Generally, in Oregon, a second mortgage note that was taken out as part of a non-purchase transaction on your home, may seek deficiency against you in the event it liquidates the home. Unless that second mortgage holder filed a satisfaction of the Deed of Trust on your property when it was paid off, they are still secured to it by virtue of the Trust Deed filing in the county. So long as the delinquent Note holder retains a deed of trust to your home, they can foreclose and sell the property. However, when they sell that property, it is subject to the first mortgage note and deed of trust after the sale. Because most mortgage agreements have an acceleration on sale clause, the purchaser of the property at the sheriff sale would then likely be facing an immediate full principal due from the first mortgage holder as well. Essentially, the risk involved in a sale would limit the likely number of purchasers at the sale and not net the second lien holder much, if anything. Once the property is "sold", the second mortgage holder is stuck chasing you just like they are now, through collection companies and wage garnishments for the remaining balance until you file a bankruptcy or settle in full with that creditor.
If the creditor lets its Deed of Trust ride and only collects against you through collection companies, it is in a better position for the future in case you happen to sell the home, where it will be paid in full in order for title to transfer properly. In their current position, they have no additional risk from sitting and waiting.
There are a few things you can do to fix the problem. You could contact the second mortgage holder and undertake a Loan Modification to bring you current again. You could file a chapter 13 bankruptcy and cure the arrears on the second over time. You could contact the second mortgage, threaten bankruptcy, and then try to settle for pennies on the dollar to have it marked paid off, but there can be tax consequences from that course. You could also file a chapter 7 and eliminate any future personal liability for the mortgage note, such that the second Note holder would have to sell the property at sheriff sale. Otherwise, your best bet may be to hold the course, hope your home value increases and wait for something to trigger action. However doing nothing and missing mortgage payments is not helping your future credit score, and fixing it sooner may be better in the long term. Your best bet is to decide where you see yourself and this house in 5 years and work towards that goal. Good Luck to You.
This information is not intended to create an attorney-client relationship. Please consult with an attorney in Oregon before making your decision.