Chase offers Loan Mod - What to do??

[texaschase]

Hello I am so glad I found this forum,

Chase is offering the basic:
1-5 years interest rate of 2% and a payment of $1,646.32 includes tax and insurance
6th year interest rate of 3% payment adjusted accordingly
7th year interest rate of 4% payment adjusted accordingly
8-40th year interest rate of 4.75% payment adjusted accordingly



Also they are offering a total of $88.33 a month for years 1-5 to be applied to the loan if payments are made on time, and never fall more than 90 days late.



We are happy that they accepted us, but at the same time is this good for us? We paid $200K for our new home 4 years ago, paid on time no problems for the 1st 2 years.


Then we fell behind starting year 3 because a injury to me that had me off work for almost 8 months and us trying to stay afloat with only wife’s income and a new baby on the way, we had to file chapter 13 to keep home, cars, ect.

The WORSE thing we ever did because we couldn’t pay the property taxes for 2 years plus interest it added up to almost $20K, plus with late fees and missed payments.


After the smoke has cleared they are adding all of these monies to the principle and now we are totally upside down with this offer... $250K new principle that matures in 25 years, with a final payment at that time of $90K due. I feel that we will basically be renting our home and never be able to own it, we will not ever be able to sell it because of being so upside down...

The house doesn’t really suit our needs any longer, and now we feel we will never be able to gain any equity from the home, or be able to sell for any profit whatsoever in the future...
I pose this question to all of you, if you were faced with the same offer would you accept, try to negotiate with Chase for lower principle, or refuse and try to find a rent / lease house?

Thank you for reading my story and god bless

[Evan Bedard]

Hi texaschase welcome and thank you for joining.

Chase is offering the basic:
1-5 years interest rate of 2% and a payment of $1,646.32 includes tax and insurance
6th year interest rate of 3% payment adjusted accordingly
7th year interest rate of 4% payment adjusted accordingly
8-40th year interest rate of 4.75% payment adjusted accordingly

Honestly you are very lucky to have been offered a modification like this. Chase is definitely one of the most difficult lenders to deal with and they are hardly offering any modifications at all. I truly believe that this is the best offer that they will give...

[texaschase]

Thanks for your quick response Evan,
We do feel very lucky and fortunate to have been given this opportunity at a 2nd chance but also feel as I stated that with us being upside down we will never, ever be able to get out of this loan or this house (which we are not happy with), if Chase were to foreclose the house they would be lucky to get $150K for it… we sort of feel trapped.


Please do not misunderstand me, we want to own our own home but also want to be happy with the home we own and live in. What happens if we turn down the offer..

We get foreclosed on, we move and probably never are able to buy a home again?

Chase puts on our credit the remaining balance after what they can get for it?

I need some advice please..

[caldwellb02]

Texas - is this a significant reduction to what your mortgage payments were?

[Evan Bedard]

Please do not misunderstand me, we want to own our own home but also want to be happy with the home we own and live in. What happens if we turn down the offer..

We get foreclosed on, we move and probably never are able to buy a home again?

Chase puts on our credit the remaining balance after what they can get for it?

If you turn down the offer it is possible you may be able to get another modification, but it is very unlikely. You can try to sale the home through a short sale which will have less of a devasting affect on your credit.

If your home goes through foreclosure your lender will more than likely issue you a 1099 for the deficiency balance..

[weneedpeace]

Hi Texas,

Was your original term for 30 years? You mentioned a step increase in the decreased rates over the next few years going up to 40 years?

I'm not an accountant but would suggest that you try to find a calculator that can clue you in as to how much more interest you'll be expending with their 'offer', and whether it's worth it to you (even if the payments are affordable now).

I think that more than a few of us have the stance where there will be so many people scarred by the mortgage industry/recession (depression honestly in some regions) that there will be recovery and ability to purchase homes in the future. Foreclosure will limit that for some time, however, you will be able to rebuild.

I believe that there are a few posts around here from others who have attempted a principal reduction, if that is what you're ultimately trying to accomplish.

Moe or Evan I believe have often said on here, and I agree - don't sign an agreement that you can't afford. But, I'd also go an extra step in saying to not agree to bad terms that truly do not work for you.

You can absolutely find somewhere to rent/lease. While some property managers or individual landlords may be strigent on qualifications, if you have otherwise clean credit or are willing to contribute the maximum security deposit allowed by your state landlord-tenant laws, that will give you a tremendous amount of leverage in security a rental.

[texaschase]

Originally Posted by caldwellb02

Texas - is this a significant reduction to what your mortgage payments were?

well considering we did not have an escrow setup before, our payments were $1450.00 now with escrow they will be $1646.00. So i guess the answer is yes they are cheaper if you include what the cost per month would be for escrow. they break it up as mortgage payment $785.00 and escrow $860.00.

What happens if they file a 1099?

[texaschase]

Originally Posted by weneedpeace

Hi Texas,

Was your original term for 30 years? You mentioned a step increase in the decreased rates over the next few years going up to 40 years?

I'm not an accountant but would suggest that you try to find a calculator that can clue you in as to how much more interest you'll be expending with their 'offer', and whether it's worth it to you (even if the payments are affordable now).

I think that more than a few of us have the stance where there will be so many people scarred by the mortgage industry/recession (depression honestly in some regions) that there will be recovery and ability to purchase homes in the future. Foreclosure will limit that for some time, however, you will be able to rebuild.

I believe that there are a few posts around here from others who have attempted a principal reduction, if that is what you're ultimately trying to accomplish.

Moe or Evan I believe have often said on here, and I agree - don't sign an agreement that you can't afford. But, I'd also go an extra step in saying to not agree to bad terms that truly do not work for you.

You can absolutely find somewhere to rent/lease. While some property managers or individual landlords may be strigent on qualifications, if you have otherwise clean credit or are willing to contribute the maximum security deposit allowed by your state landlord-tenant laws, that will give you a tremendous amount of leverage in security a rental.

Yes our original term was 30 years, but we also signed a 3 year ARM at the start of the loan in hopes we could improve our credit score to qualify for a lower interest locked rate loan.

Please let me rephrase what was offered to us as i copy / pasted what another person posted in another thread because it looked like mine, and i was at work.

years 1-5 2% monthly principle $764.34 monthly escrow $882.38 total montly $1646.72 for 60 months.
year 6 3% monthly principle $848.33 monthly escrow "may adjust"
year 7 4% monthly principle $959.09 monthly escrow "may adjust"
years 8-27 5% monthly principle $1067.42 monthly escrow "may adjust" 231 payments

They also say final payment will be a baloon payment of $87,150.12 due on maturity date.

[MyHAMP]

Take the offer!

Renting DOESN'T mean you will be living for free and you will be a slave to your landlord. There is absolutely NO LOGICAL REASON to move out right now! BTW, who's going to cover your moving expenses?

And even talking about the "finance charges" over the entire term is silly. How many of these loans are actually paid of over that timeframe?

[MyHAMP]

Originally Posted by texaschase

years 1-5 2% monthly principle $764.34 monthly escrow $882.38 total montly $1646.72 for 60 months.
year 6 3% monthly principle $848.33 monthly escrow "may adjust"
year 7 4% monthly principle $959.09 monthly escrow "may adjust"
years 8-27 5% monthly principle $1067.42 monthly escrow "may adjust" 231 payments

They also say final payment will be a baloon payment of $87,150.12 due on maturity date.

What I put in bold are the numbers you should be looking at right now if you are currently having a hard time - not what's due in year 25.

[B Stevens]

As said before, you are getting what many others have hoped for and never received. ARM and Interest Only loans are not for buying a house. They are for buying property for a short time investment.

You need to decide whether or not you want the house. Things will change over 40 years. Right now the market is in a rut. Give it a couple of years. It will peak again.

5 years is a long time to heal from an injury and find a job. If you can afford it with the principle, insurance and taxes added in, take the deal because you won't get a better deal unless they forgive principle on the loan. I haven't seen that lately. At the least, the mod offer will let you buy time, without the stress of wondering where your going to live next week, to figure out a better solution for you and your family.

[MyHAMP]

Originally Posted by B Stevens

As said before, you are getting what many others have hoped for and never received. ARM and Interest Only loans are not for buying a house. They are for buying property for a short time investment.

You need to decide whether or not you want the house. Things will change over 40 years. Right now the market is in a rut. Give it a couple of years. It will peak again.

5 years is a long time to heal from an injury and find a job. If you can afford it with the principle, insurance and taxes added in, take the deal because you won't get a better deal unless they forgive principle on the loan. I haven't seen that lately. At the least, the mod offer will let you buy time, without the stress of wondering where your going to live next week, to figure out a better solution for you and your family.

I totally agree. And rushing out of the house won't save you any money either. As I said - there is NO place where you will be living for free....

[texaschase]

MyHAMP and B Stevens..

Thanks alot for your rsponses as well as your great advice.. i really did not look at it the way you guys are putting it... 5 years is a long time and yes we can afford these payments with present employment.

Another good point was the fact of moving cost and the chance of having to move multiple times with renting..we have been home owners for 8 years and really do not want to rent. Hopefully you are both right and the market will bounce back. We will sign the letter and accept the offer from Chase ASAP!

[MyHAMP]

Originally Posted by texaschase

We will sign the letter and accept the offer from Chase ASAP!

I can promise you that you won't regret it!