I've got a first mortgage with Indymac (amount owed $236,000; at 7.125%) on a property that Zillow has at $133,000. And there's a second mortgage of $73,000 (at 7.35%). I'd like to refinance the first mortgage but when I first requested one (a year and a half ago), I was told the property value was too low, and that I'd have to fork over a hefty amount that I don't have (i forget how much). This is an investment property that's rented out (and the rent received is about $1000 less than the monthly costs involved (mrtg payments plus insurance and taxes)).
What's the best plan for me? (I'm told by some that i should refi the 1st and then settle the 2nd (by stopping payments, waiting/ignoring the lender for 6 months, and then settling for hopefully 10-20% of balance)).