Foreclosure Initiatives are Gaining Momentumby Tim Manni
JP Morgan Chase is the latest financial institution to announce a venture that will provide foreclosure assistance to its customers. JP Morgan announced Friday (Oct. 31) they plan to modify $70 billion in subprime and option ARM loans — a plan that could service 400,000 homeowners with either a lower interest rate, a smaller principal, or another more-affordable term. The bank currently holds $27 billion in subprime and $51 billion in option ARM mortgages after purchasing Washington Mutual in September.
Currently, rival Bank of America has two separate foreclosure-assistance initiatives underway. The first which is aimed at providing foreclosure relief to 265,000 of its customers with various types of mortgages, and the other which has been constructed in conjuncture with various states’ attorney generals as part of BOA’s takeover and settlement of Countrywide. BOA plans to spend $8.4 billion in restructuring subprime and option ARM loans from former Countrywide customers.
With the Treasury, FDIC, FHA, and private programs currently or soon to be underway, a rescue for Main Street seems to be in motion. Critics of these initiatives, many of whom are diligent homeowners, continue to ask, “What about helping the homeowner that did the right thing?” What’s to stop a responsible homeowner from defaulting on their loan just to receive the same assistance delinquent borrowers have begun to receive?:
The program covers borrowers who live in their homes and who “show a willingness to pay,” the bank (JP Morgan) said.
Scharf (Charles Scharf, head of retail financial services at JP Morgan) said JP Morgan 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.”
JP Morgan’s announcement will certainly serve to get competing banks on the foreclosure-assistance bandwagon. The Treasury’s TARP program that has provided capital to certain banks, has served to strengthen the institutions, allowing them to take on much needed foreclosure-assistance ventures like these.