The new $25 billion settlement that the banks have to live by is making things much easier for troubled homeowners who have had problems paying their mortgages. But it appears that JPMorgan Chase is ahead of the curve when it comes to making loan modifications easier than ever.
In fact, Chase is basically doing all of the work for you. According to the Money section on CNN’s website, Chase is making the modifications and then sending letters to borrowers letting them know what their new monthly payment is going to be. The only thing the mortgage borrower has to do is sign the form enclosed with the letter and send it back. It doesn’t get much easier than that!
Chase has pledged to more than $4 billion in mortgage relief for thousands of borrowers who have a loan through them. This relief comes from either reducing the interest rate on their mortgage loans or reducing the principal that is owed. In some cases, Chase is doing both.
One of the reasons Chase is so motivated to get these modifications pushed through is because banks are getting more credit for the mortgage modifications that they complete within the first year of the settlement, which was reached earlier this year in February. The actual deal was finalized in April, but Chase had already assembled a team to start going through the tens of thousands of mortgages that are held by the company. In order to qualify for a loan modification, the mortgage had to meet certain qualifications. For one, the mortgage had to be held by Chase directly. It couldn’t be backed by the federal government and it couldn’t be divided among other investors. Also, the borrowers had to be behind on their mortgage payments or they had to be significantly underwater in order to qualify for a modification from Chase.
At first, Chase found thousands of homeowners who fit these qualifications. The bank then sent letters to these homeowners asking them to contact the bank to discuss a mortgage modification. When only half of the customers responded, Chase decided on a new plan, according to Amy Bonitatbus, one of the bank’s spokespersons. That’s when Chase decided to be more proactive by sending out the letters with the new mortgage terms.
According to a preliminary report conducted by CNN on Chase’s progress and the progress of the court settlement overall, Chase modified more than 3,000 mortgages between March 1 and June 30 for a total of $369 million in credits. There are currently about 11,500 other modifications that have been offered by Chase but have yet to be completed.
Is it a good idea for Chase to be more proactive in trying to modify troubled mortgages?