I wouldn't waste time with a loan modification...they won't do it, can't do it for many reasons...
You could list as a short sale...with Chase you will have to show some hardship and show you have excessive obligations...not difficult. Could take 4 months....but its much better than a foreclosure.
If you want to stay in your home, you can simply fight any foreclosure attempt with a number of good arguments....Chase is a Servicer with no standing to foreclose.
Send a Qualified Written Request to the Lender to validate the debt. Push the burden of proof on them.
Don't walk away!
If that doesn't work or you don't qualify for the loan mod, you should pursue a short sale only if you and your wife agree that moving is what you want to do. Short sale approvals are contingent on the BPO value and the amount of discount off of that value by the investor - FHA.
If you have questions, go to my faq page for more information or shoot me an email for clarification.