Need a Lower Int rate

[Mike]

Should we try to keep the home or walk away? My wife and I have lived in our home for 16 years. We have a $320,000.00 1st mortgage with Citi Mortgage at 7.5% and a $30,000 2nd with Principal Bank at 5%. We have a fixed rate conventional loan and are now 4 months behind on our mortgage. Our monthly payment is $3,100.00 per month so we owe $12,000.00. We are one month behind on the 2nd at $500.00 per month. Several years ago we were impacted by downsizing I was out of work for more than a year and we lived on savings and retirement to make ends meet and pay the mortgage, dumb mistake should have sold the house then but we did not. My question is without us having one of the adjustable mortgages could we qualify for a modification that would lower our interest rate. My file is currently with the Loss Mitigation group but all they are telling me is that they can only offer a repayment plan which would increase our payments and they don’t do modifications that lower interest rates, but I am reading in the forum that they have lowered interest rates. Should I be speaking to someone else in Citi’s Loss Mitigation group and is it up to Citi or Freddie Mac my investor to lower the interest rate? Also is bankruptcy a viable option. Would this provide a lower mortgage payment?