2nd Mortgage Charge off?

2nd Mortgage has been Charge-off few years ago (even not showing anymore on credit report). Servicing co. keeps calling time to time asking for a settlement. Both mortgages (1st & 2nd) are managed with the same Servicing company. We are current with 1st mortgage. Any suggestions what is the best way to go? Are we still liable? Can they still put a lien on house (I don't see any lien on public records)? If we go for a settlement, which % is ok to pay from debt amount and are we still need to pay taxes on this "canceled debt" like 1099-C??? Sorry for all the questions and thanks in advance for answering!