What to do? Need some advice

[Mark Smith]

Hi guys. I'm posting this for my aunt and uncle. They have a home in Miami. Valuation is 700k. They have a first mortgage with a current balance of 150k. They want to move further north so they're planning to sell their house.

They had a heloc for approximately 100k. They defaulted on the heloc several years ago. The lender dropped the home as collateral about a year ago and sued them personally. They hired a lawyer who has the case tied up ad infinitum. The lawyer told them that when they sell the house they can negotiate a settlement for perhaps 1/2 of what they owe.

Their credit has been significantly affected by the heloc default. Their first mortgage and all other credit obligations have always been on time to my knowledge. They do have high ulilization on the credit cards. Their joint income is approx $165k per year and very stable. Their ages are 59 and 63.

The p&i payment is roughly $1,000 per month on their first mortgage. However, the mandatory (since the home is still mortgaged) insurances (windstorm / hurricane mainly) escrows adds literally another $2,000 to their monthly payment. They pay very little property tax as the home was purchased a long time ago and isn't subject to the normal rates.

The question is, is there a way for them to keep their current house, pay off / refinance the existing mortgage or get another heloc in a way that would eliminate the need for the windstorm insurance, rent the house out, and get cash out to buy (mortgage) another property? Any other ideas or suggestions?