Short Sales

[Rich J.]

I received a call recently from a lady whose son and daughter is inheriting a house from their grandfather, along with a mortgage for $123,000. The son, I’ll call him Joe, is 19 years old and was named executor of the estate. His sister is 17. The house is 3 months into foreclosure, and was valued by the the lender at $140,000.

The house is about is small 1100 sq. ft. home in a nice neigborhood full of similar homes. No work, other than power washing maybe, is necessary on the exterior. I did not see the interior, but the lady told me the the home was kept nice but would need some updating, i.e., kitchen, bath, carpeting and paint, bring it up to code, such as a new panel to replace the old fusebox.

The probate was opened 4/19/12, so I guess he has a little time before the property would actually would be placed in the kids’ names. There is no way they can take over payments or pay off the loan.
I know little about foreclosures and short sales, so I’ll put the the question out for anyone with knowledge of these matters.

What would be their next step to avoid being saddled with a foreclosed home and a possible bad mark on their young credit records? And is there any way for them to receive something positive out of this inheritance?