JPMorgan will modify mortgages

In an effort to avoid foreclosures on $70B worth of loans, the bank will review each mortgage, including those from WaMu and EMC.

NEW YORK (AP) -- JPMorgan Chase & Co. said Friday it is expanding its program to modify mortgages in an effort to avoid foreclosures on up to $70 billion in loans.

The 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.

Chase said the changes are expected to be implemented in the next 90 days, and until those changes can be made, it will not put any loans into foreclosure.

The loan-modification program will also be offered to customers with loans held by Washington Mutual Inc. and EMC. JPMorgan (JPM, Fortune 500) 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 JPMorgan acquired in February.

When JPMorgan acquired Washington Mutual and EMC, it also acquired portfolios of mortgages that included option adjustable-rate mortgages. Option ARMs allow customers to choose from multiple payment options each month, including paying less than the interest owed on the loan, thereby increasing the balance on the loan. JPMorgan said modifications for those loans would eliminate the monthly options and not allow for the minimum payments.

Option ARMs have been among the worst performing loans since the middle of 2007 as mortgage defaults have skyrocketed and the housing market has deteriorated rapidly.
The modification program applies only to owner-occupied properties with mortgages owned by JPMorgan, Washington Mutual or EMC, with investor approval.

Shares of JPMorgan rose $2.55, or 6.8%, to $40.19 in afternoon trading.

As reported October 31, 2008 on www.cnnmoney.com http://money.cnn.com/2008/10/31/news/companies/jpmorgan_mortgage.ap/index.htm?postversion=2008103114