My first loan foreclosed but the second mortgage company sent my loan to collections. I owe amount 58,000.00.

Your obligation lies in the Note. The Mortgage is a method of placing a lien upon real estate to serve as collateral against the Note. Once the superior first mortgage completes foreclosure, the second mortgage is dissolved against the property. The Note remains unpaid and collectible, now as an unsecured debt instead of a debt secured by the property.

Settlement of the unpaid balance is subject to negotiation between the parties. There is no mandatory settlement amount. You should evaluate your total financial picture against the settlement demand to see if you would be better served or able to wipe out this and other debt in bankruptcy.

Ordinarily a settlement demand of 10% is attractive, but not if you have few assets or little means to pay this debt. Gauge these negotiations against the amount a creditor can collect against you through contested litigation and act accordingly.

Have you considered bankruptcy? If you are insolvent and unable to pay the debt, you should consider bankruptcy and talk to a bankruptcy lawyer.

If you want to settle this debt, offer 5% and go from there. There is really no science to the least amount you can offer. You have to review whether you want to fight this debt in Court, file bankruptcy, or offer a settlement that is attractive to the other side.