Say your home gets foreclosed on. What then? Your options are to file for bankruptcy or pay off the deficiency balance, which is the amount you are liable for on the note after the foreclosure sale. But what many people don’t know — in fact, I learned this just at dinner last night — that figure can usually be reduced to pennies on the dollar outside of filing bankruptcy IF you hire an attorney to negotiate with the mortgage company. And the mortgage companies are getting so bankruptcy weary, they are in a more negotiating mood, says Jacob A. Decker, an attorney with Allmand & Lee.

“The large five mortgage companies are really talking turkey now, ” says Decker. “Last week, I settled one deficiency balance of $65,000 for less than $5,000.”

The trick, he says,  is to work with a bankruptcy law firm that deals with the creditors on a daily basis in a bankruptcy context. That way, the lenders know that if they do not settle for a  pennies on the dollar, the next step will be a bankruptcy filing where they will likely get zilch. A couple thousand versus zero? Decker says the lenders will almost always take the money.

Toss in cash-strapped tenants who are filing to wriggle free of long-term leases, bankruptcy attorneys are busier than they have ever been, says Decker. He’s also seen a significant increase in creditors’ willingness to settle other debt — renegotiate auto, student loan and even credit card debt. Bankruptcy attorneys are raking it in. Full disclosure: I have first-hand knowledge of how hard they’re working and am not complaining one bit: Decker is my new son-in-law!

Meantime, Tamarack in Idaho is under, while Credit Suisse is fighting to hang onto first lien status with uber-exclusive Yellowstone Club, which is just a mess , bankrupt and smarting from bad press due to the nasty divorce of it’s great-looking founders, Tim Blixeth and his ex (?), Edra. Also pulled in: luxury second home big boys Discovery Land Co. Interim lender CrossHarbor Capital Partners is trumping and may end up owning the joint because Credit Suisse apparently could not cough up enough cash for a debtor-in-possession loan:

“While it is highly unusual for a major lender to be pushed out of the first lien position in a bankruptcy, Credit Suisse may turn out to be too late with its latest plan.”

About this time last year I tried phoning YC to write up  properties as Hot Props in D Home — they acted as if I needed a security clearance and was trying to find the president’s war-time bunker. We ended up in Big Sky.

But Dallas Addison, who develops second home properties in east and south central Texas, as well as Hawaii, tells me the second home market is still pretty strong. (Posting his story soon: Dallas tells me that Hawaii’s Big Island gets so crowded with residents’ private jets they have to haul them off to other islands for parking.) Glad to hear it: I haven’t been on a Lear in forever.