Is there any room for lipstick on this....pig?

[Bernie Lahde]

We're newbies, who live around the corner from a home that was bought new 10 years ago but is now in foreclosure: a. on an HOA debt of about $8,000, currently set for June 20 auction (but, the HOA atty says, "we can move that"), and b. on a 1st loan of $270,000, with notice of default just filed (and thus 3-4 months away from any auction date), which has delinquencies of $75,000 (undoubtedly mostly interest). I don't yet know if there's a tax lien too, but suspect there is--I go to the county next week to check title (for my first time). If the property were in decent shape (which it's not--I haven't been inside yet but it's a desert property that's been unoccupied for years, with dead landscaping, bad paint, probably in need of at least $30,000 of 'lipstick') it probably would have MV of about $330,000-340,000. I figure that even if there's no tax lien (which there probably is, to the tune of at least $15,000), the 1st lender would have to take 50-60 cents on their dollar to make further effort worthwhile, but I'm not sure how to get them to negotiate. Their lawyer seemed cool to any suggestion that everyone consider getting together to try to work something out, especially since I hadn't been able to find the owner. He'd dropped out of sight, and after turning handsprings to find him, I finally just sent a handwritten letter--my first ever in this REI world--and got a call back! I haven't called him back yet, but will, to try and find out more.....BUT, the first would seem the biggest stumbling block.

I did a lot of negotiations in a prior life, including as a settlement conference judge and mediator, and was pretty successful in getting people to recognize the financial disadvantages of not resolving their disputes instead of going forward (in those days, to jury trials), but the lawyer for this lender seems uninterested.  Are they paid by the hour, and therefore on of that ilk that churns fees and gives lawyer their well-deserved terrible rep???

I'm not sure at this stage what to do.  Do we wait, and as the 1st gets closer to auction hope there's a similar increase in interest to compromise (as litigants felt when they began to feel the whites of jurors' eyes)?  Am I wasting my time--except for the definite upside of learning some of the ropes in this area?

If any of you have any suggestions, they'd be much appreciated.

Bernie