How do you buy the note for the second or short the second on an upside down property?

[Dan Burrows]

We have a house that we owe $235K on the first and another $85K on the second. The house is on a penninsula that is reclaimed phosphate mine in the middle of a lake. Most of the home owners on the penninsula have filed sink hole claims. Our house has not yet shown any major signs of sink hole damage but the house next door has and based on what is happening it is probably just a matter of time before we see the same with ours. If it were not for the sink hole issues the house would be currently worth about $225K but with the sink hole issues much less. The rent on the house is just about enough to cover the first mortgage payment but not the second. We can not afford to continue to pay the difference but would rather not walk away from the house. If we do ever have to file a sink hole claim the insurance will not cover both first and second but it would cover the first. How can I go about getting the second to take much less than what is owed to settle out the account without selling the property? If it goes to foreclosure they will get nothing. I am trying to be proactive to try and keep the house which would require us getting rid of the second mortgage whether we end up with an insurance claim or not. The other thing is the insurance industry is lobbying hard to get the Florida legislature to make it more difficult for home owners to get paid on sink hole claims. IF that happens and the insurance companies can get away without paying on these houses if we end up having a problem we will definately end up in foreclosure. The second is not a home equity loan it was a 80% / 20% loan that we got to purchase the house in 2006 at the height of the market. We have ideal renters who love the home and we have promised them that we would do everything we can to keep the house so they would not have to move. Does anyone have any ideas?