JPMorgan, Banks to Halt Foreclosures for Three Weeks

Original link: http://www.bloomberg.com/apps/newspid=20601103&sid=aC7x_GWO2ic8&refer=us
JPMorgan, Banks to Halt Foreclosures for Three Weeks (Update2)

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By Margaret Chadbourn
Feb. 13 (Bloomberg) -- Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp., Morgan Stanley and Wells Fargo & Co. agreed to suspend foreclosures while the Obama administration crafts a housing plan to modify mortgages for troubled borrowers.
Citigroup halted foreclosures through March 12, or when a plan is completed, the company said today in a statement. Wells Fargo said its moratorium was in place until a plan is announced. The other lenders said foreclosures will be halted on owner- occupied homes until March 6. JPMorgan Chief Executive Officer Jamie Dimon disclosed his actions in a letter to House Financial Services Committee Chairman Barney Frank released today.
Frank asked chief executives of eight banks at a committee hearing Feb. 11 to freeze foreclosures until Treasury Secretary Timothy Geithner sets up a program. Citigroup’s Vikram Pandit committed to a halt. The Office of Thrift Supervision urged savings-and-loans to suspend foreclosures until a plan is ready.
“Three weeks is adequate time for the Treasury to announce -- and for us to implement -- a new plan,” Dimon wrote to Frank. “We stand ready to work with you to put the appropriate process in place, including a national modification standard.”
President Barack Obama will give details on his housing proposals next week during a two-day trip to Denver and Phoenix to talk about the next steps in his strategy to revive the U.S. economy, White House press secretary Robert Gibbs said today. The housing speech is scheduled Feb. 18, he said.
‘Necessary Steps’
JPMorgan, Citigroup, Bank of America, Morgan Stanley, Goldman Sachs Group Inc., Wells Fargo & Co., State Street Corp. and Bank of New York Mellon Corp. CEOs faced lawmakers this week over use of $165 billion in rescue funding, including bonuses and compensation. The banks got $125 billion from the Troubled Asset Relief Program in October, and Citigroup and Bank of America each got another $20 billion.
“Citi is taking the necessary steps to help American homeowners keep their homes,” according to the statement. The company said it worked with about 440,000 borrowers to stop foreclosures since the start of the housing crisis in 2007.
Morgan Stanley, based in New York, said its Saxon Mortgage Services Inc. handled billing and collections on $26.6 billion of loans as of Sept. 30, 2006, before the business was acquired, said spokeswoman Jennifer Sala. She declined to update the total.
Bank of America in Charlotte, North Carolina, would consider extending its moratorium beyond March 6 if Geither’s plan is still being developed, spokeswoman Jumana Bauwens said.
Wells Fargo, which acquired Wachovia Corp. last month, extended until the end of February a freeze on foreclosure for Wachovia’s loan holders, and will halt actions until a U.S. plan is released, said Kevin Waetke, a bank spokesman.
Redefaults
U.S. bank regulators in December said 55 percent of loans modified during the first quarter of 2008 were 30 or more days delinquent after six months. “Re-default rates increased each month and showed no signs of leveling off after six months,” Comptroller of the Currency John Dugan said in a statement.
U.S. foreclosures reached 274,399 in January, the 10th straight month in which more than a quarter-million filings were processed, RealtyTrac Inc., the Irvine, California-based provider of real estate data, said in a statement yesterday. Foreclosure filings soared to a record last year, surging 81 percent to 2.3 million, as home prices fell and mortgage standards tightened.
The Obama administration outlined a plan this week that would provide housing relief, help remove illiquid assets clogging banks’ balance sheets and spur lending. Geithner pledged to buy and modify troubled homeowner mortgages, and Senate Banking Committee Chairman Christopher Dodd said the aid could be as much as $100 billion.
To contact the reporter on this story: Margaret Chadbourn in Washington at mchadbourn@bloomberg.net.
Last Updated: February 13, 2009 14:44 EST