Hold Paper but the Buyer defaulted on the Loan - What should I do

[Howard C]

I am currently holding a 2nd mortgage on a property that I sold to a homebuyer.  He is now in default for over a year (I am still making payments on time on the 1st). I don't wish to start a foreclosure process or a deed-in-lieu of foreclosure as the property might not be worth my time and money spent to do this.  The property has dropped in value since I sold it 3 years ago and with the fees associated with hiring an attorney and initiating the foreclosure process I don't think it is worth it for me at all.  So what would you do in my situation?  Also, is it possible to write off the entire mortgage as a loss this year on my tax return? 

Advice needed.  Thank you.