinance the mortgage in her name alone to get your name completely off the note.  A third option is to sell the house and divide the proceeds and get away from the house altogether.  If she refuses to sell the house, you may have to file a suit to get permission from the court for a forced sell or to have her buyout your interest.  A fourth option is to work with your sister to set up a password for online access to the account with the mortgage company.  Virtually every mortgage company offers online access with current, up-to-date information.  As you are paying your bills each month, you can make it a regular practice to check the site and make sure the payment has been made.  If there is a skipped payment, you can instantly jump into "getting onto sister" mode for skipping another payment. 

Even though these are not "pure" legal actions, each does have a legal consequence that can help you avoid issues in the future.

If you bought a house with your sister, you are both responsible for the loan separately and together.  This means you are each required or obligated to pay the full amount to the lender/servicer.  You need to talk with your servicer and see if you can apply for a modification, forebearance or something else entirely but both of you will have to be on that modification sheet. Talk to the servicer. Perhaps your sister can quitclaim her title to you so that you can pursue a full refinance. Before you do anything, however, talk to the servicer first.