Expert: Dick Dennis - 12/1/2009

Question
Mr. Dennis
I bought my house in 2005 for 420k. I still owe 336k. The house today would cost 190k. (Fixed rate of 30y. 5.5% interest.I pay $2500 a month)
I started my Chase Home Modification 6 months ago after I  failed to pay my mortgage for 3 months.
For my first trial period I was asked to pay $1500 as a monthly payment, what was almost a thousand dollars from my original.After 3 months we were told that we had to start a new trail and my monthly payment raised to become $1860 which  ended this month (November).
We were told by Chase that they still don't have an answer if we were approved because they are behind with other Home Modifications and asked us to keep sending the $1860.
Time to time we receive a foreclosure notice and when we call they tell us that notice is computer generated and we are to disregard that.
We are concern because some strangers came to us asking if we will short sell or let the house go on foreclosure. One note from Chase were hand written and hang on my door with a scotch tape.
Can Chase foreclosure on us after the modification trial is over and they are overwhelmed with other customer without letting us know?
Is there a place where I can check if my house is going to foreclosure?
How this strangers finds out that I am negotiating with Chase?
Would you have any suggestion in what I should do?
Your answers will be highly appreciated.

Joao

Answer
As you probably know by now, you bought your house at almost the top of the real estate market in 2005, John. That's why they are willing to modify your mortgage payments. However, it seems to me that they have not lowered your payments ENOUGH! You should have someone negotiate the modification lower if you are not able to.

Based on your valuation of $190,000, your payments should be about $1,400 per month, including taxes and insurance. Principal and interest only would make it $1,078. You should try to get Chase to lower your payments more. Chase based your payment on how much you can afford. And I suspect you may have shown that you are anxious to not lose the house. Apparently they have looked at your income and other debt and said that your payments should be $1,860. But it seems as though they are not sure. That's why you should tell them your payments should be lower.

Please understand that any information regarding your house is PUBLIC information. How much you paid, how much your mortgage, the valuation are all information that anyone may look up by looking at the county records. So, when the bank files a notice of default because you fell behind on your payments, everybody may see that and therefore you have strangers coming to your door to try to buy the house in one way or another. If Chase says that their records are computer generated, I would believe them. But what I would definitely do is to tell them I am stopping payments until they have lowered the payments to my level and that they have my promise that I will never fall behind in payments again. And they should stop any and all public notices so that people stop bothering me at my house.

This let's them know they may have another foreclosure on their hands if they don't go along with a lower payment. That previous $1,500 would have been okay. But they should also lower the unpaid balance of the loan. You just have to negotiate with them and let them know that you are prepared to move if they do not come down close to what you are looking for. This is what I did for clients. And it did work.

You can contact the name of the company that put that sign on your house with tape or call a title company to find out if your house is indeed in foreclosure. They can look it up. That would tell you whether Chase has been lying to you or not. In what state are you located? I do wish you well.

Dick Dennis
dixiedee13@aol.com