Wow. Thanks for all of the constructive replies. I knew better, but she was convinced you would just tell me she was stupid she was. I would have responded sooner but I was sleeping.
I'll try to answer the questions in order:
Can you apply for a loan modification? (fodder69)
She started this process last year as we started talking about moving. She's not eligible because she was told you need to display an actual financial hardship. Because she's made all of her payments on time, they say it's not a financial hardship. One requirement is also that she maintains residence there.
How did you come up with the 100k value? What area is it in? (Willn)
It's made up based on (lots) of research she did of condos in the area. It's in a suburb of Minneapolis.
If the loan is owned by Fannie Mae or Freddie Mac, she might be eligible for a HARP refinance... She could try to short sale, (Another Reader)
Unfortunately, it's not Fannie or Freddie. I believe the short sale had similar requirements to loan modification where because she has made all of her payments on time, she can obviously afford it. The other reason was taxes. I think she said the short sale would have made her responsible for ~$10,000 in taxes.
arebelspy
Sitting empty is our worry, especially because we don't plan to move back to the state where the condo is. Hiring a management company would cost more money and while my folks are still there, they're getting up there in age and I don't want to ask them to take on something like that.
I wrote and then edited... I had $160k in my mind as the amount still owed until she corrected me. 62.5% value to amount owed seemed pretty bad. You're right, though, 77% doesn't seem so insurmountable.
HARP isn't an option, mortgage isn't Fanny/Freddie.
Have you actually had it appraised? You may be surprised. (Miss Stache)
We haven't. She started talking to a realtor last year while I was working in another state and before we were engaged so I wasn't very involved at that point, but the realtor's suggestion was to stop making payments.
Do you mean losing $160 before or after you consider the amount going to principal? Basically does she write checks $160 larger than the income (but then, after accounting for principal she's in the black) or $160+principal larger than the income? (Common Cents / Lans Holman)
Lans, you gave me too much credit. Admittedly, I was just looking at the cash flow. If my quick calculations are correct, she's in the black almost $350/month when accounting for principal paid assuming the place is rented every month.
+1! As far as financial blunders go, that one is kinda cute. (FI40 / arbelspry)
This made me laugh. I'm not too worried about this ruining us long-term, but I'd really like to make sure we're doing what we should do as soon as we can do it.