Do I try a loan mod with Chase/WaMu or go with the Deed in Lieu?

[Buzzy1]

I just found this site and the information has been very helpful. I wasn't able to find an answer to my specific question, so I thought I would post it and see if anyone has any experience with what I am trying to do.

Here are the facts;
Original purchase price $380,000
Been trying to short sell it for 8 months, started at $300,000 - no showings, reduced to $250,000 - no showings, reduced to $225,000 no showings, reduced to $199,900 - one showing.
Primary mortgage $330,000
HELOC $15,000
I started calling WAMU/Chase in April 09 trying to figure out my options. I stopped making my house payment June 1 and missed July 1. A service rep from Chase called and made it sound very promising that they would be able to help. His manager got on the line and said that because I had a good payment history and an Option ARM mortgage, that there was a good to excellent chance that the loan modification department at Chase would help me, but I had to make my June payment. He said to do whatever I could to get the money by July 31 to stop the loan from going into Foreclosure. My ARM rate is now down 4% and I already have a 40 year amortization and I feel the only way I would want to keep the house is if they would reduce my principle balance to around $200,000 (the current market value).

Other factors:
I probably will not qualify for Hardship under their rules.
I am divorced and recently remarried.
My income is $10,000 mo. and my new wife's income is $8,000 mo.
She is not on my mortgage and has her own home and mortgage and I will be moving in with her. If we stayed in my house, my commute work commute is 54 miles and her commute would be 100 miles.
Together our expanded family has 5 children and we need more room.
My new wife's house is closer to work and has room for all the children.

QUESTIONS:
1. Will Chase actually reduce the principle balance from $330,000 to $200,000, which would make it financially viable to keep the house and find some renters?
or
2. Is it just a pipe dream and I shouldn't waste the $2,500 to make the payment and walk away? If I walk away, should I do a deed in lieu or let it go through the foreclosure process and ask for "cash for keys"?

[azdmsmith]

I don't think anyone here has posted any success with principle reductions.

As for #2 there are people here with experience that may be able to advise you.

[AACPA]

His manager got on the line and said that because I had a good payment history and an Option ARM mortgage, that there was a good to excellent chance that the loan modification department at Chase would help me, but I had to make my June payment. He said to do whatever I could to get the money by July 31 to stop the loan from going into Foreclosure.

Typical BS from the collection dept. Will tell you whatever they think you want to hear to convince you to make that payment. Proceed with caution. No point throwing money into the wind for no reason if you will loose the house anyway. If it was me I wouldn't give them a dime without a modification contract since you are so behind anyway. What will happen is you will make the payment to get current and you will find yourself back in line waiting for a mod and Chase will be no closer to trying to help you because they got what they wanted from you (that month's payment). For example.....the people next door to me have had their house on the market as a short sale for a year now. They have dropped the price from $230K to $150K with no takers. There is a foreclosure sale scheduled on the house for next Fri. The last house on my street to sell was house that got foreclosed on for $240K last winter and the bank only got $65K when they re-sold 6 months later.

[Buzzy1]

Thanks for your advice. I kinda thought this would be the case, but in my efforts to deal with them honorably, I was hoping they would rather deal with me and develop a plan that could work for both parties. The irony of my situation (which is probably the same for most people) is "if I could buy my house for the same price the bank is probably going to get for it, I could make it work".

[Bridget Ann]

Definitely don't recommend making payment to Chase. I had Heloc with them and their collections people are brutual. I wish I had recording of them to post to you tube. They have no idea @ the mod process, they just want you to make payment.

I had no equity in my 2nd loan and as I researched it further, just made more sense to let 2nd go b/c lenders don't foreclose on 2nd loan with no equity. After 6 months or so, I got letter from collections company saying I owed the money but they are willing to settle for like 20% of the 190k. I'm trying to get it lower.

[Hodgini66]

Originally Posted by Buzzy1

Here are the facts;
Original purchase price $380,000
Been trying to short sell it for 8 months, started at $300,000 - no showings, reduced to $250,000 - no showings, reduced to $225,000 no showings, reduced to $199,900 - one showing.
Primary mortgage $330,000
HELOC $15,000
UPSIDE DOWN=~$150k+

I started calling WAMU/Chase in April 09 trying to figure out my options. I stopped making my house payment June 1 and missed July 1. A service rep from Chase.... a good to excellent chance that the loan modification department at Chase would help me, but I had to make my June payment.

SO TYPICAL... IT'S CALLED "TEASERY"

Other factors:
I probably will not qualify for Hardship under their rules. TRUE

My income is $10,000 mo. and my new wife's income is $8,000 mo. THAT'S WHY

She is not on my mortgage and has her own home and mortgage ..... SOUNDS SO SIMILAR TO ME ITS UNCANNY.

If we stayed in my house, my commute work commute is 54 miles and her commute would be 100 miles. OUCH!

Together our expanded family has 5 children and we need more room.
SOUNDS SO SIMILAR TO ME ITS UNCANNY.

QUESTIONS:
1. Will Chase actually reduce the principle balance from $330,000 to $200,000, which would make it financially viable to keep the house and find some renters?
or

2. Is it just a pipe dream and I shouldn't waste the $2,500 to make the payment and walk away? If I walk away, should I do a deed in lieu or let it go through the foreclosure process and ask for "cash for keys"?

OK... Here goes:

I'm in a similar situation, 5 kids (2 future step), sorely underwater ($400k+), huge support orders (60% of paycheck), waiting to get MY mortgage situation settled BEFORE we tie the knot. Only reversal is her house is empty, I have the bigger one and we would still need SOME place big enough. So, I'm gambling here, "all-or-nothing" in my case.

Here's my detailed opinion, because you are so similar.

Please read some of my other posts with several outside links and related info.


1. Chase IS offering principal reductions (charge offs) for 2nd's when the home is drastically upside down BUT these are usually for people who are 6+ months past-due and/or have filed BK. 1st TD's are a possibility, but a long shot AND only available for people who want to stay, are upside down and have a moderate income. Wealth of knowledge in this area avail over @ bkforum (see my other posts for links).

You should probably consider walking if you don't care about your OWN credit rating. However, it COULD possibly affect your new wife's credit, although I don't exactly know how besides... Some states deem premarital "personal debts" as joint debts after marriage. Great news for the debt collectors, Huh?

In your case, this could be related to whether either of the loans are "recourse", which is usually reserved for HELOC's. Read your loan docs, their will be langauge about being "personally liable", just like a credit card if its a recourse loan.

In the case of "walking", you might be able to negotiate a reduced payoff for the 2nd which would cause a double-layered moderate ding to your credit (late pays AND a chargeoff with an offsetting comment like "settled"). This is a gamble and can backfire for reasons stated above plus other unkown factors related to credit obligations specific to your State, so be cautious.

2. Your new wife's income hurts you when requesting any type of MOD. If I were in YOUR shoes (and I do NOT know your situation or your State's laws), I'd stop paying on the house immediately and start trying to negotiate a CASH payoff settlement on the 2nd. The 2nd isn't so big that you two can't pay it off over time, even with accelerated payments.

I'd start packing now, save your cash up for the 2nd cash payoff, prepare the kids for the adjustments and move on with your life.

Chalk it up to stupidity and file under "I gambled and lost".

Good Luck!

[Chased around and around]

Buzzy1, I am no math guy, but your mortgage+insurance+taxes are $2500.00 per month?

You are grossing $10,000.00 a month plus the wife brings in $8,000.00.

chase has told me time and time again that 31% of gross is as far as they go with everything combined in order to qualify to do a mod. I was even told my HOA may not be included that is another $368.00 per month on my end.

The mod company that is working for me told me they have not seen one principle reduction yet from chase.

I do know one thing for sure, chase has no idea what the hell they are doing.

On a another note, just got an e-mail from that crazy real estate site zillow, and they just said my condo price increased 6%. Wow I guess I am only 205K underwater now. I knew today was looking up, LOL...