Bailout of JPMorgan not helping ordinary mortgage crisis victims

September 13, 2011 01:26PM

Ordinary victims of the mortgage crisis say that the big banks which
received large financial bailouts under the Bush and Obama
administrations are not doing enough to help them, even as the companies are recording
significant profits, the New York Times reported, with government
officials divided on taking a harder line.

Mimi Pierre Johnson, a
real estate agent, and her husband, a construction worker, had bought a
four-bedroom home in Elmont, on Long Island, for $413,000 in 2005. But
when the recession took hold, her husband lost his construction job,
her real estate business dropped off and they began having trouble making their
mortgage payments. Her bank, JPMorgan Chase, gave her a temporary loan modification, but then canceled it. “I’m a
realtor; I know I’m doomed,” Johnson said. “But I want to say to
Chase, ‘Hello!? The government gave you a bailout to help people like
me.’”

The advocacy group New York Communities for Change has joined with
unions to lobby towns and cities to close accounts with JPMorgan, unless
the bank begins to write down mortgages. The villages of Hempstead and
Freeport  have withdrawn millions of dollars. Ithaca, NY barred the bank
from bond offerings, but JPMorgan has assets worth trillions.
Housing advocates acknowledge that JP Morgan does not
necessarily have the worst problems, with Wells Fargo and Bank of
America responding to the crisis in the same way.

According to the Times, the Obama administration’s mortgage relief
program has not met its goals. Officials at the U.S. treasury have
begun taking a harder line, grading banks and withholding incentive
payments, with BofA and JPMorgan in the worst category.
While New York Attorney General Eric Schneiderman has refused to sign
off on an agreement
that would exempt banks from prosecution in
exchange for $20 billion in mortgage relief,
New York City officials are reluctant go hard on an industry they see
as important to the city.

City Comptroller John Liu recently
pushed the city’s Banking Commission to require banks to disclose
mortgage modifications and foreclosures, with breakdowns by economic
class, but mayoral appointees on the commission rejected the idea

When Johnson missed her final modification payment by a few days, the
bank canceled it. “Mrs. Johnson, if we did it for you, we’d have to do
it for thousands of people,” she said they told her. [NYT]