The state of California announced a new state law imposing a 90-day moratorium on home foreclosures that went into effect for local borrowers who were unable to get access to a loan modification program. Under the program lenders must prove they attempted to offer mortgage loan modifications with delinquent home loans before they begin the home foreclosure process.  The moratorium is very similar to the federal mortgage relief program that started last December and ended April 1.

The goal is to ensure loan servicers make legitimate attempts to work with borrowers before foreclosing. Because of the Federal moratorium, most of the big mortgage lenders already have a loan modification program in place. Those companies don’t have to comply with the new state law and can apply for an expemption.

That process however, can take up to a month to complete. During that time mortgage loan servicers can carry on with business as usual, including foreclosing on delinquent accounts. The State announce the California moratorium would go into effect immediately, but will the major mortgage lenders fall into line with it?

California Foreclosure Moratorium Guidelines:

ü  The moratorium applies to first mortgages made from 2003 through 2007.

ü  The mortgage loan must be for your principal residence.

ü  The homeowner must have received a notice of default.

ü  The home loan servicer does not have a California loan modification program in place.

ü  Because many homeowners are upside down on their mortgages

There is a concern that the 90-day negotiating period will only postpone the inevitable because so far the banks are not reducing the principal.  California doesn’t know how many people will actually have their foreclosures put off, nor what banks already have loan modification programs in place. The Department of Corporations does plan to post which institutions apply to be exempt from the moratorium.

Loan modification activity continues to rise as delinquent homeowner look for help.  Mortgage loan modification agreements have helped many homeowners salvage their homeownership with lower mortgage payments, but not everyone qualifies.  Mortgage modifications and loan workouts are successfully negotiated when the borrower has a job and has the ability to afford the revised loan payment.

A new cycle of mortgage bills arising from the high number of home foreclosures in the Inland area and around California is moving through the Legislature, following major initiatives at the state and federal levels in the past year.

The bulk of the new state proposals expand protection for renters living in foreclosed properties, create new rules for reverse mortgages, and impose standards on loan-modification consulting companies, such as banning them from taking advance payments from troubled homeowners.

Some industry groups and lawmakers question the need for more state legislation so soon after Congress and the Legislature approved measures to address the foreclosure problem.  Some of the laws have been on the books for only a relatively short while. 

A 90-day foreclosure moratorium approved as part of the February budget package takes effect Monday.  “It’s premature to add new legislation on top of what we have before we see what the results are,” Dustin Hobbs, of the California Mortgage Bankers Association, said. “We’re not saying more action can’t be taken down the road. But let’s see what happens first.”  But supporters say much remains to be done to address the state’s foreclosure problem, and to prevent it from happening again.

Paul Stein, associate director of the California Reinvestment Coalition, which advocates for low-income residents in the financial sector, said Congress is taking the lead in crafting foreclosure-related fixes. Those include possibly making it easier for bankruptcy judges to modify mortgage payments for struggling borrowers.

There is still a large role for the state to play, he said.  “It’s still the case that … financial institutions are not accountable for the impacts of foreclosures on borrowers and communities. They’re really not obligated to help anybody,” Stein said.

Home Loan Defaults Rise

Foreclosures have been a major burden on the Inland economy. In April, there were almost 5,000 notices of default filed in Riverside County, according to ForeclosureRadar, a tracking service. The notices are the first step in the foreclosure process. The county had the fourth-highest rate of foreclosure sales last month.

San Bernardino County had about 4,000 notices of default and the seventh-highest rate of foreclosure sales in April.  The main state foreclosure law to emerge last year was SB 1137. It requires lenders and loan servicers to talk with borrowers before starting foreclosure proceedings. The aim is to get more loan modifications.  This year, lawmakers introduced more than 30 foreclosure- and mortgage loan modificationj related bills. Nearly all of the authors are members of the Legislature’s Democratic majority.  About 24 measures are still pending, with most facing a Friday deadline to clear the Legislature’s appropriations panels.

Some of the foreclosure prevention bills would put the state in compliance with the federal Secure and Fair Enforcement of Mortgage Licensing Act approved in July 2008.  The law requires mortgage loan originators to be licensed and complete 20 hours of pre-licensing legislation, along with other requirements.  It wasn’t clear whether mortgage lenders and banks would be exempt from this new licensing requirement.

The Treasury Department has expanded its loan modification program and is now offering incentives for short sales and insurance to “partially offset” price declines on loan modifications during the first two years. The “Home Price Declines Protection incentives are designed to address investor concerns that recent home price declines may persist,” according to a Treasury fact sheet. And it provides cash payments based on average local price declines. The incentives accumulate each month the modified loan is current and payments are made at the end of the 1^st and 2nd year. “It’s just an additional incentive to participate in the program,” Treasury secretary Timothy Geithner told reporters. For distressed homeowners that are eligible for a Home Affordable Modification but can’t keep up with the payments, Treasury is providing incentives for servicers, investors and homeowners to try a short sale or deed-in-lieu if the property is not sold in 90 days. Secretary Geithner noted 14 servicers have signed up for the modification program and they have made modification offers to 55,000 borrowers so far. “This is just the beginning,” the secretary said. Treasury is prepared to expand and improve the program to “reach as many Americans as we can,” he added. Treasury also reported that Fannie Mae has purchased 2,150 Home Affordable Refinance loans so far. The mortgage giant has received over 51,000 eligible mortgage refinance applications where the loan-to-value ratios are between 80% and 105%. Freddie Mac has purchased 1,500 of these refinanced loans that do not require new mortgage insurance.

Homeowners continued to fall behind on their monthly mortgage payments in the last quarter of 2008, boosting delinquency rates and adding to the already bulging portfolio of foreclosures nationally, the Mortgage Bankers Association said yesterday.  The number of home loans at least 30 days past due stood at 3.6 million, or 7.88 % of the country’s 45.4 million home loans.

 

The data were announced one day after the Obama administration released details of its Making Home Affordable Program, designed to stem foreclosures by allowing as many as nine million borrowers to either refinance or modify their mortgages.

 

Mississippi had the fourth quarter’s highest %age of past-due mortgages, 13.11 %, or 33,120 loans out of a total 252,638. It was followed by Nevada (11.12%, 63,027 loans out of 566,795 total) and Florida (11.09 %, 396,903 of 3,578,000 total).

 

Pennsylvania’s delinquency rate was 8.32 % of all home loans, about 130,000 of the state’s 1.561 million mortgages. Of New Jersey’s 1.275 million mortgages, 7.68 %, or 97,920 loans, were behind on payments.

 

The delinquency rate excludes loans already in foreclosure. At the 4th quarter’s end, that figure stood at 1.5 million home mortgages, or about 3.30 % of all home loans.  “Foreclosure inventory jumped sharply in the fourth quarter, even though the rate at which loans were entering foreclosure remained unchanged,” said the association’s chief economist, Jay Brinkmann.  He attributed that primarily to state and local moratoriums on foreclosure sales, as well as the November decision by Fannie Mae and Freddie Mac to halt such sales, loan servicers’ reluctance to proceed with evictions over the December holidays, and overburdened legal processes in some areas.

 

A flat foreclosure rate does not necessarily mean housing’s downturn has hit bottom. The survey showed that the percentage of loans 90 days past due increased in the fourth quarter, but that foreclosure actions on a large number did not occur as servicers tried to modify loans and deal with investors who own securities of which these mortgage loans are a part.   Because loan servicers have been unwilling to talk with homeowners who are not behind in their payments, Brinkmann said, some “borrowers are running their accounts 90 days delinquent in order to qualify for certain modifications.”

 

A provision of the Obama administration’s plan to help cut the delinquency rate allows borrowers who are current on their mortgages to negotiate with servicers about loan modification options.  Gibran Nicholas, chairman of the CMPS Institute, which certifies mortgage bankers and brokers, complained that the plan’s guidelines lack a maximum total-debt ratio.  For example, modification might reduce a borrower’s mortgage payment to the plan’s target 31% of monthly income, but his or her total overall debt load, including car loans and credit cards, could be 75%.  “If the borrower defaults on the loan modification, taxpayers are on the hook for more money,” Nicholas said.

 

Farah Jiminez, executive director of Mt. Airy USA, which counsels home buyers as well as borrowers in financial trouble, said she was still seeing first-time home buyers walk in with prequalified mortgage loans that require payments equivalent to 44% to 56% of the buyer’s income.  “To really halt foreclosures, we need to stop those entering the revolving door, not just catch those that come out the other end,” she said.  “The bailout plan is focused on the latter, but who is focused on the former?”  Article was written By Alan J. Heavens.

The Obama administration kicked off the “Making Home Affordable” initiative, a $75 billion loan modification program, which runs through 2012. To qualify for this mortgage loan relief program, borrowers will have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship”.

 

Homeowners are only allowed to have their home loans modified once, and the program only applies for loans made on Jan. 1 2009 or earlier. Up to 4 million borrowers are expected to qualify. Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.

 

The legislation that gives bankruptcy judges the power to force lenders to lower mortgage rates or principal balances has been narrowed. Now, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their home mortgage loans. The compromise in legislation is expected to come to a vote in the House as early as Thursday.

Most home financing experts like Jason Cardiff believe that “we have not hit the bottom of the market and lending companies have lost so much that they can’t afford to repossess more homes in this foreclosure crisis.  

Mortgage executive Scott Hess sat down with Loan Modification Buzz recently and discussed the mortgage relief movement by lenders who simply do not want to take over more properties from foreclosure. Hess said, “Many properties in California owe significantly more than their home could be sold for.”

 

 

Watch Video of Loan Modification Buzz Interview with Scott Hess

More than 12% of homeowners in one Solano County ZIP code are more than 90 days late making their mortgage payments, according to an online data base. 

 

 

 

According to the First American CoreLogic database, as of November, the 94589 ZIP code -- the part of Vallejo north of Redwood Street and West of Interstate 80 -- had the area’s highest rate of late payments, at 12.48%. That’s about three times the previous year’s rate.  Homeowners in this region of California have been targeted for loan modification plans by many of the mortgage lenders that funded most of the mortgage loans between 2005 and 2006.

 

First American CoreLogic is a firm that collects national, state and local real estate sales-related data.   Homeowners in the 94533 ZIP code had the second-highest late payment rate at 9.56%. In that area -- which covers most of Fairfield proper -- only just over 4% of homeowners were in that position in November 2007.   Vallejo’s 94590 ZIP code, which incorporates most of central Vallejo, is right behind at 9.32% of homeowners more than 90 days late. 

  

Foreclosure rates in Vallejo-Fairfield increased during December over the same period last year, as well, CoreLogic found. According to its most recent data, the foreclosure rate for the area was 2.20% for December, an increase of 0.40 %age points over last year’s 1.90% rate. That’s higher than the national foreclosure rate of 1.7% for December.   The home loan delinquency rate in the Vallejo-Fairfield area increased to nearly 9% in December from 5.50% in the same period in 2007, CoreLogic reports.

 

In the 94558 ZIP code, Napa’s Spanish Flat area at the tip of Solano County, only 2.42% of the homeowners are behind 90 days or more on their mortgage payments, according to CoreLogic.   But though that is the area’s lowest late rate, it is a significant jump from .73% from last year.

 

Homes in Vallejo’s 94591 ZIP code, the area east of I-80 and includes Hiddenbrooke, seem to be selling best, Collins said. A high percentage of homeowners at least 90 days late paying their mortgage would ordinarily mean a correspondingly high percentage of new foreclosure proceedings, said Alan Schwartzman of Benicia’s Advance Mortgage. But these aren’t ordinary times.   Some mortgage lenders are in the middle of a foreclosure moratorium and distressed home owners may get some mortgage relief from the national stimulus package, he said.   Read the complete article online written by Rachel Raskin-Zrihen of the Herald Times.

 

You can visit them online at Loan Modification Leads or Live Transfer Leads online.  LMB provides premium mortgage modification leads for many of the most respected law offices and top producing loss mitigation companies nationally. 

Treasury Secretary Henry Paulson, trying to deal with a worsening housing slump, discussed a new initiative aimed at helping homeowners who risk losing their homes.  Struggling homeowners are seeking loan modification programs from their lenders, but the process is taking 4-6 months in many cases.  Mortgage lenders simply have not invested in their loss mitigation departments. Maybe the banks thought this foreclosure crisis would just go away on its own.

 

Watch Paulson Discuss Loan Modifications, Liquidity and the Mortgage Rescue Plan

Some delinquent homeowners are reporting that they can’t get through by phone to their mortgage company’s loss mitigation center.   Many mortgage companies and bank institutions laid off thousands of employees last year, leaving most lenders unprepared for a significant increase rise in mortgage relief requests. That has led to a bottle-neck in processing loan modification applications. Some borrowers are having a hard time getting their lenders on the phone.  

Reuters recently reported that U.S. mortgage companies increased their use of loan modifications in foreclosure prevention efforts to a record level in December, an industry group said on Thursday. 

Mortgage loan modifications, or permanent mortgage changes to lower payments, reached 122,000 in December, compared with the previous high set in October, said Hope Now, a coalition of mortgage service companies, home loan lenders and credit counselors.  Total “workouts,” including negotiated payment plans, increased to a record 239,000 in the month.  Regulators and lawmakers have criticized the industry’s foreclosure prevention efforts as too slow, or not effective, given reports that more than half of the modifications were failing after six months. The Federal Reserve said this week it would make additional measures to limit foreclosures by encouraging servicers to provide loan modification plans for at least $74 billion loans it owns, or has stakes in.

Mortgage Foreclosures Spiked 81% in 2008

More than 2.3 million American homeowners faced foreclosure proceedings last year, an 81% increase from the previous year.  Recent foreclosure reports suggest that one in five of those households in California are presently delinquent on the home mortgage.

 

Hope Now, an industry group that includes major mortgage lenders such as Wells Fargo & Co (WFC.N: Quote, Profile, Research) and subprime loan servicers, said members will likely turn more to re-underwriting new mortgage loans with lower interest rates or principal, over the less draconian practice of setting new payment plans to stretch out costs.  “Hope Now expects that the increasing reliance on loan modifications rather than payment plans will continue as economic conditions warrant,” the group said in a statement.  Data showing more prime borrowers than subprime borrowers were facing foreclosures in December underscored the urgency of foreclosure prevention. Total foreclosure starts rose by 34,000 in December from November, 75 % of which were prime loans, it said.  

In an attempt to boost the weak economy, the Federal Reserve cut interest rates to a record low of less than .25 percent. This is good news for loan modification agreements because lenders are offering lower mortgage rates with more affordable loan workouts.  Federal Reserve cut its key interest rate to below 0.25%.

RealtyTrac reported that 850,000 foreclosed homes are already on the market and real estate experts anticipate that this number will increase by another 1 million homes in 2009, with 2 million more homes entering the foreclosure process during the same period. 

Countrywide Loan Modification Information

Corporate owner: Bank of America
Department:  Home Retention Division.

Call (800) 669-6607
Web site: www.homebycountrywide.com
Call the customer service telephone number on your loan statement.

Important loan modification qualifications: Proven financial hardship and target debt-to-income (DTI) ratio: 34%

Mortgage Relief Options:

ü  Temporary Forbearance

ü  Repayment Plan for Delinquent Loan Payments

ü  Mortgage Rate Reduction

ü  Extended Mortgage Terms

ü  Re-Amortization of Outstanding Mortgage

ü  Foreclosure Stay

ü  Home Refinancing

ü  Short Sale
Deed in Lieu of Foreclosure

Hardship letters are being sent to borrowers who are sixty days delinquent or who are deemed likely to become delinquent based on a computer model that crunches the borrower’s credit score, payment history, debt-to-income ratio, home value, interest rate reset and other factors. If you don’t get a loss mitigation letter, that doesn’t necessarily mean you won’t qualify. Countrywide and Bank of America reserve the right to approve or deny loan modification plans.  Income documentation and signed financial statements are required.

Noted IndyMac Loan Modification Qualifications:

Government agency:  Federal Deposit Insurance Corp., or FDIC.
Call (877) 908-HELP (4357)
Web site: www.imb.com

ü  Inability to afford your current mortgage payments.

ü  Missed home loan payments.

ü  Ability to make modified payments.

ü  May need to prove financial hardship.

Target debt-to-income (DTI) ratio: 38%.

Mortgage Relief Options:

-      Repayment plan

-      Interest-rate reduction

-      Extension of loan term

-      Conditional forbearance

-      Foreclosure stay

-      Principal deferral

-      Short sale

-      Deed in lieu of foreclosure

Hardship Letters: IndyMac sends out “invitations to apply” for a mortgage modification and ready to sign preliminary loan modification offers based on information that’s on file.  IndyMac loan workouts require verification of income and expenses and financial statements must be signed. Borrowers who have missed two payments are more likely to receive a letter.

Chase/ WAMU Contact Info for Loan Modification Programs

Corporate owner:   J.P. Morgan Chase
Contact:  Call the telephone number on your mortgage statement.
Call (800) 848-9136
Call (866) 550-5705
Visit a Chase regional counseling center.
Web site: www.chase.com

Hardship letter may be required.  Loan modification plans are offered only to owner-occupied residence.  Mortgage owned by Chase, WaMu or EMC or with investor approval.

Target debt-to-income, or DTI, ratio: 31 % to 40 %, capped at 50 % for borrowers who’ve demonstrated they can pay more.

Loan Relief Options:

Ø  Repayment plan

Ø   Principal forbearance

Ø  Mortgage modification in hardship situations

Ø  Extension of loan term

Ø  Deferral of principal

Ø  Interest rate reduction

Ø  Foreclosure moratorium

Ø  Interest-Only Payments limited to ten years

Ø  Hope for Homeowners Program

Ø  Refinancing with lender-paid closing costs

Ø  Pre-foreclosure short sale

Ø  Deed in lieu of foreclosure

Hardship Letters:  Chase will send letters to borrowers who have subprime adjustable-rate mortgage loans or payment-option ARMs. Borrowers are more likely to receive a letter if they’ve racked up the maximum amount of negative amortization and their interest rate is scheduled to reset. Chase and WAMU reserve the right to approve or deny loan modification plans.  Income documentation and signed financial statements are required.

Citi Mortgage Contact Info for Loan Modification Programs

Departments:  Office of Homeowner Preservation, Borrower Relief Centers.
Citi Contact: Call the telephone number on your loan statement.
Call (800) MORTGAGE, or (800) 667-8424
Fax (480) 753-7832.

E-mail mortgagehelp@citi.com
Web site:  www.mortgagehelp.citi.com

Required qualifications for loan modifications:

Ø  Principal residence   Ø  Sufficient reliable income to afford modified mortgage payments.

Ø  Mortgage must be owned by Citigroup Inc.   Ø  Target debt-to-income (DTI) ratio: 38%

Mortgage Relief Options:

Ø  Mortgage Rate Reduction.

Ø  Extension of loan term.

Ø  Forgiveness of principal.

Ø  Foreclosure moratorium.

Ø  Financial education services.

Hardship Letters:  Citi is “reaching out to customers through calls, written correspondence, e-mail, toll-free assistance lines, online social networks and external counselors,” according to a company statement. Homeowners in Arizona, California, Florida, Indiana, Michigan, Nevada and Ohio are most likely to receive a letter because of declining home prices, high unemployment and economic distress in those states.

Loss Mitigation Tip: Citi also conducts local outreach programs with nonprofit counseling organizations.  Citi Mortgage reserves the right to approve or deny loan modification plans.  Income documentation and signed financial statements are required.

With its bailouts of Bear Stearns and American International Group, the Federal Reserve took a vast portfolio of mortgages onto its books. Now, it is trying to use its control of billions of dollars worth of home loans to help prevent foreclosures. The Fed will seek to revise negotiated mortgage terms it owns that might otherwise enter foreclosure, Chairman Ben S. Bernanke told congressional leaders in a letter yesterday. The decision won praise from congressional Democrats, who took it as a sign that the central bank’s leaders are cooperating with mortgage relief efforts from the government’s power to try to reduce home foreclosures nationally.

It is unclear how many homeowners stand to benefit. Under the program, the Federal Reserve can provide loan modifications by reducing what a homeowner owes on a mortgage, lower the interest rate, lengthen the term of a loan or take other steps to keep a loan from defaulting, if doing so would offer taxpayers a better long-term payoff than foreclosure. Individual borrowers are unlikely to know whether their mortgage loans are owned by the Fed, but if they qualify for a renegotiation, they would deal only with their mortgage servicer.  The Fed is emphasizing reducing the amount of principal owed by people at risk of foreclosure, particularly those with a mortgage loan balance that is more than 125% of the estimated value of their property. Private lenders have been reluctant to renegotiate mortgage rates that way, as some of the institutions that own those loans, in the form of mortgage-backed securities, stand to lose money and therefore object.  Bernanke has previously advocated principal reductions, saying in a speech in March that they could be an “effective means of avoiding delinquency and foreclosure.” Mortgage modification programs remain the hottest alternative to home refinancing.

This week the House Judiciary Committee approved legislation aimed at helping Americans keep their homes through bankruptcy.  I introduced the Helping Families Save Their Homes In Bankruptcy Act of 2009 to give courts the power to modify mortgages to bring them in line with underlying home values. For families in distress, this is a much-needed home financing reform. And considering the realistic mortgage alternatives, it is fair to all concerned.

I have been working on this bill for nearly two years. I believe it represents one of the most tangible and productive steps we can take to limit the fallout from the real-estate depression that has been sweeping the nation. While it is not the entire answer to the economic crisis, it is a common-sense and practical approach to stopping a downward spiral where foreclosures also depress nearby home values and thereby hurt other homeowners. This spiral is not helping anyone — not homeowners, not lenders, and certainly not communities.

Some argue that we are acting too quickly, and that we should delay my legislation to give homeowners and lenders more time to modify the terms of existing home loans on a voluntary basis outside of bankruptcy. But the evidence shows that such modifications don’t work. For one thing, many of the service companies who control the mortgage loans claim they are not legally permitted to agree to voluntary loan modifications. And even when they are legally permitted to agree, their financial incentives are stacked in the direction of foreclosure.

As a result, the much-vaunted federal “Hope for Homeowners” program launched in October has been only a limited success. The program is supposed to facilitate new mortgages for homeowners if FHA mortgage lenders agree to reduce the amount of money owed on a home to 90% of its assessed value. The FHA loan program went into effect with the goal of helping hundreds of thousands of homeowners. To date, it has processed less than 400 FHA Hope for Homeowners applications. To those who claim that my bill will end up harming consumers by increasing the cost of credit, I would respectfully suggest that they are not taking account of the track record of the modern-day bankruptcy code.

For more than three decades, the bankruptcy code has permitted the very kind of court modification we are considering today, for every other form of secured debt, including loans secured by second homes, investment properties, luxury yachts, and jets. For over twenty years, this very kind of mortgage modification has been available for home mortgages already — if the home is a family farm. There is no indication that this has in any way increased the cost of credit for any of these kinds of home loans.

As for my legislation, we have narrowed it to apply only to existing mortgages. So it will have no effect on new home mortgages and cannot impact their cost. This is one reason why Citigroup is now among the many business and consumer groups that support this proposal. It’s also one reason why the Obama administration supports my bill.  Article Written By JOHN CONYERS JR.  Read the complete article >

Recent mortgage loan delinquency reports indicated that 10% of homeowners in the United States are now in default with their lender. Mortgage loan modification experts forecast that in the next year or two that the number of borrower’s defaulting will double to more than 20 million households, with many others on the verge. This is nearing epidemic proportions, say industry professionals. With the fear of foreclosure and the threat of losing their houses, many homeowners remain discouraged because they have been turned down for mortgage refinancing. In addition, these borrowers are often misinformed about loan modifications and alternative mortgage relief solutions that may be available to prevent foreclosures.  The Loan Modification Buzz reports that consumers are fed up with low rate talk that in most cases is only available to homeowners who have high credit scores and tangible equity in their home.

As seen on CNN Money, homeowners need to demand that their bank show proof of a promissory note, which many banks lose or destroy. Without this evidence your house could be saved from foreclosure.

Loan modification programs continue to invade the mortgage sector, because so many homeowners are turned down by their lender when seeking a refinance loan. In most cases the borrower does not have enough equity, but many homeowners are delinquent on their mortgage and their credit scores are too low for most refinance opportunities.

Chase announced today that it has extended its mortgage modification efforts to their mortgage loans that are owned by investors that it services — about $1.1 trillion of home mortgages — significantly expanding the outreach and effectiveness of the mortgage relief announced previously with their mortgage modification programs. Chase now owns WAMU, so the number of loan modifications possibilities is staggering.  These foreclosure prevention efforts include investor-owned home loans held in securitizations.

 

Based on the company’s review of investor agreements and its experience with investors and trustees to date, Chase has made the decision that they can legally restructure loans with loan modifications of the majority of mortgage loans owned by investors consistent with the relevant investor agreements and the best interests of investors and intends to offer loan modifications where their loss mitigation department deems appropriate. Chase will continue to seek investor approval in the small number of situations where investor agreements contain specific terms that may limit modification actions Chase can take.  “Building on our loan modification efforts for Chase-owned mortgage loans, we have reviewed closely the terms of our investor agreements and have worked with investors, trustees, government officials and other interested parties to fashion an approach to foreclosure prevention efforts that will work for investors and homeowners,” said Charles W. Scharf, Chief Executive Officer for Retail Financial Services at Chase.

 

“When homes are foreclosed, everybody suffers, so working aggressively to modify all home loans -whether owned by Chase or owned by others – on terms that should work for the borrower, makes good sense for everyone,” he said. “Our experience at Chase shows that when home loans are properly modified, using income verification and other appropriate qualifying criteria, they perform very well over time.”  Chase announced enhanced foreclosure prevention efforts on October 31, and the company now has in place the people, programs and tools to help more borrowers remain in their houses.  Since early 2007, Chase has prevented about 330,000 foreclosures, primarily by modifying loan terms. Since its October announcement covering Chase-owned loans, Chase has accomplished the following below:

 

o    Delayed starting foreclosure on over $22 billion of Chase-owned mortgages of more than 80,000 homeowners so that Chase could review those home loans for possible mortgage modification under the enhanced program.

 

o    Implemented the previously-announced, more attractive package of loan workout offers for delinquent homeowners.

 

o    Finalized for mailing in early February proactive mortgage relief offers to borrowers of Chase-owned loans at imminent risk of default.

 

o    Selected locations for 24 Chase Homeownership Centers in areas with a high rate of foreclosures and loan delinquencies where counselors can work face-to-face with struggling homeowners. Two of the centers are now open; 12 are expected to be open by Feb. 28; and the remaining 10 are scheduled to open by mid-March.

 

o    Added 300 new loss mitigation counselors in the last 11 weeks to provide better help to troubled borrowers, bringing the total number of counselors to more than 2,500.

 

o    Initiated an independent review process to ensure each borrower was contacted properly and offered loan modification plans prior to foreclosure, if appropriate.

 

o    Developed a robust financial modeling tool to analyze and compare the net present value of a home in foreclosure to the net present value of a proposed loan modification; use of this tool will allow Chase to determine that it is acting in the best interests of investors when making loan modifications.

 

o    Worked to help establish a non-profit clearinghouse to join Chase and other mortgage lenders who want to donate or discount their owned real estate with the non-profit and government agencies that can use these properties. Chase is continuing to work with individual non-profit and government agencies; to date, Chase has completed five donations and has 47 discounted sales pending.

 

o    Worked with Fannie Mae and Freddie Mac to implement their new Streamlined Modification Program for borrowers at least 90 days delinquent; 19,000 letters were mailed in the last week of 2008.

 

Chase continues to work with Fannie Mae to implement Fannie Mae’s previously announced program to assist distressed homeowners in an effort to minimize loan defaults and foreclosures. Through the initiative, Chase believes it will be able to meaningfully increase the number of homeowners it can help.

Thousands of homeowners in Virginia threatened with foreclosure will now be offered some mortgage relief with reduced rate loan modification assistance.  Virginia Attorney General Bob McDonnell says 8,900 homeowners will get some mortgage relief from the $8.4 billion Countrywide Financial settlement, resulting in nearly $213 million in assistance.

Homeowners who were involved in subprime mortgage loans with balloon payments are eligible for relief with lower rate loan modifications. Hundreds of others who have already lost their homes could also get some compensation.  “Everybody that has been that has been affected by, what we’ve alleged, are deceptive practices by failing to disclose all the terms of the increased payments will be afforded some relief under this agreement,” McDonell says.  Countrywide loss mitigation departments, which are owned by Bank of America, promised to contact eligible borrowers with mortgage relief options.

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