Banks Realizing That It Pays To Save Victims from Foreclosure
March 10th, 2009
Banks are realizing that it pays to save victims from foreclosure. Meanwhile pressure is building up in political circles as the country reels under the foreclosure related socio-economic crisis.
On 31st October one of the latest jumbo banks to come forward with offers of cutting monthly payments was JP Morgan Chase. For the time being interest rates were reduced and cuts were imposed on the main loan. From this move more than 400,000 house owners are expected to benefit. Previously Bank of America that had taken over Countrywide took similar steps to reach out to 400,000 of its borrowers. This was part of its agreement with the states.
The steps are only a miniscule of the gigantic problem the entire country is weighed down with. But something is better than nothing and will partly be instrumental in containing the flood of foreclosures and be more effective and speedier than the move of government guarantee of the modified loans.
Banking pundit Gerard S. Cassidy commented, “The banks are doing the cost-benefit analysis. The banks don’t want these customers going into foreclosure because it is a costly and punitive way of trying to collect your money.”
By June approximately 1.5 million houses had been foreclosed upon. Experts apprehend that many more will join the gang in the coming year as the real estate market continues to fall and unemployment increases.
Spokespersons on behalf of Morgan Chase said that their action was not based on charity or under government pressure. The bank wanted to take the path of least loss. Already 250,000 loans have been modified since the beginning of 2007. Charlie Scharf the CEO of Morgan Chase said, “What we are doing is a process that just makes a lot of sense. If the government can come in and help us find ways to modify more people that would be wonderful.”
Morgan Chase plans to set up 24 counseling centres and absorb 300 more employees to negotiate with the borrowers facing foreclosure. 90 days time will be allowed before proceeding with the judicial process so that both sides get an opportunity to come to a realistic amicable settlement. Morgan Chase has taken over Washington Mutual and Bear Stearns. The same treatment will be meted out to the borrowers of both these firms. However it claims helplessness to negotiate those mortgages that have been sold as securities because of restrictive contracts.
- Ohio Is Also Scrambling to Get On to the Foreclosure Rescue Lifeboat
- The foreclosure crisis has led to the Museum of American Finance face an awkward situation
- Non-profit Organizations Spreading Across America to Help Foreclosure Victims
- Problems and Solutions for Underwater Foreclosure Victims
- North Carolina Foreclosure Victims Hungry for Details of Obama Rescue Plan
- More Help Is Coming for Foreclosure Victims from the Treasury
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