Truemors
Earlier in the jump in home sale and easing out the credit crunch in US has giving the sign of turnaround in housing market.It is further boosted by the act of JP Morgan halt of Foreclosures.This act wil spread the better sentiments in the housing market.
JPMorgan Chase the nation's largest bank and one of its biggest mortgage lenders, temporarily halted foreclosures Friday and offered to renegotiate a swathe of mortgages.
The global credit crisis, which began with subprime mortgages, increasingly appears to be affecting a wider range of consumer loans and, according to a report published by First American CoreLogic Friday, nearly one in five U.S. mortgage borrowers now owes more on the loan than their home is worth.
JPMorgan [JPM 41.25
3.63 (+9.65%)
] has avoided the large writedowns and credit losses posted by rival banks because it has limited exposure to the riskier classes of mortgages, such as subprime loans.
But when the bank acquired failed savings and loan Washington Mutual in September, it inherited that bank's more toxic mortgages.
The expansion of the mortgage modification plan will target many of these mortgages, as well as prime mortgages held by JPMorgan that are also starting to show signs of deterioration.
"Prime mortgages, especially where there are pay-option ARMs involved, (are) becoming a broader issue," said Charles Scharf, head of retail financial services at JPMorgan.
JPMorgan has about $250 billion of prime mortgages and home equity loans, $27 billion in subprime mortgages and about $51 billion of "option" adjustable-rate mortgages.
Other lenders have also had loan modification programs in place, including Washington Mutual and the former Countrywide Financial, which was acquired in July by Bank of America [BAC 24.17
Earlier this month, Bank of America agreed with 11 state attorneys general to offer relief to nearly 400,000 Countrywide customers with troubled mortgages, resulting in an expected $8.4 billion of interest rate and principal reductions.
Wells Fargo [WFC 34.05
As part of JPMorgan's effort, expected to last about 90 days, the bank will hire loan counselors and introduce alternatives to existing mortgage agreements. During this period, the bank will not put any additional loans into foreclosure.
JPMorgan expects to renegotiate $70 billion of mortgages over two years, in addition to $40 billion held by 250,000 borrowers since early last year.
The program covers borrowers who live in their homes and who "show a willingness to pay," the bank said.
Scharf said JPMorgan will also work with homeowners who are current on payments, given that modification programs started once customers have missed payments are "very often too late to help."
Most of the troubled mortgages are in regions where house prices have fallen and unemployment is rising, Scharf said, but the program will be open to all customers.
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