What A World

In response to the massive foreclosure crisis causing homeowners to lose their home, JP Morgan Chase has halted foreclosures for 90 days to try to help homeowners keep their homes. The Chase foreclosure plan will cease putting delinquent loans into the foreclosure process for 90 days as it puts a loan modification team together and implement their mortgage rescue plan. The mortgage rescue plan is intended to assist home loan borrowers at risk of foreclosure receive mortgage modifications. JP Morgan Chase plans to prevent unnecessary foreclosures with an independent review process to assist homeowners who may not need to be placed in foreclosure, and hire and train more staff for the caseload of loans.

Despite the fact that JP Morgan Chase is one of the largest banks affected by the foreclosure crisis, holding 1.5 Trillion dollars in mortgage loans, will be implement their plan on loans held by the bank which is only about 20% and the other 80% of loans are held by investors whose loans they service and are currently not figured into this plan, yet. According to Charlie Scharf, CEO of Retail Financial Services at Chase,

While Chase has helped many families already, we feel it is our responsibility to provide additional help to homeowners during these challenging times. We will work with families who want to save their homes but are struggling to make their payments.

One of the program’s first priorities, is to eliminate the negative amortization loans it services most of came when they took over Washington Mutual Bank and EMC. This is a significant addition to its current foreclosure prevention program.

The type of loans targeted by the JP Morgan Chase plan are called “option adjustable rate mortgages” also known as option ARMs. The modifications that the bank plans to offer option ARM borrowers include affordable 30-year, fixed-rate loans, as well as a conversion for 10 years to an interest-only loan and principal deferment, in which a large portion of the debt is forgiven for a term of years or until the house is sold.

Chase’s plan is similar to that of Bank of America’s loan modification plan, in which the borrower will have to pay only about one-third of their income on a home mortgage.

Chase said it will review its entire portfolio to try to determine which of its customers are at risk and offer workouts to those borrowers before they get into trouble. It will streamline the process by using some kind of affordability standard (the bank declined to say how that will be done) to determine the best workouts it can offer customers to keep them in their homes.

Then it will contact the borrowers who will merely have to accept the offers to get more affordable mortgages.

Chase plans to meet the challenges head on by increasing staff, add 300 new counselors, for a total of 2,500 and opening 24 new regional counseling center for accessibility to their mortgage customers. Truly hope that this plan works for the many families facing foreclosure at the moment.