Does Mod on the 1st cover the 2nd too? Conflicting info ... - Mortgage Forum

erzulie · 12-22-2009, 10:42 AM

Okay - long story short, I have two loans with Chase. 1st, a fixed rate of 6.75%, balance around $729,000 (just a hair under the MHA limit). I also have a HELOC with Chase, paying interest only at this point, around 3.5%, balance of $197,000. I filed all my modification documents back in September. Still waiting for an answer from underwriting ... calling every week ... all docs are complete, confirmed now for over 60 days ....

My question is this. When I first did my modification, I wasn't sure if I qualified for MHA due to the amount of my loans combined. I was told that I did, simply because MHA only takes the first mortgage balance into consideration. That raised the question, "does the modification cover both loans?" And I was told "yes" several times. However, I got a call from the HELOC department yesterday, that told me the modification does NOT cover both loans, and that I would need to keep paying on my HELOC until the modification on the first was complete. That somehow the modification on the HELOC would come AFTER the 1st modification, and it would need to be done separately ...?

What I am hoping for, and what I was presuming/expecting, is that my modification terms would essentially wipe out the HELOC entirely. It's been frozen for over 2 years, the value of my home has dipped to $626,000 ....

So, I am not sure what to do or what is correct. One Chase department tells me one thing, and another department tells me another. What is the truth? Anyone have any insight here?

Thanks so much ......

shade · 12-22-2009, 11:20 AM

OK - I am going through the exact same thing...
Once your modification becomes permanent on the 1st mtg then the second has to be modded as well. Now the terms of modding the second are sketchy as to what is going to be done such as lowering the interest rate to X or extinguishing X amount.
Now the HELOC department can start the process after the date the first mortgage mod becomes effective. The HELOC department began this process for me right after the 1st was modified.
I actually just sent an email to my executive team contact asking for an update. I am expecting them to set the interest rate to X for 30 years or something like that, but I dont expect them to kill off the second entirely. I have tried looking for information as to what has been happening with that but havent been very successful.

erzulie · 12-22-2009, 11:57 AM

Did you stay current on your HELOC during the time your first was being modified? I was under the impression (based on what the Chase Mod folks told me) that the second was part of the first mod .... now it seems they are like two different islands .....

Evan Bedard · 12-22-2009, 12:50 PM

Quote:

And I was told "yes" several times. However, I got a call from the HELOC department yesterday, that told me the modification does NOT cover both loans, and that I would need to keep paying on my HELOC until the modification on the first was complete. That somehow the modification on the HELOC would come AFTER the 1st modification, and it would need to be done separately ...?

What I am hoping for, and what I was presuming/expecting, is that my modification terms would essentially wipe out the HELOC entirely. It's been frozen for over 2 years, the value of my home has dipped to $626,000 ....

The modification will not wipe out your HELOC. If you are approved for the MHA program it will modify your first mortgage, and you will have to apply for a modification on the HELOC seperately. But if you do get your 2nd modified it will most likely be for a lower interest rate like Shade stated, they are not wiping out these loans unless your willing to settle..

erzulie · 12-22-2009, 01:09 PM

What does that mean, "willing to settle?"

I've been paying about 3.5% interest only on the HELOC. It will most likely be MANY years before the equity in my home improves to a point where I could lump the two loans together into one fixed loan (which was the original intention). Given that the balance of both the first and the second together are around $925,000, and my home value is right around $625,000 ....

Would it behoove me at all to go ahead and start a modification process on the second, BEFORE the first mortgage modification completes? All this waiting around is agonizing.

Evan Bedard · 12-22-2009, 02:01 PM

Quote:

Would it behoove me at all to go ahead and start a modification process on the second, BEFORE the first mortgage modification completes? All this waiting around is agonizing.

Yes you could definitely start the process for your 2nd now, but they will most likely not give an answer for that one until the 1st is resolved. So if you start now you may have a better chance getting them done around the same time.

shade · 12-22-2009, 02:50 PM

From my understanding talking to my executive team person they can not start until the effective date for the 1st modification comes up.
Assumption your first perm mod takes effect Jan 1. Chase wont start looking at it until Jan 1.

snapple candy · 12-22-2009, 04:46 PM

erzulie,

HAMP does not allow to consolidate any other loans with your 1st mortgage. YOu do need apply to Home equity side of Chase for mod on your 2nd seperately. Mine are both held by Chase. I am in the middle of trial mod right now. I also faxed in the same HAMP/MHA application as I did for the 1st to the Home Equity dept. I just changed the account numbers and balances.

When Chase Home Equity was told I was doing a HAMP trial, they immediately told me they would give me a trial mod on the 2nd and cut my payment by 50%. They will match the 1st terms if it becomes permanent. What they dont tell you, is that it is not a trail mod, it is a forbearance of sorts. When I asked them why my statement is still showing lates, etc, thats when I discovered it was not really a trial mod.

erzulie · 12-22-2009, 04:54 PM

So - I haven't made a payment on the HELOC since October 1. In November, I paid a partial (about 85%) payment on the first mortgage, and didn't pay the HELOC. This month, did the same thing. In my own sense of logic (or, lack thereof?

), it made more sense to pay as much as I could toward the first, versus paying on the HELOC when it is interest only at this point, and if the HELOC goes away, I am just throwing that $$ away anyhow in the meantime, prior to the decision.

Is my logic here flawed? Should I make the two payments on the HELOC to bring it current, and pay less on the first mortgage? I know my credit is taking a hit, not much I can do about that now ... just trying to figure out the best strategy.

snapple candy · 12-22-2009, 05:23 PM

Well, the only flaw I see is that you think the HELOC might go away. Unless you settle for a lesser amount, it is not going away. HELOCs just are not being extinguished as of yet. I cant tell you what to do but I can tell you what i did. I stopped paying my HELOC and I do not think it will do you much good to make partial payments because they put those in an UNAPPLIED funds category and do not apply them until you reach a full payment so it will still show you delinquent for the month you made a partial on your first. No matter what you are getting a hit on your credit whether it is partial or not. Many of us have seen that until you go totally delinquent, you wont get much action from the lender on your modification.
As for the HELOC, well Id fax in the same mod papers to them and NO I wouldnt pay less on the 1st to bring it current. The Home equity side is pretty fast and should respond. It would be helpful if you could get the 1st on a trial. It would go much quicker. Your gonna have to be willing to take a credit report hit if you want to play ball with these lenders.

msm859 · 12-22-2009, 05:40 PM

Quote:

Originally Posted by erzulie

So - I haven't made a payment on the HELOC since October 1. In November, I paid a partial (about 85%) payment on the first mortgage, and didn't pay the HELOC. This month, did the same thing. In my own sense of logic (or, lack thereof?

), it made more sense to pay as much as I could toward the first, versus paying on the HELOC when it is interest only at this point, and if the HELOC goes away, I am just throwing that $$ away anyhow in the meantime, prior to the decision.

Is my logic here flawed? Should I make the two payments on the HELOC to bring it current, and pay less on the first mortgage? I know my credit is taking a hit, not much I can do about that now ... just trying to figure out the best strategy.

Pay 1st first -- 2nd second -- if at all. You should talk to a Bankruptcy attorney. It may be best for you to get your 1st modified and then get your 2nd wiped out by filing chapter 13.