Can I strip off, reduce and or avoid my 1st mortgage using the Homestaed clause?

I don't know what a homestead "clause" is, but your homestead exemption has nothing to do with whether or not you can lien strip a junior mortgage lien in a bankruptcy case. Whether or not you can reduce your 1st mortgage lien depends on whether this is your principal residence or not.  If it is, then you cannot regardless of the values.  If it is a rental/investment property, you can reduce the amount owed on the 1st mortgage down to value of the property, but you can only do that in a Chapter 11 bankruptcy case, which is quite involved and expensive and could cost you as much as the reduction, based on the numbers you provided. Mark Markus has been practicing exclusively bankruptcy law in California since 1991.  He is a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization,  AV-Rated by martindale.com, and A+ rated by the Better Business Bureau.