Should daughter quit claim deed the house to ex spouse without any compensation, even in this real estate market?

There are some real important issues to consider here. If your daughter and her soon to be ex-husband bought the property together and took out a mortgage together, they are both liable on the mortgage and probably on the promissory note. The deed to the husband will not relieve your daughter of her liability on the note and the terms of the mortgage. In addition, the deed may be a violation of the terms of the mortgage and expose her to a default being declared and a suit to foreclose the mortgage. Given the upside down nature of the property, that suit may expose her to a deficiency judgment as well.

The equity issue is harder to answer and really is not an attorney issue. The old adage is that you do not lose money on an investment until you sell it. I cannot tell you if the market will turn around so that she will end up with value later. In a divorce, you are pretty much dealing with values as they are today.

In any case, she should not deed the property to her husband/ex-husbanc without dealing with her liability on the mortgage and note.

Hope this helps.