Advice needed???

So here I am In Nor Cal a new investor in a motivated sellers house :o) sitting in a nice families front room and the wife is really wanting me to take over the payments of her 2098 sq foot house. The total payment is $2300.00 a month on two seperate(adjustable rate) loans one at $240,000, and second at $63,000. Taxes are not impounded and they are going to be about $3000.00 to bring current. Oh by the way it will take $14,000 to bring the loan current. The total owed is $303,000 (seller apraises the house at $343,000) but local sales would probably warrant $285,000 retail.
Okay, Okay, I know but I would love to here from all of my wise and experienced peers. on what you would think.
The motivation is there, but it seems that a short sale on the second may be the only way to make this even pencil… but there is that adjustable on the first. Any way I thank you in advance for opinions