With an average interest rate of 7% for a 30-year conventional loan, WITHOUT taxes and insurance, you would have to keep your loan at about $80,000 to keep your payments at around $500. I don't know which area you are asking about, so don't know the taxes, nor do I know the condition of the home, so I can't say what type of Homeowners insurance policy you would be able to get; therefore, it is difficult to figure the amount you would have to escrow for either.
It is also hard to say how much to offer for the particular bank-owned property of which you speak since you do not provide any other specific details. Banks are not always willing to negotiate, and you are not always guaranteed the best deal, either, just because it is bank-owned.
My advice to you would be to consult the services of an area Realtor who is experienced in working with foreclosures. It is likely the bank would not deal with you individually, anyway.