Specialized Loan..offerin temp repayment plan

[baileys dad]

Hello everyone,
I just got off the phone with Specialized Loan Servicing, the holder of my second mortgage. I was 90 days past due with them as of end of Jan 09. I have been in regular contact with them as I gather my financials. As a matter of fact, once I became 90 days late, I was given a single person to contact. In our conversation today, he offered a "temporary repayment plan". If I gave them 730.00, which is half of my normal monthly payment, he said they would proceed to do the following:
-Submit a modification, with a partial write-off on the balance, as well as a lowered interest rate.
I asked if the 730 would go to the payment or to the late fees and other charges that have been accruing. He said it would go to the payment.
The original first and second were in the form of 75/25 towards 100% financing. Right now the property has lost at least 25% of the value, I am in calif (non-recourse)and so my understanding is that they are kind of screwed. My plan was to deal with the first mortgage first; if they give a good offer should I take it which would put my DTI ratio for the first in a better light?
Rob