If she is not upside down and can truly sell for enough to pay off the debt she should absolutely do that. Other things she should try - 1) loan modification, the lenders may be willing to modify the loan to terms she can afford vs foreclosures, 2)short sale - even if it turns out she is upside down, she can possibly get a short sale approved allowing her the chance to negotiate away the possibility of future recourse.

You mention the 2nd is in foreclosure. That is good if she is in a largely non-recourse state like CA. Definitely better to let the 2nd foreclose first.

Be sure to read the other posts here, I've made more detailed posts on some of these issue elsewhere here.

I agree w/ Sean that it appears your daughter should be able to complete a note modification or a short sale. Unfortunatlely, some "traditional" Realtors take listings, yet, do not know how to negotiate with the bank. We just completed a short sale where a "traditional" Realtor had the home listed for 6 months. In that time the Seller depleted their saving while the wife was transferred to Texas and they were making 2 housing payments. We took the listing, sold the home in 30 days and 90 days later the family was reunited. This was in California, so there was no recourse. Since they had just stopped making the payments, they will have a 90 day mortgage late vs a Foreclosure. Your daughter should know her options.

Another home we just listed had an agent who listed the home for 10 months - He told me he didnt do short sales and kept his sign out because he wanted buyer calls - needless to say, I was infuriated because this was a huge injustice to the homeowner and we're now working to avoid a foreclosure even though the NOD was filed. We like to see a short sale vs Foreclosure, esp when we can negotiate a waiver of the banks right to pursue a deficiency judgement.

Call or e-mail me if you want your specific situation reviewed. bob@inspiragroup.com 949-600-5404

Bob