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Paul Kiesel
Paul Kiesel
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JPMorgan Chase: 90 Day Foreclosure Moratorium

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JPMorgan Chase will not be putting any more homes into foreclosure over the next 90 days, as it comes up with a loan modification plan geared towards keeping borrowers in their homes.

In a press statement released on Friday, JPMorgan said that the modifications should impact as many as 400,000 borrowers, or approximately $70 billion in mortgages, and almost $55 billion will focus on option ARM loans that JPMorgan inherited after purchasing Washington Mutual and absorbing its "toxic loans."

JPMorgan will offer borrowers in payment option ARM loans alternatives such as 30-year, fixed-rate loans with affordable payments (principal deferral, interest-only payments for a specified period, etc.).

Even though it appears that JP Morgan Chase is: 1. Trying to mitigate its own losses by enacting this moratorium and 2. Wants to keep people in their homes, the company likely has ulterior motives; by going forward with this plan, at this current time, JPMorgan can avoid further market regulation surrounding its servicing practices. House Financial Services Committee chairman Barney Frank (D-MA) has been suggesting all throughout the mortgage crisis that lenders who fail to implement programs to modify loans or choose to ignore Congress’ call to correct servicing practices will be subject to further regulation.

According to HousingWire.com, "With reports now surfacing that investors aren’t willing to participate in the recently-legislated Hope for Homeowners — as well as early reports suggesting that lenders are refusing to buy the loans, as well — it’s very possible that JPMorgan is trying to keep ahead of a potential political firestorm over the issue."

It’s not clear if JPMorgan will be able to yield these proposed ambitious results (400,000 loan modifications within 90 days?), considering investors play a role in this whole process, but maybe they’ll find more success than FDIC IndyMac, which, in comparison, has only modified about 4,500 loans or 1% of the total JPMorgan wants to help.