I know that will effect us negatively...but still would like to hear opinions since she has not paid mortgage since 07 and they have not been able to foreclose on her.

Interesting, but we need our view to be know directly to the SEC it they are to have any effect.

Your student loan debt is being serviced from after aftertax income, so that 6.8% needs to be adjusted for your marginal tax rate to yield what you must actually earn to service that debt (could be closer to 9-10% pre-tax).If you have forced appreciation in the house and it will appraise for 135K, you may be able to pull additional equity from the home to pay down (or pay off) your student debt ... effectively transferring your student loan (6.8%) to your mortgage (4.x%?).  

If any lender can't clearly communicate the criteria behind their charges to you, in advance, then find another lender.

There are multiple reasons why I believe this MARKETING STRATEGY is effective.

EFFECTIVE GROSS INCOME: $89,330EXPENSES:Property Management: 7.5% = $6,700Insurance: $5,112Maintenance: 12% = $10,720 (I will likely modify this number after inspection one I have a better idea of the actual shape of the property)Taxes: $8,568Trash: $1,085Water/Sewer/Common Elect: $6,910TOTAL EXPENSES: $39,094NOI: $50,236Cap Rate: 8.37%Debt Service: $33,672 (5 yr arm - 25 year am, 5.0%)Net Cash Flow Before Taxes: $16,564Cash on Cash (Assuming 20% down): 13.8%ROE (NCF + Princip paydown): 22.1%DCR: 1.49Debt Yield: 10.5%Using 50% Rule: $83.28/unit/month

Like the others have mentioned, one problem with being an absentee landlord is showings and moving tenants in and out.Other aspects like marketing, tenant screening and rent collection can be done pretty effectively remotely.The properties I own near me I manage.  

So issue is essentially what you were asking access that equity other than selling it and "how to" measure the refi fees & cash in hand vs effect to cash flow & refi fees.I have seen a couple posts asking about using HELOC loans which I guess have less fees but just started researching those but I guess they are lower LTV so might not offer access to as much cash.I guess it all depends on goals and what you want to accomplish...

I would appreciate feedback from investors who has used this medium and the effectiveness of this marketing technique. 

Is it more cost effective to just have a PM take care of this or do they generally charge a premium?