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JPMorgan Chase enforces foreclosure freeze

2008-11-04 13:59:11 (GMT) (Caymanmama.com - Banks & Banking News)

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JPMorgan Chase

JPMorgan Chase formally announces a freeze on foreclosures for the next 90 days.

Jacksonville, Florida (CaymanMama.com) — Always staying one step ahead of the game, JPMorgan Chase formally announced on October 31st that they will be “ramping up” efforts in the betterment of the nationwide foreclosure problem by restructuring loans and putting a freeze on foreclosures for the next 90 days.

According to a report by BusinessWeek, JPMorgan Chase, which acquired failed lender Washington Mutual in September, hopes to positively amend loan terms affecting 400,000 homeowners, making up for some $70 billion in outstanding loans.

Among the steps JPMorgan Chase is taking to assist suffering homeowners: eliminating bad “pay option” loans, offering new loan terms to homeowners prior to default, and adding an additional 300 loan counselors to their workforce.

“While Chase has helped many families already, we feel it is our responsibility to provide additional help to homeowners during these challenging times,” said Charlie Scharf, head of Chase’s retail financial services, in a statement.

The announcement comes as one of the first banks to enforce the $700 billion government bailout plan and is the first step for the company to provide some relief to the American homeowners who are buckling under the weight of a sagging economy.

New York City-based JPMorgan Chase indicated that it will review the entire company portfolio to establish which homeowners may be in jeopardy. The banking giant said it plans to eliminate the dangerous pay-option ARMs, which is a highly risky type of adjustable-rate mortgage that allows borrowers to defer part of their monthly payments, rolling the difference onto the principal they owed.

According to the report, “borrowers were often enticed to take such loans by the lower payments but now find themselves owing even more on their dwellings, even as home values have slid. A recent study by research firm First American CoreLogic found nearly one in five borrowers in the U.S. owes more on a home than it is worth.”

JPMorgan Chase also says it will take a proactive approach to extend their helping hand to borrowers by contacting them with prequalified offers to reduce their interest rates or loan principals. In additions, plans are in place to set up 24 new regional counseling centers to provide on-site, personalized assistance in real estate markets with high late-pay rates.



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