Loan modification - two mortgages with two lenders.

[Mike]

Hello, let me first express my appreciation for this resource and all the positive energy from all the members. This gives me, and I am sure others, hope. Now onto our situation. We have two loans on our house, both fixed 30 year. 1st with National City, 417K at 7% 2nd with Chase, 160K at 9.57% Combined debt is 577K and the price of our house is currently slightly below 550K, the property prices are dropping at an unbelievable rate!!!

We cannot refinance with our loan to value ratio and with some of the additional medical expenses and large student loans we are accumulating our credit card debt. My wife and I are employed, with decent salaries and good credit scores (mid to high 700's), and all we are looking for is to be able to meet ALL of our financial obligations and stay in our house. We have not missed a single payment yet, but I feel that day is close.

If it wasn't for the drop in real estate values, we would have refinanced at today's low rates and lived happily ever after. *My question is, what is the best course of action in our situation (given two mortgages with two lenders). * Do we approach Chase because the rate is higher, or do we approach both lenders and ask for modification.

How does it typically work between lenders in such case? I am afraid they will just point fingers at each other and nothing will happen, except for eventual foreclosure on our part. Please let me know if I missed any essential info to explain our situation.