I have a first and 2nd mortgage on my condo. The First is a 5% adjustable tied to the Treasury index. It is due to adjust in October and the interest rate & payment should go down. The 2nd is a 7 1/2 % balloon payment. $ 80,000 due in October. I have asked to settle the 2nd at $ 30,000 and the bank said no they want to modify. However they want to modify at a higher payment which I can not afford. I am considering defaulting on the 2nd when it comes due in October but continue to pay the first mortgage. What are the possible consequences? Can the property go in forclosure if I am paying the first mortgage. The same bank has both loans.