Thanks for the additional information.
Let me first say that while your friend may have done the deal they claim, it is a very rare deal and your financial facts are almost certainly much different from that of your friend at the time they made that insanely-great deal. I see something like that maybe once every 5 years.
While there is nothing preventing you from approaching the HELOC lender about a compromise settlement of the remainder of their claim, there is little reason that they would agree to do that either.
First you have been paying the debt all these years even after the foreclosure occurred, and because the loan was made after the original mortgage
was taken, while they don’t have a secured interest in the property any longer, they have a viable claim against you personally for the debt.
If you were years behind in payment, or they believed that you would file bankruptcy leaving them with nothing, then they might accept pennies on the dollar. I would not expect them to take much less than a 20% cut on the remaining debt---and that would be based on you making payment in full on the 80% in a lump sum.
Most lenders will not agree to a decrease of any kind until you are 3 months or more in arrears on the debt, and so if you even want a chance at negotiating a deal, you will almost certainly have to cease payment altogether and make noises about filing bankruptcy to them---whether you intend to or not. I wish you success.
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I wish you and yours the best in 2015,