Largest Banks End Moratoriums, Increase Foreclosed Homes
The country's largest lenders, including JPMorgan and Citigroup, have pursued foreclosure actions on borrowers who have not done anything to remedy their mortgage problems during the moratoriums, increasing the number of foreclosed homes across the nation.
After giving in to President Obama’s requests for foreclosure moratoriums in the past months, the nation’s largest banks have lifted their moratoriums and completed thousands of deferred foreclosure actions, increasing numbers of home foreclosures for sale nationwide.
JP Morgan Chase has ended in March its foreclosure moratorium launched in October 31 last year that deferred the foreclosure of over $22 billion of mortgages held by over 80,000 homeowners.
Citigroup also ended its moratorium on March 12, but assured federal officials it will help borrowers who continue to negotiate with the bank to save their houses from becoming foreclosed homes.
The government-run mortgage firms Fannie Mae and Freddie Mac have also ended their moratoriums on March 31 and completed deferred foreclosure actions, turning many rental homes and second homes into foreclosed homes.
GMAC said it has been evaluating its mortgage loans and found about 10 percent of borrowers whose houses could be prevented from becoming foreclosed homes.
Foreclosed homes owned by Wells Fargo have also increased as the bank completed foreclosures deferred during its moratorium period.
Meanwhile, American Home Mortgage’s executive vice president Jim Davis said the bank is exhausting all efforts to keep its customers’ houses from becoming foreclosed homes. But he said borrowers who did not take any positive action during the foreclosure moratorium will likely have their houses turned into foreclosed homes.
Michael Thompson, head of Iowa Mediation Service, said many borrowers negotiating with their lenders will likely have their houses turned to foreclosed homes because many of them have their lost jobs, have low income or have debt problems in addition to their mortgage problems. He said many borrowers did not do anything to remedy their mortgage problems during the moratorium periods.
In California, one of the states hardest hit by foreclosures in 2008 and in the first months of 2009, notices of trustee’s sales soared in March by over 80 percent to 33,178 from February levels, based on data compiled by ForeclosureRadar.com and Field Check Group. This indicates an increased number of foreclosed homes in the state as moratoriums were lifted by the banks.
In the meantime, financial analyst Frederick Cannon said the foreclosure moratoriums helped banks to a certain extent in the first three months of 2009. He said the moratoriums delayed the posting of charge-offs for foreclosed homes, increasing bank profits in the first quarter.
By Cassiano Travareli