JPMorgan Chase expects to modify terms on $70 billion in loans to 400,000 families, including customers of Washington Mutual, and will delay foreclosure on any loans while it rolls out the new program over the next 90 days.
JPMorgan Chase expects to modify terms on $70 billion in loans to 400,000 families, including customers of Washington Mutual, over the next two years, and will delay foreclosure on any loans while it rolls out the new program over the next 90 days.
The lenders previously modified loans and payments for $40 billion in mortgages to 250,000 families, the New York company said in a release.
JPMorgan bought WaMu after the Seattle-based thrift failed last month.
The new program will allow some borrowers to reduce their interest rates, in some cases permanently, and to defer principal payments until borrowers refinance or sell their homes.
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Modifications are available to mortgages owned by JPMorgan and some loans it services that are owned by investors.
For borrowers who have option ARM mortgages — which allow customers to make monthly payments so low that their loan balances can rise — JPMorgan will offer modifications to eliminate that so-called negative amortization.
JPMorgan said it inherited numerous option ARMs from WaMu, and a portfolio it acquired when it bought Bear Stearns earlier this year.
The program is only for owner-occupied properties and only for borrowers who show a willingness to pay, so customers should continue making mortgage payments to demonstrate their intent.
JPMorgan said it will reach out to eligible homeowners to offer modifications. Customers who are concerned they might not be able to make a payment should call the phone number on their mortgage statement, a spokeswoman said.
The bank will establish 24 new regional counseling centers to offer face-to-face help in places with a high rate of borrowers whose payments are overdue. Officials said they plan to open offices in California and Nevada, but are still deciding where else.
JPMorgan Chase also plans to hire 300 more loan counselors, bringing its total to more than 2,500, and create a process to examine each mortgage before it goes into foreclosure to ensure that the borrower was offered appropriate modifications. That new process will employ about 150 people.
The bank did not say how much the new program will cost the bank, and would not disclose how many of the affected mortgages are from Washington Mutual or in Washington state.
JPMorgan received $25 billion earlier this month as part of a federal bailout package meant to shore up the economy by encouraging banks to start lending again. The New York Times reported last week that a JPMorgan executive told employees on an internal conference call that he expected the bank to continue tightening credit while using the federal funds to help it buy other banks.
Melissa Allison: 206-464-3312 or firstname.lastname@example.org