Lenders modify their ways
JPMorgan Chase & Co. has jumped on the mortgage modification bandwagon.
Late last week, the bank said it is launching a new program to stem the number of foreclosures it undertakes, according to the Associated Press. The bank will not put any homes into foreclosure for the next 90 days while it implements the program, which is expected to help as many as 400,000 customers with about $70 billion in loans.
The modification program will also be offered to customers of Washington Mutual, which JPMorgan Chase recently acquired, and EMC, which was a mortgage unit of Bear Stearns Cos. and bought by JPMorgan in February, according to the AP. The program is apparently designed to help rework multiple mortgages, instead of going through time-consuming case-by-case reviews.
Since early in 2007, the New York-based bank company has modified about $40 billion in mortgages, helping about 250,000 customers.
JPMorgan’s latest, expanded plan calls for setting up 24 regional counseling centers, hiring 300 additional loan counselors, creating new financing alternatives, reaching out to borrowers with prequalified modification terms, and a new process to review each loan before it enters foreclosure. Also, when JPMorgan bought Washington Mutual and EMC, it acquired mortgages that had option adjustable-rate mortgages, which let the borrower decide whether to pay the full loan payment or less than the interest that was due. The modification program will eliminate that option.
As part of a legal settlement, Bank of America has said it will start a loan modification program on Dec. 1 that is expected to cover about 400,000 loans held by Countrywide Financial Corp.
The FDIC has had some success with its loan modification program since taking over IndyMac Bancorp over the summer, which may have influenced JPMorgan’s program.
Plans for regional counseling centers, hiring additional loan counselors, and dumping those pick-a-payment options sound like a good start, even if they are a little bit late. Do you think the bank’s efforts will make a difference, or just delay the inevitable?
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