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Chase Moves to Freeze Foreclosures

JPMorgan Chase & Co. (Chase) — the same company that up until earlier this year encouraged it’s own loan officers to fudge facts and figures on loan applications — announced today a voluntary loan modification program it says will help up to 400,000 homeowners over the next two years. Today’s announcement applies only to owner-occupied properties with mortgages owned by Chase, Washington Mutual (which Chase acquired a few weeks ago), or EMC (the loan-servicing company acquired in the takeover of Bear Stearns earlier this year).

Within the next 90 days, Chase, which just a few weeks ago accepted more than $20 Billion as a cash infusion from the U.S. government, will open regional counseling centers, hire additional loan counselors, introduce financing alternatives, reach out to borrowers to offer pre-qualified modifications, and commence a new process to independently review each of its loans.

Since early 2007, Chase claims to have helped about 250,000 families — with $40 billion in loans — avoid foreclosure, primarily by modifying their loans or payments.

Specifically, for Chase, WaMu and EMC customers, today’s announcement means Chase will:

  1. Systematically review its entire mortgage portfolio to determine which homeowners are most likely to require help — and try to provide it before they are unable to make payments.
  2. Proactively reach out to homeowners to offer pre-qualified modifications such as interest-rate reductions and/or principal forbearance. The pre-qualified offers will streamline the modification process and help homeowners understand that Chase is offering a specific option to make their monthly payment more affordable.
  3. Establish nearly 25 regional counseling centers to provide face-to-face help in areas with high delinquency rates, building on the success of one- and two-day Hope Now reach-out days.
  4. Add 300 more loan counselors — bringing the company’s combined total to more than 2,500 — so delinquent homeowners can work with the same counselor throughout the process, improving follow-through and success rates.
  5. Create a separate and independent review process within the company to examine each mortgage before it is sent into the foreclosure process (in order to validate that each homeowner was offered appropriate modifications). In order to pull this off, Chase will hire 150 dedicated staffers.
  6. Not add any more Chase-owned loans into its foreclosure process while enhancements are being implemented.
  7. Disclose and explain in plain and simple terms the refinancing or modification alternatives for each kind of loan. Chase also will use in-language communications, including local publications, to more effectively reach homeowners.
  8. Expand the range of financing alternatives offered to modify pay-option adjustable rate mortgages, including 30-year, fixed-rate loans with affordable payments, principal deferral and interest-only payments for 10 years. All the alternatives eliminate negative amortization.
  9. Offer a substantial discount on — or donate 500 homes — to community groups or through non-profit or government programs designed to stabilize communities.
  10. Use more flexible eligibility criteria on origination dates, loan-to-value ratios, rate floors and step-up features.

More than 765,000 homeowners received foreclosure notices during the 3rd quarter of 2008, the most since records began in January 2005, according RealtyTrac.

When you include Countrywide’s mandatory loss mitigation efforts, today’s announcement spells possible relief for some 800,000 Americans facing imminent foreclosure.

Posted By: 4wordsystems @ 9:02 pm Comments (11)
Filed under: JPMorgan Chase & Co

11 Comments »

  1. Point of correction-Bear Stearns has owned EMC Mortgage for quite awhile.

    Chase isn’t doing these modifications out of the goodness of their hearts. Many judges are demanding that Banks go into some type of mediation to avoid a foreclosure hearing and are demanding that lenders prove they are the legal holder of the mortgage and note before allowing foreclosure hearing. Many of these modification agreements have indemnification clauses in them that prevent the homeowner who may or may not have been a victim of that particular lender’s questionable lending practices from taking legal action. I would encouage all homeowners to get a forensic audit done prior to negotiating with a lender about a loan mod.

    Comment by Steve Dibert — November 1, 2008 @ 2:29 pm

  2. Steve is right. Seek advice before entering into a modification. The indemnification clauses not only prevent you from taking any legal action against them for any wrongdoing, these clauses often waive some of your rights of foreclosure in the event you miss a payment or are late on a payment.

    As to the $20 billion J.P. Morgan received, let’s not forget the $55 billion they got for the purchase of Bear Stearns. Great rewards for fraudulent lending practices.

    Steve is also correct in saying that most lenders are being foreced into modification efforts and are not doing it out of the goodness of their hearts. Corporate America has no heart be it banks, oil companies or pharmacutical companies. Deregulation in many industries was no more then a free pass for illeal activity.

    That all being said, at least something is being done although I do not believe it will help the hundreds of thousands of homeowners as they claim.

    The key word in Chase’s plan is “prequalified”. The problem here is that many if not most people in trouble cannot qualifly anymore. Loss of jobs, business and credit preclude any workouts. Current real estate values also make it difficult as most properties are underwater.

    I would like to see more definitive guidelines to these workouts which will then allow me to see the real potential of help. Until I do, this is still more “feel good” news releases with no real teeth. Too much effort if not all the effort is being made to “restore confidence” by “feel good” measures. Untill some of the over one trillion dollars the government threw out to the financial sector hits the street, I do not see much relief.

    Comment by Larry Rubinoff — November 1, 2008 @ 2:53 pm

  3. Homeowners that do a modification need to also have a new title policy without exceptions written on their property. The reason being is that Chase may not own the mortgage and note.

    Comment by Steve Dibert — November 2, 2008 @ 9:17 am

  4. Fascinating. So homeonwers stand a good chance of being screwed (again) with the new “help”?

    Comment by Dawn McNeilly — November 2, 2008 @ 9:37 am

  5. Chase – Smooth Criminal

    Chase is not modifying loans to help the home owners – they can careless, but what they do care about is how far a borrower will go to stay out of foreclosure. I will tell you how far!!!! Far enough to start dropping names and dates and facts that could cause Chase a hold lot of fines and some possible jail— there modifying loan and shredding documents as I type.
    Right now Chase has a cash crow the United States government—which continues to drop cash in there pockets for all there dirty deeds. Chase has taken so much from consumer, communities etc…. they made money on the front end doing the bad loans and, will make tons on the back end on the recovery—cry broke to the government and continue to get more money. Sweet deal huh????? So if you got a loan with Chase – you were hit by a smooth Criminal.

    Brad Ford

    Comment by BRAD FORD — November 3, 2008 @ 12:11 pm

  6. Chase has made no effort to help me. I’ve been out of a job for nearly months now. I had just hit the 3 month behind mark on Nov 15th. On Nov 21st. My father lent me enough money to pay the mortgage for 1 month (all he could afford). They refused the payment saying that they could only accept 2 payments and were very nasty and unsympathetic. I asked to speak to a superior and she was even worse. All she had to say was “Is your father going to make next months mortgage too? In 2 week you’ll be in the same situation”. “I’m sorry, (sarcastically) it’s policy we can’t do that”. They would rather take my house and make my family and I homeless than work with me. The economy is at its lowest level in a long time. All lenders want to do is kick you while you’re down. What’s wrong with this picture? Our country wasn’t founded on that attitude!

    Comment by Sharon Kaplan — November 26, 2008 @ 1:41 pm

  7. Chase did basically the same thing to me… Lost my job in Jan 2008 becuase of a Mortgage Fraud Case involving my employer.

    Did all I could to keep up with the $2700mo payments as long as I could – tried repeatedly for the loss midigation people to work with me on a restructure and got nowhere!

    If they would have just taken me back down to where the payment was when I first bought the house ($1,900 – May 2003) – My family (myself, daughter, grand daughter & son-in-law) would’ve been ok and able to save our home

    Notice of Trustee Sale was filed 8.15.2008 for Trustee Sale on 11.14.2008.

    Comment by Ruth Lamb — November 26, 2008 @ 2:18 pm

  8. All the talk of Loss Mitigation – work outs – and help to the homeowner is just smoke and mirrors. It is just a way to lead people to believe that there is help for them while we spend Trillions of Dollars on those that are still foreclosing.

    Congress mandated that much of this money be spent on saving peoples homes yet Paulson turns around and says they will not. Congress mandated that there be transparancy in all of the money being given out yet Paulson and Bernanke refuse to say where it is going and how much is going where.

    The only way to fight this is to “fight” back. Many foreclosures are illegal. See my new site http://www.TheForeclosureDetonator.org.
    There you will find a comment by Judge Shack of New York that will show you how he feels and how he has ruled against foreclosures. The same with Federal Judge Boyko in Ohio who actually dismissed 26 foreclosure cases in one day.

    As to those seemingly “nasty” people who you talk to to try to work things out, they are only following direction from the CEO’s of their companies. You can’t really blame them, they are getting a paycheck each week and know they are lucky to be getting one. They know in their hearts what is right and wrong but then again, they know in their hearts that they need the job to keep up their mortgage payments and feed their families. Hard to stand on principal when it comes to their job or unemployment.

    The real problem is still with the big corporations, their CEO’s and the government for feeding their greed even more with more money and no accountability – just more reward.

    Hope you all have as pleasant a holiday as possible given the current situation that most people find themselve in. You know for sure that Chase’s CEO will be lavishly enjoying his.

    Comment by Larry Rubinoff — November 26, 2008 @ 6:37 pm

  9. I agree with most of what you said, but unlike you, I refuse to let the “little guys” off the hook. As you said in another post, “right is right and wrong is wrong.” I don’t care if they do it to keep a paycheck – that makes them little better than prostitutes, in my book.

    Happy Thanksgiving to you and yours, as well, Larry. Chase CEOs aside, I imagine most of us have plenty to be thankful for if we take a good look at what counts. Not one of my greatest blessings is mortgaged or waiting for a payment to be made on it. We’re healthy, we’re together, and for now, we’re warm and fed. At the end of the day, little else matters. I’d rather be broke and know that I do the right thing, day in and day out than be a rich man with no soul.

    Comment by Dawwn — November 26, 2008 @ 9:13 pm

  10. Well said Dawn. We all have much to be thankful for and those things are not measured in dollars.

    Comment by Larry Rubinoff — November 27, 2008 @ 12:24 pm

  11. I all the time used to read piece of writing in news papers but now as I am a user of internet so from now I am using net for articles, thanks to web.

    Comment by real estate market — August 2, 2013 @ 2:23 am

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