I think it's time for your daughter to bail. The community seems to be a fail, so even if she could keep up the payments somehow is it even worth it?
I would advise here to default (stop paying) and try to work with the bank and do a short sale. There is a market price for every dwelling. It could be the case that others in her community are being unrealistic. If she prices it right she'll get offers. The bank might not find them palatable, but at least she can say she tried, and it will give her more time with no housing expenses.
It will obliterate her credit (just did a short sale earlier in the year) but she's young so she'll be fine.
This post was edited on 10/11 at 8:33 am