I believe that the first answer hit the nail on the head. Obviously, the lender needs to be paid. If she was the only one signing on the loan, then the lender can only take from her estate. As a rule, they cannot come after your assets.
I suggest meeting with an attorney.
I am sorry for your loss.
As to your question, the executor of the Will is given broad discretion as long as he/she follows its terms. Obviously, he/she may not unjustly enrich him/herself; and he/she has to act "fairly".
Based upon what you wrote, I am not sure why the house was sold in a short sale or if your possessions were actually taken to the dump.
Regarding removing you from the house - you indicate that the house has already been sold. If so, it would be the new owner that...
Under California law you are entitled to a copy even if you were not a co-trustee, but simply a child. Obviously, you will prevail, but as the others pointed out you may have to hire an attorney to force her to do what she is legally obligated to do!
At the risk of sounding repetitive, I am not sure that you are going about this the right way. If I were you, I would spend an hour with a business attorney in your area. I always tell clients "you don't know what you don't know." Years from now, or even sooner, litigation could occur because of things you are not thinking about right now.
I am not admitted to practice law in Indiana and I believe that the first two individuals have provided very good answers. More than likely your step mother will be made the administrator/executor of your father's estate if she decides to apply. Regardless, you and your sister are heirs of the intestate portion of your father's estate.
I am sorry for your situation.
For the most part we are permitted to do whatever we want with our own money/estate. However, it must not be subject to undue influence, fraud, our own incapacity, or mistake.
If it could be proven that your mother was incapacitated, unduly influenced, subject to fraud by your sister, or mistake, you would be able to overturn what occurred.
You should consult a probate litigator.
Ms. Garcia's answer is a very good one. I assume your mother's house was in her name. If so, there will be probate court involvement before the house can be sold.
You should contact an experienced probate attorney. The fees will not be that much.