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Do Declines in Foreclosures Necessarily Show An Improving Housing Market?

The number of foreclosures have continued to decrease year over year. Should this be taken as another sign of improvement in the housing market? The recent shift by many banks towards short sales and other strategies designed to avoid the foreclosure process make analyzing the data difficult.

In April 2012 five of the largest lenders in the country reached a court settlement with the attorney generals of 49 states and the District of Columbia. The agreement concluded the lawsuit brought by the attorney generals against those banks – Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial- who had been accused of various illegalities and abuses regarding the way they handled the foreclosure process of homes whose mortgages they held. The settlement totaled $25 billion, and under the terms of the deal at least $17 billion of that total would be committed towards modifying mortgages for delinquent borrowers, including principal reductions for some of the roughly 1 million homeowners currently underwater on their mortgages.[1]

To date nearly $10.6 billion in mortgage relief has made its way to homeowners, according to the Office of Mortgage Settlement Oversight. Per the stipulations of the settlement, at least 60% of the borrower relief was to be spent on principal reductions; thus far less 10% of the money has been allocated to that end. Virtually all of the remaining money, more than 85%, has gone towards pre-foreclosure short sales, a practice whose employment is growing rapidly amongst housing lenders. A short sale involves the bank agreeing to accept less than the full mortgage balance when the home is sold. By focusing on short sales, banks skip the arduous foreclosure process and they no longer have to manage, maintain and market homes upon the conclusion of that process. When the court settlement in April was reached there was hope that it would lead to more lenders approving the modification of loans and write downs of principal in order to assist homeowners struggling to pay their mortgages. Instead it appears that homeowners are simply losing their homes in another fashion, one that does not impact foreclosure statistics, since no foreclosure takes place.[2]

This new trend in the housing market makes it difficult to analyze the lower foreclosure totals showing up in various industry surveys over the past few months. In August, 99,405 homes entered the foreclosure process, down 13% from August of the previous year, and down dramatically from the foreclosure peak of April 2009, which recorded an astounding 203,000 foreclosure filings. Still, the latest foreclosure figures remain far in excess of the monthly totals seen prior to the housing bubble’s collapse, as the 34,000 foreclosure filings of May 2005 attests. Short of another severe economic shock, experts expect this trend to continue, with several citing the dramatic drop in foreclosure starts, the initiation of foreclosure proceedings, down 19% last month from the previous August, to a total of 52,380. With the country on pace to have 678,000 foreclosures by the end of the year, a noteworthy decrease from the 800,000 foreclosures of last year can be reasonably expected.[3] Additional good news includes a reduction in the number of homeowners underwater, from 11.4 million at the end of the first quarter of this year to 10.8 million at the end of the second quarter, with this improvement being attributed primarily to the ongoing stabilization of housing prices.[4] Still, there is cause for concern given the banks ongoing intransigence as they seem more interested in adhering to the letter of the deal than to the spirit. It remains an open question whether the drop in foreclosures is truly reflective of an improving housing market, or whether people are simply losing their homes in ways not reflected in the data of the various industry surveys most market watchers use.

This concern has led to some to call for a more sweeping approach to solving the housing crisis. Austin Goolsbee, a former top Obama Administration official who held the chairmanship of the Council of Economic Advisors, says, “I think there's a lot wrong in the housing market” and recommends a broad expansion of an existing program to rent out the homes foreclosed upon by Fannie Mae and Freddie Mac that are currently owned by the government. Instead of these houses sitting empty, they could become rental properties thus reducing the supply of homes for sale on the market, a development that could only help what appears to be the glimmerings of a housing market recovery.[5] It is worth noting that houses with mortgages held by Fannie Mae and Freddie Mac were not included in the court settlement of last April, knowledge that would seem indicative of the need for the implementation of solutions to address the issue particularly given the fact that various government related entities, such as Fannie Mae and Freddie Mac, currently have about 200,000 homes in their possession.[6]

Despite the uncertainty as to whether the marked drop in foreclosures can be cited as an indication of an improving housing market or not, there are a number of other clear indications that the market is slowly on the way towards recovery. Home prices have increased year over year across the country and in virtually every major metro area, per the S&P Case Shiller Indexes.[7] Sales volumes have increased and home inventory levels have hit record lows, all of which can only be viewed as encouraging.[8] The housing market is on the way up, but there remain hardships to endure. A more clear indication on the part of the banks that they wish to be part of the solution, and not part of the problem, would do much to help dispel the greatest impediment to a return to a healthy housing market; the lack of confidence on the part of the average citizen in the institutions that comprise that market.

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What Will Mortgage Refinancing Levels Be After QE3?

Interest rate levels have once again hit historic lows. Will this lead to another sustained surge in home mortgage refinances? Regrettably, given the numerous obstacles that must be navigated by borrowers, such an event is unlikely.

With the implementation of round three of quantitative easing official, interest rates have once again dropped to record lows, hitting 3.72% on the 30 year fixed in mid September 2012, the lowest rate in the 30 year history of the Mortgage Bankers Association survey. Even prior to the announcement of QE III by the Fed the pace of home construction had increased in August, perhaps in anticipation of the policy initiative and an associated increase in home buyer interest. Applications for refinances continued to outpace those for new home loans, however, with the former comprising 81% of all mortgage applications. As QE III gains momentum, can we expect a return to the boom refinancing levels of recent years? Not so fast.

There are a number of impediments that borrowers will have to overcome in order to refinance their home and it is unlikely that we will see a return to the volume of refinances seen in the early days of the Great Recession, despite efforts by both the Federal Reserve and the Obama administration to lower rates and widen access to the resultant cheaper loans. Included amongst the obstacles facing both borrowers individually and the housing market as a whole, are the following:

  • Existent lenders are severely understaffed and overwhelmed by the paperwork associated with processing mortgage refinances.
  • There is less competition in the industry as hundred of lenders failed between 2006 and 2008, while others that survived either reduced their industry presence or exited the home lending business altogether. This has reduced industry capacity to deal with prospective borrowers.
  • Home prices have fallen 34% since July 2006 per the S&P Case Shiller Metro Index. This has led to homeowners having less equity in their homes and in many cases being underwater, i.e. having no equity at all as the balance they owe on their mortgage is a greater amount than what the home’s value is. Homeowners without equity cannot qualify for a refinance, regardless of interest rate levels.
  • Borrower fatigue induced by years of record low interest rates. Many of those borrowers able to qualify for these rates have already refinanced, some multiple times. There simply isn’t much depth in the pool of potential borrowers.
  • Buyback claims, which is when lenders are contractually obligated to repurchase loans if they are based on faulty appraisals, false data about borrowers or paperwork mistakes, have spiked in recent months, surging up $6 billion to $22.7 billion in the 2nd quarter of 2012. This has led an already bruised industry to become even more cautious and paperwork dependent. “With that hanging over their heads, they’re really, really defensive,” said Terry Wakefield, a mortgage industry consultant in Mequon, Wisconsin, who helped start a home lending unit for a Prudential Financial Inc. predecessor. “Lenders just keep asking for more and more and more documentation, not because they think it has any value but because they think it will help them if there’s a buyback demand.” Banks keep raising the bar for what’s required of borrowers during the refinancing process, straining even further the industry’s capacity for processing the associated paperwork.
  • Origination and title fees have spiked due to the elongated process, with the average costs of a $200,000 loan rising from $3,118 in 2008 to $4,070 in 2012.[1]
  • There is a growing delay in banks passing on interest rate cuts to consumers as the lowest rates in history could be even lower as lenders continue to take advantage of the spread between the rates they pay to borrow money and that which they charge their customers. Banks earn money from mortgages from lending at one rate, then bundling the loans together to sell them as mortgage backed securities (MBS) that pay interest at a lower rate. Historically that spread has been around 0.75%, but it has nearly doubled to over 1.4% in the past twelve months. If the spread had remained constant a 30 year fixed mortgage rate could be as low as 2.8%.[2]
  • The historically low rates are the result of continued concern regarding the economy, both global and domestic. QE III is the Federal Reserve’s answer to these concerns. By aggressively entering the Treasury securities market and purchasing $40 billion of such securities per month, rates are being driven down. Investors seeking safe haven for their money are also snapping up U.S. Treasuries, pushing rates down even further. Given the uncertainty surrounding Europe’s sovereign debt crisis, China’s economic slowdown and the impending Fiscal Cliff here in the United States, these trends are likely to continue making the government and banks even more reluctant to loosen tighter lending restrictions and lenders even more desirous of additional paperwork to protect themselves, with the latter resulting in an already difficult refinance process becoming even more onerous for all concerned.

QE III and the continued flight of worried investors to the Treasury market will keep rates low and in the short term should lead to a surge in refinance applications. This is unlikely to last, however, due to the reasons listed above. Those expecting a sustained flood of refinances will be disappointed. That said, the housing market as a whole will benefit from what is almost certainly going to be years of low interest rates. A nascent housing recovery is already underway, one that is broad based, but fragile. The near guarantee of the continuance of low mortgage rates will address that fragility, broaden the pool of potential buyers, and provide the necessary fuel for that recovery to continue.

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Could a Huge Drop in Underwater Mortgages Jumpstart the Economy?

With more than 10 million American homeowners who are underwater on their mortgages, will the United States economy ever be able to recover?

It would be difficult to argue that the housing market is not one of the major drains on the United States economy and a huge hindrance to its growth. In fact, some would say that the housing market is the number one reason why the economy ended up in the situation that it is in and why we haven’t recovered financially as a nation yet.

Possibly the largest problem with today’s housing market is the number of underwater homes that exist. When a homeowner is “underwater,” it means that they owe more money on their home than what it is actually worth. Today, there are nearly 11 million homeowners in the United States who find themselves in this precarious position. But why do underwater mortgages create such a problem for the housing market?

For one thing, homeowners who owe more on their home than its fair market value are more likely to have their homes foreclosed. Foreclosures are a close tie with underwater mortgages when discussing the main problems with the current housing market. Another problem with underwater mortgages is that the homeowners cannot sell the home without a huge financial penalty. If they owe more than the home is currently worth, they can sell the home for whatever price they can get, but they will still be responsible for the difference between the sale of the home and the amount that is actually owed on the house.

According to an article in the Washington Post, almost 50 percent of the homeowners under the age of 40 currently owe more on their home than what it is worth. This limits their ability to relocate to other areas where jobs are better or to downsize from their current home into something that is smaller and more affordable.

The federal government has been working overtime in trying to find viable solutions for this problem. Without a significant change in the situation, the economy is simply going to remain about the same as it is right now. One of the solutions that the Federal Reserve has come up with is to buy up to $40 billion of mortgage-backed securities in the upcoming months to help reduce lending rates. The strategy behind this is that many homeowners will refinance their homes at lower rates and this will give them more money to spend which, in turn, helps stimulate the economy.

Unfortunately, underwater homeowners do not usually have this option. It’s difficult, if not impossible, to get a refinance loan on a home for an amount that’s more than what it’s currently worth.

There seems to be some good news, though. The Washington Post reports that more than one million Americans achieved “positive equity” in the last year. That means that they are no longer underwater on their homes and they actually have equity. As a result, they have a better chance of being approved for a refinance mortgage. If many of them start refinancing, they will have extra money to spend each month because they can likely lower their monthly mortgage payments. That still leaves about 10 million American homeowners underwater, which accounts for about 22 percent of all homeowners in the nation. That’s more than four times the rate of underwater mortgages in a healthy housing market.

Until the rate of “negative equity” shrinks, there probably won’t be a huge surge in the American economy coming from the housing market. This is just the beginning of what appears to be a slow process.

Have you considered remortgaging now that rates are at historic lows? Check the rates where you live.

Buying A House with Less Than a 20% Downpayment

There are a variety of programs designed for homeowners who want to get a mortgage but don't have a large amount of cash for a downpayment. Programs such as My Community Mortgage, VA Loans, and FHA Loans allow an individual to purchase a home with 0% down in some cases.

Before the financial crisis, the “Great Recession,” and the housing collapse, it was common and easy for a homebuyer to purchase a house with 0% down. In some cases, a homebuyer wouldn’t put anything down and would get money back upon closing, which could be used for renovations, home furnishings, or other expenses.

Since the collapse of the mortgage market, it has become common to hear that those days are over. That’s not necessarily true. Although it has gotten tougher and more expensive to purchase a home without a down payment of 20% or more, it is still possible. While 20% down or more is ideal for receiving a conventional loan, and still necessary for a jumbo loan, it is always necessary to purchase a home.

“There are various programs aimed at helping buyers without a large amount of cash to purchase a new home,” said John Shaedel from the lender National Mortgage Alliance. “The expanded agency mortgage route offers programs such as My Community (3-5% down), HomePath, and various other First Time Buyer Assistance programs. There is also the government route, with FHA programs (3.5% down) and special case FHA programs as well as Community Assistance down payment programs. If someone is a veteran, there are VA loan programs (0% down). If in a qualified area, there are USDA RHA programs (0% down).”

My Community Mortgage

My Community Mortgage is a Fannie Mae program that provides very flexible mortgage options for qualified low-income individuals. The program will finance up to 97% of a home (meaning the buyer only needs a 3% downpayment). It's available to purchase or refinance a single-family home, PUD, condominium, or a 2–4 family home. Other features of the program include:

  • Only requires a 3% downpayment from the borrower
  • Competitive rates
  • Requires PMI for downpayments of less than 20% but at a reduced rate.
  • Not just for the first-time homebuyer and can be used to refinance a mortgage.
  • Available for fixed-rate or variable rate mortgages.

Learn more about My Community Mortgage

Homepath Mortgage Program

Homepath is a program run by Fannie Mae to help sell properties that they have received in foreclosure. Properties held by Fannie Mae are listed as Homepath and buyers of those properties can purchase them with as little as 3% down. Other features of Homepath are:

  • No need for an appraisal
  • Available for fixed-rate, variable, or interest-only loans
  • No PMI (mortgage insurance) necessary
  • Available for primary residences, second home, and investment properties (some condos are also available).

Learn more about Homepath

FHA Loans

FHA Loans are perhaps the most popular program for those who want to buy or refinance with a small downpayment. The loans allow anyone regardless of income to purchase or refinance a home with as little as 3.5% down. While anyone can take advantage of an FHA loan, the property must be a one to four unit structure. In addition, there are limits to the loan amount, which vary depending on which state the house is located.

“The biggest drawback to an FHA Loan are the fees associated with it. FHA is charging twice the fees they did a few years ago,” said Jim O’ Malley, a Senior Loan Office at Leader Bank. Compared to a non FHA mortgage, those fees can make a significant difference. FHA loans now have a 1.25% upfront fee and 1.25% PMI fee. So, on a $200,000 mortgage, the upfront fee would cost $3,000 upfront. FHA loans are generally competitive but adding the 1.25% of PMI makes them more expensive. A 3.25% 30-year fixed rate mortgage would become 4.50% with the PMI included.

Learn more about FHA Loans

VA Loans

The government estimates that more than 27 million veterans and active duty military personnel are eligible to receive a VA loan. These loans allow qualified buyers to purchase a home with no downpayment. In general the loans are good up to $417,000, although they can vary depending on the state and geography. Other advantages of a VA Loan include:

  • No mortgage insurance (PMI).
  • Limitation on closing costs.
  • Traditional or variable mortgage loans. Buyers can choose a traditional 30 year fixed rate mortgage, or a variety of ARM options.
  • Loans can be used to buy a house, condo (must be VA approved), or co-op. Loans can also be used to build a house or refinance an existing house, condo, or co-op.

Even if a veteran received a VA loan in the past, they may still be eligible to refinance or receive a new VA loan depending on the number of entitlements remaining or if the prior loan was paid off.

Learn more about VA Loans

USDA Loans

The USDA Rural Development Single Family Housing Guaranteed Loan Program offers guaranteed loans to with no downpayment to rural homebuyers. The program partners with approved local lenders to finance 100% of the value of a house to eligible rural buyers. To quality, a buyer must purchase a home in a qualifying rural area and household income must exceed the limit established for that area. Key features of the program include:

· 100% financing, no downpayment required.

· Individuals with “non-traditional” or lower than average credit scores may be accepted.

· USDA offers 30 year, fixed rate loans.

· Not limited to first time homebuyers.

· Eligible property types include existing homes, new construction, modular homes, Planned Unit Developments (PUD’s), eligible condominiums and new manufactured homes.

Blended Mortgage

A homeowner can also use a blended mortgage to finance the purchase of a home or refinance a purchase. Common before the financial crisis, blended mortgages allow homeowners to cover part of the downpayment with a home equity loan. A common blended mortgage might be a 80-10-10.

80% - Mortgage financing

10% - financed via a home equity loan

10% - financed via cash downpayment.

In this way a buyer could finance the purchase with less than 20% down and also avoid paying mortgage insurance. Not paying mortgage insurance can save the homeowner a significant amount.

Since the fiancial crisis it has become more difficult to structure a blended mortgage. Lenders have tightened up their standards and according to Mr. O’ Maley, they want to see house and other credit payments comprise no more than 45% of a household’s total income. Blended mortgages are tough with condos.

Jumbo Mortgage Downpayment Options Limited

None of the above applied to jumbo mortgages. Buyers who need a jumbo mortgage to finance their home need to have at least 20% down or it will be very difficult or impossible to get the loan approved. And none of the programs covered above are for non-conforming (jumbo) loans.

Housing Market is Slowly Healing

Without fanfare the domestic housing market has become something of a bright spot in an otherwise gloomy national economy. Indicators across the country give one encouragement that better days are ahead.

Lost amid all the doom and gloom of low GDP numbers, high unemployment, the ongoing European sovereign debt crisis and the looming potential of a plunge over the Fiscal Cliff is an improvement in the area of the economy from which originated the current economic malaise: the domestic housing market. Various indicators are trending in the same direction and at approximately the same pace: upward, but slowly. The improvement is broad based, however, which is encouraging, as signs of a return to health of the real estate market are appearing across the country.

Among the positive indicators are included the following:

  • Home prices have increased up over their levels of a year ago, according to the S&P Case-Shiller Home Price Index, by a margin of 1.2%. Case-Shiller tracks numbers in a national index as well as in a metro index consisting of twenty of the nation’s largest cities; the latter is showing improvement as well as Atlanta, Detroit and Miami, all among the hardest hit cities during the real estate crisis, showed month to month improvement from May to June.[1] Of all the cities that comprise the index, only Charlotte and Dallas showed a slowdown in their annual price appreciation rates.[2]
  • The number of existing home sales increased in July from the prior month. Even more encouraging, however, was that volume was up 10% year to year.[3]
  • Turnover of inventory has also increased, dramatically, as homes are now typically on the market for 69 days, down 29.6% from a year ago.[4]
  • Sales of new homes were of mixed results, as volume increased, while prices decreased. Year to year sales are up a startling 25.3%, but the corresponding price drop of 2.5% does dampen enthusiasm somewhat. The inventory of new homes did drop to a record low of 142,000 in July, which is difficult to view as anything other than strongly positive.[5]

The recovery of the housing market is crucial to the recovery of the national economy. The housing crash was the epicenter of our current financial travails with the low volume of housing sales combined with low sales prices representing a persistent drag on the U.S. economy. Some market observers are drawing optimism from recent numbers and are offering the opinion that the housing market is now contributing to, not detracting from, our national economic output. "We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change," said David Blitzer, a spokesman for S&P, in a statement. "The market may have finally turned around." There are a number of factors positively influencing the trend of the recent data, with two being particularly important: reduced inventory leading to competitive bids and historically low interest rates incentivizing buyers, with the caveat that stringent lending laws often lead to those most in need of access to these rates not being able to qualify.[6]

The road forward is not anticipated to be without its obstacles however, as typically seasonal factors begin to take a part as colder weather generally leads to a declining volume of sales. Additionally you have the wide combination of uncertainties including the presidential election, the Fiscal Cliff and continued high unemployment to name just a few. Some economists caution against relying on data from a national housing market that many don’t believe exists as real estate markets are Balkanized by their widely disparate data.[7] As Zillow Chief Economist Stan Humphries opines: "We're still a few years away from a normal housing market"[8]

Still, doubters aside, the housing market has quietly been a rare bright spot in our national economy for several months now and is at or close to adding to our economic output for the first time since 2005. Indicators consistently point to a rebounding housing market, most experts agree, including David Crowe, chief economist for the National Association of Home Builders, who said, "The fact that we continue to see a strong core of metros showing up on the improving list each month adds to the growing evidence that the emerging housing recovery has a solid foundation on which to build as housing returns to its traditional role of driving economic growth."[9] If Mr. Crowe is indeed correct this is the most welcome economic data this country has seen in a long series of lean, hard years.

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Fed Announces More Stimulus - What That Means for Mortgage and Savings Rates

The Fed today announced several moves that will impact mortgage and savings rates. The positive news is that the programs may result in lower mortgage rates. Unfortunately, savers will continue to suffer an environment of historically low savings rates.

The Fed today announced several moves that will impact mortgage and savings rates. The positive news is that the programs may result in lower mortgage rates. Unfortunately, savers will continue to suffer an environment of historically low savings rates.

One key piece of the Fed’s plan is to purchase $40 billion extra in mortgage backed securities with the goal of driving down mortgage rates. It will also continue to reinvest the principal payments it receives from its existing portfolio of MBS. Together, these activities will result in $85 billion in additional monthly MBS purchases.

Will these activities drive interest rates down further? Jimmy O’ Malley, a senior loan officer at Leader Bank doesn’t think so. According to him, increases in fees from Fannie Mae and Freddie Mac will eat up any reduction engineered by the Fed, resulting in stable rates. He doesn’t expect rates to rise or fall much in the next six months. “Now is still a great time to refinance or purchase a house,” he said, “even if rates don’t drop further. Rates remain near record lows.”

In addition, the Fed’s purchases of MBS were already widely anticipated by the market, and much of the impact may already be included in current mortgage rates.

Impact of Fed Decision on Savings Rates

The Fed statement also said that it will “keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.” This increases the period of exceptionally low rates by one year, from mid-2014 discusses in previous statements. For savers this means that the historically low rates on savings and CD rates will continue for the foreseeable future.

Savers can make the best of a bad situation by shopping around and finding banks that are growing and are hungry for consumer deposits. Banks that need consumer deposit funds will pay more.

Impact of Fed Moves on Economy

Beyond the impact on savings and mortgage rates, will the stimulus, dubbed QE 3, help the economy? The best analogy I heard was from an analyst on CNBC (I can’t remember his name). He said the Fed can rev the engine with these policies, but the transmission can’t engage. Because of that, a revving engine will not result in faster economic growth.

JP Morgan Chase is Making Mortgage Modifications Easier

If you have a mortgage through JPMorgan Chase, you may be receiving a letter with new mortgage terms in the near future.

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?

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