The primary hurdle to your bro succesfully negotiating a mod is that he can afford his payments. What is the lender going to do with a guy who can afford his payments, even if things are getting tight? I don’t see a mod in his future based on his ability, unless there is a drastic change in either his payments or his income.
Morality aside, buy and bail or bail and rent may make financial sense. He could also try a short sale. If he really wants to try and keep the place, he could stop paying his 2nd and see what they do. The 2nd (assuming it’s a 20% piggyback) is essentially unsecured at this time so they are unlikely to foreclose. They may be susceptible to a pennies on the dollar short payoff after months of non-payment, and your bro stays in the house and just has to pay the 1st moving forward.
