Can this Deed in Lieu be done? Or a Short Pay?

[Brian Jones]

Hi Everyone! Any suggestions, greatly appreciated. I'm trying to help a good friend out that got herself into a real bind. She bought a property from a shady investor in Birmingham, AL 1/09 that has been nothing but a nightmare. He gave her a verbal warranty(her 1st mistake not in writing) on the house for a year as she did not get an inspection (her 2nd mistake). 6 months after owning the roof caved in, then the tenants later living there totally took advantage, numerous other expenses spent, and finally getting notice from code that the property supposedly has been condemned since 2002 yet that never showed on any public records(Title ins did not cover) and the water was previously able to be turned on, yet now city saying it can't b/c property is condemned?? 10k+ in repairs needed to now bring out of condemned status b/c code really stuck it to her. She had a property manager out there that didn't quite manage. She lives in FL

Anyway...she currently owes 60k (purch for 76k), the properties in the area are now selling for literally 5-10k(for 3bdrm houses). With the repairs needed to bring out of condemned status this house is worth nothing, $0.

I intend to help her by negotiating w/ her lender Wells Fargo, but I don't even know where to start on this one. Property was purchased as a 2nd home, she can meet the hardship no problem, but would the bank accept a deed in lieu on something like this? or should she just let it go and deal w/ probable/possible deficiency later(She does have job earning approx 50k/yr). I was thinking if she could offer maybe 10-15k cash they may take it as a short pay, but I don't know if the bank is going to want anything to do w/ that property w/o giving her a fat deficiency judgement.

Any suggestions on how to approach this with the lender greatly appreciated. She mentioned the loan was w/ I think HSBC and now it's w/ Wells Fargo(she is current still, but planning on letting go next month), maybe we can find some loop hole in requesting the lender to produce certain docs, that maybe have been lost in the shuffle since Jan 2009? I don't know.. Any creative ideas or advice from experience greatly appreciated, She is a really sweet girl and doesn't deserve what she's gone through, would love to be able to offer her some help. Thanks!