My lender who is modifying my matured loan sent me a collection notice demanding payment in 21 days

My 10 yr 2nd mortgage of $64,000 matured August 2014. I have been trying to refinance it since then.The holder of the loan won't let me continue payments, so to them, it is in default. Today I get a collection demand for the full amount from the bank doing the loan modification. The modification department has dragged this out with continuous paperwork demands. The mortgage department of the same bank wants their money. The delays have caused my credit score to go from 702 to 558. I could not go anywhere else now to refinance even if I wanted to. My house is worth $240K. I have 18 mos left on a 1st mortgage of $23K. My 2nd is now $67,000 with interest accumulated. So I have equity. I have money in their bank. I take home $40,000 a year. Most of my expenses are paid through my business, which grosses $77K to $80K a year. I don't know where to turn as the people I deal with at the bank are truly unprofessional and even worse, dispassionate about my plight. They can care less. What can I do?