Forclosure Ideas Needed

Let me begin by saying this may be a controversial topic. I understand this, but really only want ideas to how to go about this.

My friends sisters problem is that she has received a job offer in another city (200 miles away from current town). She has a small 3 bedroom home, with an outstanding Mortgage of about $90K. Market prices are over priced in this small town, and there is very little if any people moving into town. The size of the town is about 18K at best. She has very little if any chance of selling the home anytime soon.She cannot afford the price of two homes.

She is thinking of allowing the current home to go into foreclosure, but she wants to make the most out of the situation. Here is the controversial part -- What can she do to maximize her cash prior to the foreclosure?

In other words, can she refinance the home for remodeling/update, and instead of using the loan for refinance loan for the stated purpose, can she Keep the difference in cost?

Can she rent the home until the foreclosure actually occurs? She would not be making any payments on it, although I would collect rent monies.

What other options does she have? Money is tight. She is open to constructive criticisms on her thoughts, but hope to avoid the moral/ethical issues here. Please provide your thoughts and ideas. She does not want to do anything criminal (one could make the argument that this is fraud, but one could easily counter that argument as well).

So let the comments begin!!!