JPMorgan to ramp up loan help

Lender to tackle $70b in effort to avoid foreclosures

As part of its effort to renegotiate $70 billion in loans, JPMorgan will establish 24 homeowner centers and hire 300 loan counselors. (Mark Lennihan/Associated Press)

JPMorgan Chase, one of the nation's largest banks, said yesterday it ramped up a program to help borrowers modify their mortgages so that they can afford their monthly payments and prevent foreclosures.

The New York banking company already has renegotiated $40 billion in loans and now plans to tackle $70 billion more in an attempt to help another 400,000 families reduce their payments. As part of that effort, JPMorgan will establish 24 homeowner centers around the country and hire 300 loan counselors.

With loan delinquencies and foreclosures soaring, some financial companies are trying to stem the losses in their loan portfolios by providing relief to their struggling borrowers.

Bank of America Corp., starting Dec. 1, will roll out a program to reduce principal and interest payments by $8.4 billion for some 400,000 customers of Countrywide Financial Corp., which it acquired.

Lenders' and the government's efforts to modify loans are slow, in part, because the institutions are overwhelmed by the number of delinquent mortgages and also thwarted by the complex ownership structure of mortgages, which were bundled together and sold to investors in packages. But lenders are under mounting pressure from Congress and US officials, who want the companies to do more to help delinquent borrowers in exchange for all the government aid that has poured into the financial and housing sectors in the last several months.

JPMorgan is a relatively healthy company, analysts said, but it swallowed two troubled institutions in just five months. In May, the company said it would acquire the Wall Street firm Bear Stearns & Co., a major player in the subprime securities market. After federal regulators seized troubled Washington Mutual in September, JPMorgan took over the Seattle lender and a loan portfolio with rising delinquencies.

WaMu was Massachusetts' ninth-largest lender, and nearly one in five of its mortgages at the height of the real estate boom in 2006 was a subprime loan - high-priced loans made to people with poor credit histories.

Tom Kersting, a bank analyst for Edward Jones in St. Louis, predicted the pace of loan modifications would quicken in coming months. "Some of it is obviously political pressure to keep many of these people in their homes. But much of it is financially driven," he said. "Why do they want to foreclose on them and take possession of the real estate if they can still make a reasonably sized payment on that property?"

JPMorgan said the program would be available to homeowners who received mortgages from its Chase Bank division, Washington Mutual, or EMC Mortgage, a Bear Stearns subsidiary.

JPMorgan spokesman Tom Kelly said the company will renegotiate subprime loans and so-called negative amortization mortgages, which were made by Washington Mutual and EMC Mortgage. In a negative amortization loan, the principal balance increases in the early years, because the borrower does not make a big enough payment to cover both the principal and interest.

JPMorgan is offering to convert them to 15- or 30-year fixed-rate mortgages if the borrower has "a reasonably good payment history." If the principal balance is high, some of that may be deferred and paid off when the mortgage is renegotiated or the home is sold, Kelly said. "We felt it is our responsibility to provide additional help to homeowners during these challenging times," said Charlie Scharf, the chief executive of retail services, in a statement. "We will work with families who want to save their homes but are struggling to make their payments."

Kimberly Blanton can be reached at blanton@globe.com.