re: underwater on a real estate loan

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For the most part, lenders/services want to see a documented hardship before they entertain an alternative to foreclosure. If your daughter is making the payments OK, then this will be very difficult to do.

Since she just wants out of there (ie no modification) then i think her only alternatives are to try for a short sale (tough to get approved for reason stated above) or stop making the payments and bail.

Either option is going to be painful so she needs to really evaluate her situation to make sure it's worth it.

ETA: Another alternative would be to rent it out. If she cares about her credit, this might be a better option even if she's still coming out of pocket a little bit each month to cover the mortgage.

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Right, she has no problem paying the mortgage.

We are considering her renting it out but first the sewer treatment issue they are having needs to be fixed. She can't have renters in there with sewer backups happening.

If she can get renters in there it will probably cover her mortgage payment. Then she can just rent something in a more desirable area.

She will walk away from the property only as a last resort.