How would you make money in this scenario for a non-performing 2nd

[Arthur Mayer]

So here is the scenario:

First Lien is $150,000

2nd Lien is $40,000

FMV: $80,000

Borrower is 120+ days late on both mortgages and is in Chapter 7 Bankruptcy.

Assuming the Property Taxes + Late mortgages there is about $20,000 in Arrears 

Borrower lives in New York

Seller will sell you the 2nd at $3,000.

What could you do or what would be possible and what steps could you take to make this deal work?