Purchase second mortgage at discount

[Don Son]

Hello,

A friend of my cousin has a house that's 400K ARV that will go up for a sale in July 2017. This is first sales date that he received so his attorney thinks he could postpone it at least couple of times. However, he is underwater with two loans. His 1st mortgage is 300K with a servicing company and second is 150K with a regional bank. Repair cost is 20K at the most.

I have heard that you could purchase second mortgage at discount.  So what is the process???  Get the house in contract and contact second mortgage holder to deal with them to get discount?

Any advice will be much appreciated.

Don