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2nd mortgage charged-off -- Any options?

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2nd mortgage charged-off -- Any options?

I'm rebuilding my credit after a period of financial chaos that included a foreclosure suit and settlements/charge-offs of several credit cards.  I avoided foreclosure and bankruptcy. My 1st mortgage has been current for 2 years.  However, I made the mistake of purchasing my condo with 100% financing so the same bank that holds my 1st mortgage (now BofA) also holds a 2nd  mortgage.  The 2nd has been in charge-off  status for almost three years.  The bank has made no attempt to collect it.  I'd like to sell the condo or refinance eventually, assuming the real estate market here in Chicago Illinois gets back to normal.  Would it be possible to refi without settling or paying off the 2nd loan? Should I be doing anything about the 2nd in the meantime? I don't have the cash right now to make a realistic settlement offer.  BTW, the property is worth, at best $175k.  The balance on the first loan is $162k, $36k on the 2nd. The average of my 3 scores is about 640.  My income is good, debt ratio is under 20%.

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