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Chase Mortgage Modification

What can I do to get a Chase mortgage modification?

We have been working W/Chase for over 6 months on debt forgiveness and as of today no success. Do we have any other options or avenues that we can pursue? We are not late on the mortgage just we owe $100K more than what the home is worth. After reading I went through proper steps but need to find out what else I can do to get the process to work for us.

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Bill's Answer
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Highlights

  • Successful mortgage modification depends on your lender's policies and luck.
  • A mortgage servicer is under no obligation to modify a mortgage.
  • Review the FHA short refinance plan.

The wording in your question is a bit ambiguous. I could interpret your question to mean you have a $100,000 unsecured debt with Chase, perhaps a credit card, that you want to resolve. However, I will assume your question is, “Our house’s market value is worth $100,000 less than the balance of our Chase mortgage. Negotiations with Chase over the last six months have gone nowhere. What can we do?”

You do not mention if you are in financial distress. If so, then your chances of Chase modifying your mortgage will depend on luck and the numbers you submit in your modification application. I write luck because the mortgage modification process is not transparent, subject to the whims of the mortgage servicers, and whether the mortgage servicer loses all or part of your application. You may think that last sentence is cynical. I wish it were. There are countless media reports of the mortgage servicers asking applicants to resubmit the same forms repeatedly, applications being lost, and applicants who receive denials and then take their cases to the media, and subsequently have their applications approved.

If you are not in financial distress, then I see your chances of Chase modifying your mortgage as nil.

Mortgage Modification Defined

The U.S. Department of Housing and Urban Development offers a succinct definition of mortgage loan modification: "A loan modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford." A homeowner undergoes a loan modification because they experience some sort of financial distress.

Some home loan modifications today are completed according to the rules set by the Obama Administration’s Home Affordable Modification Program (HAMP). This is a voluntary program, and there is no requirement that a loan servicer (the bank holding the mortgage in question) participate in HAMP. However, if the loan servicer received TARP money, it must participate in HAMP.

As implied by the definition of a home loan modification, all parties to a loan modification do so voluntarily. A homeowner qualifies for a loan modification according to the value of the loan in proportion to the fair market value of the property, the homeowner’s debt-to-income ratio, credit history, and the loan servicer’s criteria. A loan modification is not a refinance, does not add or remove a party from the contract, or allow the homeowner to remove equity from the property in the form of cash.

Home loan modification is great in theory, but to date the loan servicers have modified a relatively tiny number of loans that qualify for modification under HAMP. However, a loan modification has several advantages for the consumer and loan servicer. First, although the home loan modification process is unpredictable in terms of timing and outcome, it is rare for a consumer in the midst of a loan modification negotiation to be foreclosed upon. Note my word choice. Bills.com readers have reported some loan servicers demonstrate uncoordinated behavior in this regard. Second, a loan modification in and of itself will have no impact on a consumer’s credit score.

Recommendation

What reasons has Chase offered when declining your application for a mortgage modification? If you are not in financial distress, then Chase is not under any obligation to modify the mortgage.

You may qualify for the FHA Short Refinance,an ambitious and attractive program for consumers, but one that has not been embraced widely by mortgage servicers and investors.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

11 Comments

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  • JM
    Nov, 2012
    jorge
    I am in foreclosure for over 3 years and try to modify my mortgage with Chase I got a tryout for 6 months then got denied for not having enough income in 2009...Now I would like to try again to modify my home loan do you think the Bank will cooperate? I got my house rented and both have steady disability income...We owed the Bank around 530,000 and the house is worth around 380,000...
    0 Votes

    • BA
      Dec, 2012
      Bill
      I don't know whether you will be successful nor how what you will present today will differ from what you presented to Chase last time. However, I don't see what you lose by trying. You may also want to speak with government-approved counselor about how to avoid foreclosure. Call HOPE NOW at 888-995-4673.
      0 Votes

  • GS
    Jul, 2012
    Gracie
    My experience with Chase. I wrote them asking for help in reducing my 7% interst to lower my payments. I am a widow on SS. They referred me to their debt collection departement even though I have never had a late payment since I bought the property and to to MHA program. After nearly 10 months of resending paper work over and over because they left it expire.. they came up with my help..... I can extend my less than $50,0000.00 loan with 15 years left to 40 years and keep the 7% interest. Who in their right mind would accept this?
    0 Votes

    • BA
      Jul, 2012
      Bill
      I cannot speak for Chase, but I think the answer to your question can be found in the monthly payment you have now and the monthly payment amount Chase proposes. If your goal is to lower your payments, moving from what I assume is a 30-year loan to a new 40-year loan may reduce your monthly payment. How do the two payments compare? If the difference is significant, and if there is no pre-payment penalty on the 40-year loan, then you may wish to consider Chase's offer. When your financial situation improves in the future, you can increase your payment amount to get yourself back on track to pay-off the loan in a shorter term.
      0 Votes

  • SV
    Aug, 2011
    Sonja
    We are in our 70's. My husband had a debilitating stroke in 2008, and our son, who was helping me with his care and our property died in 2010. This forced us to move from our home to live closer to our other children in another state. We put our home on the market in July, 2010, at $450,000. (appraised 2 years before at $515,000.) We got no action, so we decided to try the short sale with Chase. After sending in all the paperwork, them losing it a couple of times, requiring us to duplicate it, it finally got to a negotiator. We got 2 offers for exactly the same amount, $365,000, one was cash, the other was a mortgage. After many phone calls, which she would not return, and several weeks (we lost one of the contracts because it was too long,) she countered at $439,000. We have no reason, but our people walked. (At that price, I don't think it would have been a short sale. We owe $386,700.) It is an interest only mortgage. I called and complained with another department, and asked about a deed in lieu of foreclosure. They put those papers through, and are giving us a new negotiator. I told them that we would go into foreclosure if this didn't work because our credit is not important to us now. We have everything we need, and now we want to enjoy our last few years and do some traveling. I also told them I was going to stop making the payments effective immediately, because I'm just throwing good money after bad. If this was stock, I would have sold it a long time ago. They told me that I would not have to pay anything if it was a short sale, but am I going to have to pay something if they accept a deed in lieu or foreclosure? Can they reach my savings & IRA's which is my retirement money? My credit right now is over 800. I've never been late on any payments. Other people's experience with Chase doesn't make me comfortable.
    0 Votes

    • BA
      Aug, 2011
      Bill
      Sonja, you need to speak with an attorney. Your assets could be at risk. Although retirement accounts are usually off limits, savings accounts are not. Let an attorney advise you and handle your negotiations. It would not serve you well to tell a creditor that you are not going to pay them but wish to enjoy some of your golden years traveling. I realize that you may not have shared that with the creditor, but, even if not, an experienced professional can best assist you. Make sure to bring proof of the cash offer you received, when you go meet with the attorney.
      0 Votes

  • KR
    Jun, 2011
    Kris
    Here's our situation, which you seem to address the most on your blog. Here's our situation. House worth $401,000 according to Zillow, 1st Mort with Aimloan $401,000, 2nd with Chase $63,000. 97 days past due with Chase. Denied a modification, offered a settlement of 14%, denied on that as well. If you have any additional information on Chase possibly changing their stance at any time, could you please share that with me? We really don't want to walk away from our home but we know it might come to that. Should we stop paying on the 1st so they might take our modification request more serious?
    0 Votes

    • BA
      Jun, 2011
      Bill
      The mortgage modification negotiation process is opaque because that suits the interests of the mortgage servicers. I have no unique insights into Chase's mortgage negotiation process, and what I share here is the result of conversations with Bills.com readers.

      I do not see how ceasing payments on your first mortgage will assist you with your negotiations with your second, other than you will have more funds to offer in a lump-sum settlement, which works against you.
      0 Votes

    • KR
      Jun, 2011
      Kris
      Ok, thank you for your insight. The reason we thought we'd cease making payments on our 1st was because we have heard numerous times that they won't even start negotiations about modifications or settlements until you're significantly past due. If we're going to lose the house, the ony way we would gain any financial freedom is to stop paying our larger payment as well.
      0 Votes

    • BA
      Jun, 2011
      Bill
      If your goal is to save the house by jettisoning the second, then stopping payment on the first is counter-productive, in my humble opinion. If you foresee eventual foreclosure on the first regardless of any resolution of the second, then I do not understand your question.
      0 Votes

    • KR
      Jun, 2011
      Kris
      And there lies the conundrum. We wish it was an easier decision for us. If Chase would have accepted our offer, we would be done waffling about the whole damn thing...maybe there's a chance they'll reconsider it after another month or two. Thanks so much for your input, I REALLY appreciate it.
      0 Votes