If you can, perhaps by borrowing from a relative or something, see if the second mortgage holder will accept a pay-off. I have a client who negotiated an 80% reduction to pay off a second mortgage, he paid $30K to satisfy a second mortgage of $150K! He got a personal loan from a relative to do it. I am now hearing of others doing the same thing. I know it's difficult to come up with the lump sum but if you can this may be the perfect solution. Baring that, yes, try to negotiate better terms. The bottom line is this, it is in the best interests of the second mortgage holder to work with you because, if they don't they stand to lose everything.
First mortgages are able to do more because they are relatively secure. Second mortgages often end up with little or nothing in a short sale or foreclosure. Very few if anyone is anxious to take on the great risk. Your best bet would be to work with your second lender to see if there is any room to improve the terms of your loan, through lowering the rate or extending the term. If they are unable or unwilling, give it a couple of years. Markets that have been down eventually come back. Once you are in a stronger equity position, you may find more options come available.