I have a friend in pre-foreclosure, what are her options

[Christopher Davis]

We have a close friend who has received notice of trustee sale.  They are under a bit of stress as one might imagine so the information I have right now is incomplete but it should still be enough to start exploring their options.  

- Litchfield Park, suburb of Phoenix, AZ

- The sale is due to take place in September

- Home value guestimate ~$170k

- No equity, they are a little under-water and owe 180-190

- They are currently paying on another plot of land and trying to get a house finished after it being botched by an unlicensed contractor.  So they want to maximize the time they can spend in the current house. 

- Conventional loan is with Washington Federal

I happened to have just heard podcast #19 which featured @Tracy Royce talking about this very issue.  I am not really looking to work this as a deal, I would like to be able to get them in touch with a person who knows the Phoenix, AZ market who can best explain the best options for their situation.  I will consider this a learning experience and perhaps an experience BP member can earn some money. 

I'm a bit puzzled regarding the math of having a conventional mortgage and being upside down by 10-20k, but she admits to not understanding the process well and might just be a little confused on the terminology.  Once I can go back to her with more information or someone to talk to, I think she'll be more open to getting her head around the specifics.