Thank you all for your comments and prayers and thoughts this weekend. Here is an update. We have moved in. Things were a little challenging because the night before we moved in part of the basement flooded.
I talked to our realtor and she talked with her broker this weekend. As the second mortgage, PNC cannot foreclose if they are unhappy about how much they are receiving. What they can do, however, is refuse to settle and that would trigger a foreclosure. At that time, we would try to buy the house at auction or directly from the bank.
In the case of a foreclosure, PNC would get NOTHING. So even though it is not fair and they are definitely getting a raw deal with just $3300 when they want $13000, I am hoping that they will take it. Or, in the case of a foreclosure, I hope that we can buy the house.
I guess we will live to fight another day ;)