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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The banks should string these people out to recover as much money as possible and only foreclose if there are no payments . The housing market is so distressed now ,that adding more foreclosures will make it worse and cost the banks , ( and the average citizen) ,more money..
Eventually these loans will have to be foreclosed.
Its a good idea for the banks, but not going to affect the fundamentals dramatically in all likelihood
I generally agree with Maven, but consider the person that is (or was) doing things the right way. They prudently amass a conforming down payment and emergency fund to assure financial viability. Meanwhile, the homeowner that purchased more than they could afford and ultimately drove up prices are now getting a loan workout. This holds prices artificially high which either causes the prudent buyer to overpay or continues to lock them out of the market.
Under different economic conditions, I would advocate for letting the foreclosures continue largely unabated. Overspending homeowners and banks alike share blame and it isn't like the home is reduced to rubble after a foreclosure. One persons loss is another persons gain.
JP Morgan, Bank of America and all the other large financial institutions should be less concerned about delinquent mortgages and more concerned about the hundreds of trillions of derivatives on their books.
The mortgage crisis exposed the problem in the financial system, the derivatives crisis is going to bring down the global financial system.
I dispute the premise that stopping foreclosures will help the economy. The economy needs bigger volume of sales, not higher home prices. Prices should come down and the buyer will come to the market to shop. If any sector of the population needs to be helped it is the first time home buyer. It is he or she that is capable of pulling us all out of this mess, not the overextended mortgage borrower, subprime or otherwise. Politicians just have it backwards for the simple reason that they have no guts to tell it like it is to the ownership constituency.
Post# 5 is absolutely correct.
Either home prices need to come down more OR Sellers/Agents need to find buyers who are more stupid then existing homeowners to pay the inflated price.
Investors and flippers have left the party long ago and waiting for get back into Stock market. They will not return to real estate anytime soon.
I hear so much talk from politicians talking about saving people from foreclosure. For people struggling to save enough to buy someday, its very disheartening as these families waited for the insanity to stop and for them to actually be able to afford the homes they were looking at rather than tricky math. If prices maintain, I'd rather be a renter for the rest of my life and take the money I'm saving and put it elsewhere...or move somewhere more economical. I doubt I'm the only one. If people were going to buy higher, they've already done it and they're already regretting it.
dangerous space for buddy. craving to get more from your side :)
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