125% CLTV, are they around?
The DU Refi Plus/ HARP (Home Affordable Refinance Program) did allow up to 125% CLTV however it was ONLY for a Rate & Term refinance (no cash out). It was designed to allow people to keep their homes and refinance in a more affordable payment even if their values have declined.

Gift to pay off our mortgage.
She should contact an attorney and / or CPA to discuss the laws pertaining to this matter.