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Wednesday, May 22, 2024
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JPMorgan Chase Hiring 300 Workers to Assist Mortgage Holders

At least one job category is showing signs of growth , loan counselors.

In the past few weeks, banks, along with the federal government, said they plan to temporarily stop foreclosures, and amend mortgages to help distressed borrowers to continue making their payments.

Among lenders that have launched loan counseling and modification programs are JPMorgan Chase (which owns Washington Mutual Bank), Bank of America (which owns Merrill Lynch), and Citibank.

And on Nov. 11, decision-makers in Washington, D.C., announced a loan workout program to help borrowers who hold mortgages owned by Fannie Mae and Freddie Mac.

While programs vary, they target borrowers who are having trouble making higher monthly payments after their adjustable rate mortgages reset with higher interest rates.

JPMorgan Chase said it plans to open 24 regional counseling centers and hire 300 counselors in 90 days to “introduce new financing alternatives to offer prequalified modifications, and commence a new process to independently review each loan before moving it into the foreclosure process.”

Chase spokesman Gary Kishner said counselors would meet with borrowers and review their personal finances to determine where they can scale back so that they can continue living in their homes.

While terms vary, changes to loans could involve deferral of payments on the principle, converting an adjustable interest rate to a fixed rate and/or extending the term of the loan, Kishner said.

Too Little, Too Late

Many critics say loan modification efforts are a bit too little, too late to help the large number of borrowers who are already far along in the foreclosure process or whose loans are no longer owned by the originators of the mortgages.

“It’s difficult because a lot of these loans were sold to investors,” said Mike Perry, chief executive at San Diego Trust Bank. “It’s going to be difficult to find out where that loan is so they can restructure it.”

Hans Ganz, chief executive at Pacific Trust Bank in Chula Vista, said he doubts modification programs would help borrowers who have defaulted on payments and are close to losing their homes. He said the bulk of the foreclosures are nearing a tipping point.

“I don’t see the foreclosures greatly increasing,” he said. “Maybe you’ll see one more month of increases, and after that, you’ll see decreases.”

According to an October report by MDA DataQuick in La Jolla, during the third quarter in San Diego, 7,062 notices of default were recorded.

The notices are the first step in the foreclosure process that could take several months before a bank takes back a house.

That was up from 5,673 notices of default recorded in the third quarter of 2007.

Another tracking firm, Foreclosures.com, found that of the 828,670 foreclosures this year, 255,000 were located in 10 counties, including San Diego.

Jim Bliesner, director of the City-County Reinvestment Task Force, which works with banks to promote community reinvestment, said the monthly foreclosure activity in the county has been fairly steady during the last six to nine months, averaging 15,000 notices of default and 5,000 notices of foreclosure.

Programs Not For Everyone

While workout programs offer some respite for homeowners, the fact is that many borrowers are so “under water,” or owe more on their loan than their property’s current value, that many are walking away from their home, Bliesner said.

The federal programs may not be attractive to many borrowers because the government wants some equity in exchange for amending the loan agreements.

“You have to be a highly motivated borrower to accept these terms so that you can stay in your home,” he said.

Perry said that even if the programs do help some people retain their homes, foreclosure activity is likely to continue because of the worsening unemployment picture.

“The problem is, if you don’t have any income, it really doesn’t matter what the interest rate is,” Perry said.

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