I'm a bit confused. In order for your nephew to borrown on the property, his name would have had to been on the title. I am guessing his name was on the title with yours? The he borrowed, signed a note and a mortgage, and you signed neither the note nor the mortgage? Usually they would ask you to sign the mortgage as a co-owner (no obligating you for re-payment on the loan, but making foreclosure would be simpler because the mortgage is the security instrument that pledges the property as security on the loan). How is it that it is valued much less than what your nephew borrowed? Banks almost never want to own property but they do want to receive what is owed on the loan - or as much as think they can possibly get. I might consider a real estate appraisal on the property, but first I would talk to a knowledgeable real estate attorney in your area. Good luck!