Without being a defendant, there would be little chance of receiving any money if this property (which based on property values seems to have equity to cover both the first and the second lien) was sold at auction above the amount of the opening bid.As the owner of a junior lien, is there anything I can do at this point to strengthen my position or at least avoiding losing everything? 

Don't know your new financial advisors training, background, or bias but most "financial advisors" are either (a) stockbrokers disguised as financial advisors (b) insurance salesman disguised as financial advisors or (c) financial planners with heavy education and knowledge of stock market, bond market, annuities, tax planning, estate planning and wealth transfer with very little or no knowledge of real estate investing.  

Rather than walking away, we asked them whether we could strengthen our offer and bring in an inspector before they accepted our offer.

It might be collateral IF you would be willing to physically deliver into a bonded escrow(aka give up possession), but imo, to use as a down payment you would need to convert to cash and deliver it to the escrow agent.

LOL  it sat fallow until early 2000 when the bonds got cleaned up lots got sold and when I was there last summer its all built out.. kind of proud to know I did it.. but not so proud to know I lost millions on the deal  :(

I am also an active trader for my own personal accounts, trading a pretty wide array of asset classes; stocks, options, warrants, futures, bonds, currencies, and am just starting research in mortgage notes.I've got a few rehab deals under my belt the last couple of years, and I am looking to begin ramping up my efforts.I'll send you a Colleague Request.Regards,-Rob 

You might be able to bond around it.

Hi Jonathan,The hot mess that is Chicago has actually strengthened and is going to continue strengthening some of the areas around it.

IV. 1915 ACT BOND FILE: Cost between $75.00 and $150.00This file identifies parcels required to pay for 1915 Act Bond Redemptions.It includes parcel number, Assessment District ID, Bond description andamount, 1st and 2nd installment amounts, Bond Principal, Interest and FeesLevy codes and revenue accounts V.

The voters have actually modified Prop 13 twice, both times to strengthen it, both times via Constitutional amendment, and both times with overwhelming support of the voters: Once to allow parent to child transfers of the property tax basis, and a second time to allow grandparent to grandchild transfers of the property tax basis.