Screening a tenant undergoing a short sale

[Danny Duran]

BP'ers--a prospective tenant who is undergoing a short sale on their home wishes to apply to rent one of my units. As their credit has been damaged by the short sale, they have offered what they claim is a qualified co-signer. In addition to the co-signer, they are willing to provide me with proof of employment, references, bank statements, etc. to prove the ability to pay the monthly rent. The married couple are both professionals and claim to earn a gross monthly income of 3x the rent amount (to be verified by me).

I have a rigorous screening service for criminal, credit, eviction, and employment verification which I will use to process applications for the married couple and their qualified co-signer.

I've read that renting to a tenant undergoing a short sale is fraught with risk because the short sale may never occur, which would result in foreclosure and could pressure the tenant into bankruptcy during the lease period. Although more recent federal bankruptcy laws contain more protections for landlords, I've heard that it is still possible for a tenant who files bankruptcy to avoid paying 1 - 2 months of rent before they may be evicted. 

Assuming the co-signer passes my screening process and I lease up this new tenant, the co-signer will be required to pay the rent no matter what. Is this right? If so, this would cancel out the risk of non-payment due to bankruptcy. right?

Are there any additional risks in this scenario that I'm not considering?

What other questions should I be asking the prospect?

I don't understand short sales very well, so, I don't know what I don't know.

I don't know whether the short sale has a closing date established or not yet...

I have not yet processed this prospect through my screening service as I wanted to learn more about implications of their short sale before moving forward.

I'd really appreciate some help from experienced BP'ers (@Marcia Maynard ) out there on how to conduct my due diligence around this prospect who is undergoing a short sale. Please advise. @Brie Schmidt

Note, my unit is located in the City of Chicago and subject to the Chicago Landlord-Tenant Ordinance.