JP Morgan Chase Unveils $70B Mortgage Modification Program

31 10 2008

JP Morgan Chase & Co. on Friday became the latest major bank to beef up its mortgage modification efforts as the government also considers a plan to help homeowners avoid foreclosure.

JP Morgan’s expanded program aims to help avoid foreclosures on an estimated $70 billion in loans, which could help as many as 400,000 customers. The New York-based banking giant has already modified about $40 billion in mortgages, helping 250,000 customers since early 2007.

JP Morgan will not put any loans into foreclosure as it implements the expanded program over the next 90 days.

The $70 billion estimate is projected over a two-year period, but could be larger and last more than two years _ as long as the company sees a need among troubled borrowers, said Charlie Scharf, JP Morgan’s chief executive of retail financial services.

“We think it’s the right thing to help as many people who want to stay in their homes,” Scharf said in an interview.

Scharf said the modifications at JP Morgan will range from reducing rates to extending terms to completely replacing products. Modification options will be given to customers based on their current product and needs, Scharf added.

The program will also be offered to customers with loans held by Washington Mutual Inc. and EMC. JP Morgan acquired Washington Mutual last month after the bank became the largest in the nation’s history to fail. EMC was a mortgage unit of Bear Stearns Cos., which JP Morgan acquired in February.

With defaults mounting, lenders like JP Morgan and Bank of America Corp. have an incentive to get more aggressive about modifications, particularly because both lenders want to protect their brand image.

“These are very big, large retail banks,” said Dain Ehring, chief executive of Dorado Corp., a San Mateo, Calif.-based mortgage technology company. “There’s a vested interest in keeping their customers.”

Bank of America has said that starting Dec. 1, it will modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. as part of an $8.4 billion, legal settlement reached with state officials in early October.

Meanwhile, the Bush administration is expected to soon announce a new plan to help about 3 million homeowners avoid foreclosure, though administration officials say several different ideas are on the table, and that no announcement is imminent.

The plan would be the most aggressive effort yet to limit damage from the U.S. housing recession.

The uptick in loan modification efforts was kicked off in August by the Federal Deposit Insurance Corp., which took over failed lender IndyMac Bancorp in July.

More than 4 million American homeowners with a mortgage were at least one payment behind on their loans at the end of June, and 500,000 had started the foreclosure process, according to the most recent data from the Mortgage Bankers Association.

Nationwide, almost one out of every five homeowners with a mortgage owes more to their lender than their properties are worth, according to a report released Friday by First American CoreLogic.

JP Morgan’s enhanced program will include the opening of 24 regional counseling centers, the hiring of 300 additional loan counselors, new financing alternatives, reaching out to borrowers with pre-qualified modification terms and a new process to independently review each loan before it is moved into foreclosure.

Face-to-face meetings with customers and adding staff to help customers in their neighborhoods was a key part of the program, Scharf said, adding that JP Morgan worked with community groups and local organizations to draw up the plan.

One of the biggest stumbling blocks JP Morgan has found in trying to modify loans is actually getting in touch with customers, he added.

When JP Morgan acquired Washington Mutual and EMC, it also acquired portfolios of mortgages that included option adjustable-rate mortgages. Also known as pay-option, or pick-a-payment mortgages, those loans allow customers to choose from multiple payment options, including paying less than the interest due, which in turn increases the balance of the loans.

JP Morgan, which did not originate option ARMs, said modifications for those loans would eliminate the option to pay less than the outstanding interest.

Source: AP

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Florida Home Sales Rise 24%

25 10 2008

Sales of both existing single-family homes and condominiums climbed in September as prices continued to fall. Last month saw a 24 percent increase in home sales over September a year ago. Condo sales increased 11 percent statewide, according to the Florida Association of Realtors.

“This is a clear sign that the significant price declines that have occurred across the state are leading to a more rapid absorption of the housing inventory,” said Sean Snaith, an economist and director of the University of Central Florida Institute for Economic Competitiveness.

But he said that the increase is inflated by the fact that there was a sharp decline in sales in September 2007.

“That was the month following the initial wave of global fallout precipitated by the subprime mortgage meltdown that roiled markets in August 2007,” Snaith said.

Sales in the Jacksonville area were flat, with the 876 homes being sold in September two fewer than September 2007. The median sales price dropped 11 percent to $173,000. Sales of existing condos fell 4 percent and the median price of $150,000 was down 8 percent from a year ago.

While statewide condo sales were up, the median sales price of condos dropped 22 percent to $153,800.

Low home prices and low interest rates also are luring buyers back into the market nationwide.

Existing home sales, which include single-family homes, townhomes, condos and co-ops, increased 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September, up from 4.91 million in August and 1.4 percent higher than the 5.11 million-unit pace in September 2007, according to the National Association of Realtors.

The national median price for all existing housing types was $191,600 in September, down 9 percent from a year ago, when the median was $210,500.

“Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future,” NAR President Richard F. Gaylord said.

Source: Florida Association of Realtors





Existing Home Sales Rose 5.5% in September

25 10 2008

Sales of existing homes rose by the largest amount in more than five years in September, a real estate trade group said Friday.

The National Association of Realtors said Friday that sales of existing homes rose by 5.5 percent in September compared to August, the best showing since a 5.6 percent increase in July 2003, during the five-year housing boom.

Even with the gain in sales, prices kept falling. The median sales price has dropped to $191,600, down by 9 percent from a year ago.

Inventories of unsold existing homes dropped by 1.6 percent in September to 4.27 million units which would be a 9.9 months supply at the September sales pace, still a historically high level.

Lawrence Yun, chief economist for the Realtors, said a sales turnaround first seen in California was beginning to broaden to other regions of the country including Colorado, Kansas, Minnesota, Missouri and Rhode Island.

He said housing may be starting to find a bottom but the turnaround could be aborted by the near-certainty that the country has fallen into a recession. For that reason, he said it was important for Congress to pass a second stimulus package including measures that would bolster the housing market.

In a further effort to bolster the housing market and deal with record high levels of mortgage defaults, Shelia Bair, the head of the Federal Deposit Insurance Corp., is pushing Treasury to include in the $700 billion rescue package for the financial system a new program to prevent more mortgage foreclosures.

Under Bair’s proposal, the government would provide guarantees for mortgages that have been reworked by banks to lower the payment schedules to more affordable levels.

The rise in September sales pushed activity to a seasonally adjusted annual rate of 5.18 million units last month. Sales were up 9.6 percent on a year-over-year basis before adjusting for seasonal changes.

By region of the country, sales soared by 16.8 percent in the West and rose a more moderate 4.4 percent in the Midwest and 2.2 percent in the South. The only region of the country which saw a decline was the Northeast, where sales fell by 1.1 percent.

Housing has been suffering through its worst downturn in decades following a five-year boom that ended in 2006. Since that time sales and prices have plummeted.

Builders have responded to the huge glut of unsold homes by sharply cutting back on construction as their confidence levels have fallen to record lows. The National Association of Home Builders is projecting that construction of new homes and apartments will total just 936,000 units for this year, which would be the weakest performance since 1945.

See VDO clip on MSNBC

Source: MSNBC





Florida Home Sales Rise 24%

24 10 2008

Sales of both existing single-family homes and condominiums climbed in September as prices continued to fall. Last month saw a 24 percent increase in home sales over September a year ago. Condo sales increased 11 percent statewide, according to the Florida Association of Realtors.

“This is a clear sign that the significant price declines that have occurred across the state are leading to a more rapid absorption of the housing inventory,” said Sean Snaith, an economist and director of the University of Central Florida Institute for Economic Competitiveness.

But he said that the increase is inflated by the fact that there was a sharp decline in sales in September 2007.

“That was the month following the initial wave of global fallout precipitated by the subprime mortgage meltdown that roiled markets in August 2007,” Snaith said.

Sales in the Jacksonville area were flat, with the 876 homes being sold in September two fewer than September 2007. The median sales price dropped 11 percent to $173,000. Sales of existing condos fell 4 percent and the median price of $150,000 was down 8 percent from a year ago.

While statewide condo sales were up, the median sales price of condos dropped 22 percent to $153,800.

Low home prices and low interest rates also are luring buyers back into the market nationwide.

Existing home sales, which include single-family homes, townhomes, condos and co-ops, increased 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September, up from 4.91 million in August and 1.4 percent higher than the 5.11 million-unit pace in September 2007, according to the National Association of Realtors.

The national median price for all existing housing types was $191,600 in September, down 9 percent from a year ago, when the median was $210,500.

“Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future,” NAR President Richard F. Gaylord said.

Source: Florida Association of Realtors





Existing Home Sales Rose 5.5% in September

24 10 2008

Sales of existing homes rose by the largest amount in more than five years in September, a real estate trade group said Friday.

The National Association of Realtors said Friday that sales of existing homes rose by 5.5 percent in September compared to August, the best showing since a 5.6 percent increase in July 2003, during the five-year housing boom.

Even with the gain in sales, prices kept falling. The median sales price has dropped to $191,600, down by 9 percent from a year ago.

Inventories of unsold existing homes dropped by 1.6 percent in September to 4.27 million units which would be a 9.9 months supply at the September sales pace, still a historically high level.

Lawrence Yun, chief economist for the Realtors, said a sales turnaround first seen in California was beginning to broaden to other regions of the country including Colorado, Kansas, Minnesota, Missouri and Rhode Island.

He said housing may be starting to find a bottom but the turnaround could be aborted by the near-certainty that the country has fallen into a recession. For that reason, he said it was important for Congress to pass a second stimulus package including measures that would bolster the housing market.

In a further effort to bolster the housing market and deal with record high levels of mortgage defaults, Shelia Bair, the head of the Federal Deposit Insurance Corp., is pushing Treasury to include in the $700 billion rescue package for the financial system a new program to prevent more mortgage foreclosures.

Under Bair’s proposal, the government would provide guarantees for mortgages that have been reworked by banks to lower the payment schedules to more affordable levels.

The rise in September sales pushed activity to a seasonally adjusted annual rate of 5.18 million units last month. Sales were up 9.6 percent on a year-over-year basis before adjusting for seasonal changes.

By region of the country, sales soared by 16.8 percent in the West and rose a more moderate 4.4 percent in the Midwest and 2.2 percent in the South. The only region of the country which saw a decline was the Northeast, where sales fell by 1.1 percent.

Housing has been suffering through its worst downturn in decades following a five-year boom that ended in 2006. Since that time sales and prices have plummeted.

Builders have responded to the huge glut of unsold homes by sharply cutting back on construction as their confidence levels have fallen to record lows. The National Association of Home Builders is projecting that construction of new homes and apartments will total just 936,000 units for this year, which would be the weakest performance since 1945.

See VDO clip on MSNBC

Source: MSNBC





U.S. Home Construction Falls Sharply in September

18 10 2008

Construction of new homes plunged by a bigger-than-expected amount in September as U.S. builders slashed production to the slowest pace since early 1991.

The Commerce Department reported Friday that construction of new homes and apartments dropped by 6.3 percent last month, a much bigger decline than the 1.6 percent decrease that had been expected. It pushed total production to a seasonally adjusted annual rate of 817,000 units. That’s the slowest pace since January 1991, a period when the country was in a recession and going through a similar painful housing correction.

The declines last month reflected weakness in many parts of the country. It was led by a 20.9 percent drop in the Northeast, where construction of single-family units dropped to the lowest level on record.

Source: The Associated Press





$1 Billion Foreclosure Relief for Countrywide Borrowers in Florida

18 10 2008

Relief is on the way for some Floridians in foreclosure or at risk for it.

Bank of America is to provide $1 billion for Floridians who are recipients of Countrywide home loans considered troubled or risky.

Bank of America, which acquired Countrywide last year, is expecting about 58,000 Floridians to be eligible for its home retention program that begins Dec. 1.

The program is to give Countrywide borrowers restructured loans, foreclosure relief or relocation assistance after 11 states settled a lawsuit with the company that claimed lenders misled borrowers.

Florida residents who went into foreclosure with a Countrywide-issued loan because of early payment defaults or after adjustments to interest rates will be eligible for a share of the $20 million that Bank of America is allocating in foreclosure relief for Floridians.

Under that program, Floridians are expected to receive money from Bank of America as compensation for loans that were not written correctly.

Rick Simon, spokesman for Bank of America, said the foreclosure relief and relocation assistance component of Bank of America’s home retention program are expected to go to about 8,000 Floridians.

Simon said the bank is working to identify eligible Countrywide borrowers who will be contacted via mail or phone by Dec. 1.

“Between now and then, the time is needed to get the system set up,” Simon said. “Some of those letters could start before December.”

Relocation assistance is to include about $4 million for Floridians, who could receive money if they voluntarily agree to leave their home after a foreclosure sale.

Simon said the most expensive portion of the home retention program in Florida will be the rewriting and restructuring of an estimated 50,000 loans.

Bank of America is expected to use a majority of the $1 billion to help Floridians get fixed-rate loans.

“Florida is the second largest state in this program in both the potential amount of customers and payment relief,” Simon said.

Bank of America is to allocate $3.5 billion to California, which is estimated to have 125,000 Countrywide borrowers in need of assistance.

Nationwide, it is a $9 billion program projected to relieve 400,000 Countrywide customers.

Ken Wieand, a finance professor at the University of South Florida, said the home retention portion of the program has the potential for success.

“In the overall meltdown that we’re having in terms of reducing the number of mortgage defaults, certainly that would be helpful, Wieand said.

“This program would in a sense keep some people who would have had to default on their loans from defaulting in the future. And certainly that would benefit the economy right now.”

Source: Florida Association of Realtors








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