If these are HAMP modifications you are already past the 3 monthly payment trial and if the modified amounts are still not affordable you can propose that they make further modifications to make the loan affordable. If you have mortgage insurance they can do a partial claim with your mortgage insurer to pay any delinquent amounts on your mortgage which will reduce your payments by not adding that amount to the end of the mortgage, the partial claim amount will be a no interest loan from the mortgage insurance company. Chase can also do a principal forbearance which will lower your payments. You can also extend the length of the mortgage which will also bring down the payments. Each of those options are solutions that lenders generally are willing to do.
I will address your 2nd as that one is cut and dry. A modified interest rate of 6.78% is too high, under the Making Home Affordable 2nd Lien Program your 2nd mortgage is automatically reduced to 2% on interest only loans for 5 years, then will step up to the interest rate set on your modified 1st mortgage and the 2nd mortgage is to forbear principal to the same proportion as principal forbearance on the 1st mortgage modification.
If the 1st mortgage modification will include a forbearance of principal then the 2nd should wait for the 1st to complete as that will increase the monthly savings on your payment. That may be what Chase is waiting for from the Treasury Dept as the Government will share the cost of reducing your 1st mortgage.
I do not understand why they would have to wait as they can just arrange the principal forbearance and get reimbursed from the government but they may want the paperwork through so they get paid right away before they make that modification. That is not procedure under the HAMP guidelines but they are not strictly following these guidelines or both your mortgages would now be permanently modified with your 2nd mortgage modified payment a lot lower than it is now.
I can not say on your 1st as I do not know what you are paying or what the terms are on your 1st mortgage modification (if you want specific recommendations complete the on-line Pre-Qualify for FasTrac Hardship Loan Modification Form). It should be generally be below 4% and can go as low as 2% unless a higher percent brings the payment down to 31% of your gross monthly income. Remember that the target payment of 31% of your gross monthly income is to include your escrow payment or your property tax, homeowner insurance and home owners association fees if you pay that separately.
If 31% of your gross income is still not an affordable rate then you will need to work out a different mortgage loan modification with Chase and they should be willing to work out something as they do not want more foreclosures in Phoenix.
by Ethan Leak