J.P. Morgan to Help Homeowners Who Are Behind on Mortgage Payments

[Nov 1, 2008.]

 

J.P. Morgan announced that it would alter the terms of $70 billion of mortgages to help homeowners who are struggling to make payments. The move is aimed at stemming the tide of foreclosures that have rocked the U.S. housing market. Banks have been under pressure to do something to deal with the rising rate of foreclosures.

The number of foreclosure filings rose 21% in September from a year earlier, according to ReatlyTrac. Nevada, Florida, and California had the highest rates of foreclosure. J.P. Morgan is making its move even as the U.S. government continues to consider what should be done about the huge number of foreclosures around the country.

Many mortgage lenders have been reluctant to renegotiate loans with homeowners on a large scale, but J.P. Morgan decided to take action now, rather than later. "It doesn't make sense for us to wait" to tackle the problem," Charles Scharf, who runs the retail division at J.P. Morgan, told the Wall Street Journal. "We've heard loud and clear and are listening to what some of the thought leaders around the country are saying."

Many of the homeowners who will be helped have option adjustable rate mortgages, or option ARMS, which often have minimum monthly payments that don't cover all the interest due. As a result, borrowers see their loan balances increasing instead of decreasing.

J.P. Morgan's move could mean that more banks will follow suit and begin to renegotiate loans with homeowners who are already behind on payments. Other homeowners who are likely to fall behind on their monthly payments soon could also benefit if more banks decide to alter the terms of homeowners' mortgage agreements.

If you're facing foreclosure there may be a chance that you, too, can renegotiate the terms of your mortgage. Even if your bank hasn't announced a formal plan to renegotiate loans you may be able to work out such a deal by contacting your lender and just asking.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.