Legal Question in Real Estate Law in Maryland

You can offer the property to the lender in what is called a deed in lieu of foreclosure. However, the bank is not obliged to forgive the loan by accepting. Your sister's estate remains liable on the loan, but if the estate has no other assets the lender will be unable to collect. The other option is a short sale, assuming the property is under water. Again though, you need the lender's cooperation for this to go through, assuming you can find a buyer.

The above post accurately describes some options, but whether the estate can/should take those options depend in part on the condition of the estate. Assuming the property is in Maryland, the personal representative (sometimes called executor) has a responsibility to open up an estate, give notice to creditors, sell and/or disburse assets.

One cannot tell from your post whether the house has equity, whether the mortgage company was notified, whether they filed a claim, what other assets (like bank accounts, etc) may have existed or whether any other assets (like bank accounts) were disbursed to heirs. Those things matter because the law dictates who gets paid in what order and generally if the home has equity it should be sold and the proceeds disbursed after the mortgage is paid. When a mortgage is higher than the home value obviously there wouldn't be anything to dole out to other creditors or heirs after sale.

Naturally this post offers general information and shouldn't substitute for specific legal advise.