Expert: Terry Leeders - 12/10/2008

Question
QUESTION: I owe ~ $170k 1st mtg. (~6.5% int. rate) and a HELOC ~ $43,500.  Both are with Chase.  I rec'd a letter from Chase stating my home value is only $198K.  Due to a fire, self-employment (advertising sales way down in current economy) and predatory lending, I am about to file Ch. 7.  I have been told by someone in the Chase organization that Chase will not even talk with me about reducing my loan amount until I'm at least 90 days behind on my mortgage.  I have missed my mtg. payment as of 12-1-08.  If I do NOT reaffirm, will I still be able to negotiate with the mtg. co. to try to keep my house once the 90 days is up?    I live in Georgia.  If I reaffirm and stop making payments so they will talk with me will that make a difference?  Do you have any idea what the statistics are at this point?  Are the mtg. cos. more willing to talk with people in trouble now?  I hate to lose the home I've lived in for 32 years.  It was almost paid off prior to the fire; but, I refinanced to help pay for restoration. I would appreciate any feedback or statistics available.

ANSWER: It is your home until a foreclosure is complete. You can negotiate with chase afterwards, even if not reaffirmed, if they will speak to you. You can always refinance with another company as well.  I would advise not to reaffirm then stop making payments, as that will ding your post filing credit drastically.

---------- FOLLOW-UP ----------

QUESTION: Thank you for your quick response.  My payment won't be late until the 19th of this month.  If I file prior to that will I be ok?  I'm not sure what you mean when you say don't reaffirm then stop making payments.  Once I file, as long as I keep my other payments current (phone, electric, gas, etc.) will that reflect well on the credit score?  I'm not sure what you mean with regard to dinging my post filing credit?  Do you mean if I stop paying my house note before I file it will adversely effect post credit?  Also, if Chase won't talk with me after I do not reaffirm, I guess I have to be prepared to definitely lose my house.  Thanks so much for the help.

Answer
You had asked what would happen if you did reaffirm then stop making payments to then get chase to 'work' with you. that would not be recommended, that would 'ding' your credit. Making monthly payments to your other bills on time after filing will help to improve the credit.  If you are current, reaffirm, then they would definitely talk to you.  Each company has different requirements regarding loan modifications, so you'll have to play on their terms, or else look to reaffirm with someone else.