Selected borrowers receive unsolicited relief from major lenders

TRD New York /
Jul.July 05, 2011 09:34 AM

Major national lenders JPMorgan Chase and Bank of America are quietly changing the terms of tens of thousands of loans for borrowers that the banks deem to be of special risk, the New York Times reported. These borrowers, who have not defaulted on their mortgages or asked for help, have so-called pay option adjustable rate mortgages, which were popular in the late stages of the boom, and which lenders now deem to be especially troublesome.

Borrowers receiving unsolicited relief from JPMorgan can’t help but suspect a trick, according to the Times. Cutting loan balances, even for loans in default, is extremely rare.

Dan Frahm, a spokesman for Bank of America, said it was utilizing every possible technique short of principal reduction to remake its loans: “By proactively contacting pay option ARM customers and discussing other products with better options for long-term, affordable payments, we hope to prevent customers from reaching a point where they struggle to make their payments,” Frahm said.

Adam Levitin, a professor of law at Georgetown University, argued that little-publicized programs added fodder to accusations that the banks were behaving in contradictory and dishonest ways.

“Modifications that should be happening aren’t, while loan modifications that shouldn’t be happening are,” he said. “Homeowners of any sort, whether current or in default, would rightly be confused and angry by this.” [NYT]


Related Articles

arrow_forward_ios
(iStock)

Older Americans increasingly saddled with housing debt

Older Americans increasingly saddled with housing debt
(Getty, iStock)

Mortgage applications to buy homes decline for fourth straight week

Mortgage applications to buy homes decline for fourth straight week
(iStock)

Black homeowners pay $13K more for home loans: study

Black homeowners pay $13K more for home loans: study
While some Americans have benefited from low mortgage rates, others find themselves locked out (iStock)

Homebuyers with bad credit increasingly locked out of the market

Homebuyers with bad credit increasingly locked out of the market
(Getty)

Has homebuying peaked? Mortgage applications sink 2%

Has homebuying peaked? Mortgage applications sink 2%
A new report by CoreLogic showed mortgage payments that are over 120 days delinquent rose to 1.4 percent in July, its highest level since 1999 (iStock)

Mortgage delinquencies jumped to highest rate in 20 years

Mortgage delinquencies jumped to highest rate in 20 years
Snapdocs CEO Aaron King (Snapdocs; iStock)

Snapdocs raises $60M amid record demand for mortgages

Snapdocs raises $60M amid record demand for mortgages
AIG CEO Brian Duperreault and Brooklyn Navy Yard project, with Andrew Joblon and 980 East 149th Street (Turnbridge, Brooklyn Navy Yard)

These were the top outer-borough loans in September

These were the top outer-borough loans in September
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...