BofA, JPMorgan Modifying Risky Mortgages Without Being Asked

Bank of America Corp and JPMorgan Chase & Co have started modifying tens of thousands of mortgages where the banks deem the loans especially risky, even if the borrowers have not asked, the New York Times reported on Sunday.

In some cases, the paper said, the banks are slashing the amount borrowers owe, citing one case in Florida where a woman's principal balance was cut in half.

The paper said the banks are targeting holders of pay option adjustable-rate mortgages, a type of loan where borrowers have the option of skipping some principal and interest payments and having the amount added back onto the loan.

Such "option ARM" loans were seen as especially high risk in the wake of the financial crisis; the two banks collectively still have tens of billions of dollars of such loans in their portfolios.

One law professor quoted by the Times said the banks were behaving in contradictory ways, modifying some loans that should not be and not modifying some loans that should be.

Spokespeople for the two banks were not immediately available to comment.

(Reporting by Ben Berkowitz. Editing by Maureen Bavdek)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[Abby in CA]

07:34 PM on 07/25/2011

Please help me out and sign this online petition. Takes a few minutes. Thanks in advance.

http://www.change.org/petitions/tell-ag-kamala-harris-to-investigate-get-an-injunction

[Siebenstein]

05:46 AM on 07/09/2011

sign the petition:

http://www.change.org/petitions/jp-morgan-chase-bank-modify-option-arm-mortgages

[shadow013]

12:10 AM on 07/06/2011

What if the banksters can't prove they own the loan and/or mortgage? That's the thinking on foreclosure discussion sites. If they can't come up with the paper trail showing they are the bank to which money is owed, they can't legally collect. If they can't come up with mortgage chain of title, maybe they can't take the house after default. If borrowers sign new paper, it cleans up previous problems, and lowered principle is inducement to sign a fresh contract when banksters can't find the originals. For borrowers, it is kind of important to pay the bank that owns the loan, but paperwork messes were part of banksters "business model."

[Terri Skau]

03:07 PM on 07/05/2011

If this doesn't make any of you angry. Please put your head back in the sand.

The elite bankers are laughing all the way to there banks. Don't you think it's time to stop the destrution of the 'American Economy at the hands of the elite.

It is the elite bankers whom profit from our debt. The ancient banking families own the FED RES and therefore have the sole right to issue all money in the U.S.

Our Government then must borrow money from the FED in order to have money to pay our debts. The FED loans them the money but charges them interest.

Remember the Higher the National Debt the more money the banking elite makes.

What is wrong with this PICTURE?????????

[ejhickey]

04:31 PM on 07/05/2011

"What is wrong with this PICTURE??? ??????"

I am not part of the elite banking circle!

[karen1p]

11:47 AM on 07/05/2011

Yves serves up a home-run. This article is more truthful than those I have seen anywhere. Go Yves!!!

http://www.nakedcapitalism.com/2011/07/summer-rerun-the-empire-continues-to-strike-back-team-obama-propaganda-campaign-reaches-fever-pitch.html

[spoonbill1963]

11:04 AM on 07/05/2011

You can cut a deadbeat's loan in half and they will still default a second time inside of 12 months. This has been documented time and time again.
Sorry.

[hoagie58]

11:46 AM on 07/05/2011

Gee, I'm going to go out on a limb here, and bet you work for a bank! Well, Mr Banker Man- you're the m0ron that gave said "deadbeat" the loan on the first place. Greed knows no bounds!

[spoonbill1963]

11:55 AM on 07/05/2011

Nope, no banker I.
But the banks are hell for those trying to get loans today and I suspect it will stay that way for a long time. I don't blame them.

[liquidwallpaper]

11:02 AM on 07/05/2011

Now these banks decide todo this????? After the treasury department bought from the bank all the bad properties that were foreclosed on which we taxpayers will pay for. After ALL those people lost their homes in foreclosures and asked for help and were turned down? Now these banks can afford to be generous? This stinks so bad I feel sick. Why did we even bail them out if they do what they want and hurt so many Americans with their greed and hurt our country with their bad debt they created ? Banks are only for themselves and have no loyalty to our country.

[spoonbill1963]

11:05 AM on 07/05/2011

Good point. The banks can afford to be "good guys" since it ain't their money.
Actually it is my money since I still pay income taxes.

[Jenni Gahr Schmidt]

10:45 AM on 07/05/2011

Nobody is holding them accountable since Congress is bought and paid for anyway.

[jcaunter]

04:14 AM on 07/05/2011

Beware of bankers bearing gifts.

[pepper1311]

04:08 AM on 07/05/2011

QUICK go borrow money and ask or demand no repayment... Nice to know people can just walk away, laugh and get more money in two years. Morals and ethics are gone and forgotten by the American people. Free money on the backs of the 95% who pay there bills.

[spoonbill1963]

12:00 PM on 07/05/2011

Well said.
I suspect the freeloader percentage is higher than 5%. It's getting larger too.
Sad.

[dennismfl]

02:16 AM on 07/05/2011

The Federal Reserve and our politicians created a HUGE moral hazzard by bailing out the "too big to fail" banks. They set a whole new standard for doing business in this country. Gone are the days of ethics and morals, hello criminals and thieves. The big banks ALL should have been left to fail, while those responsible for the economic fallout jailed, but instead our corrupt government rewarded them with record pay and bonuses. So what about the homeowner?? If I had a mortgage and struggled every month to make that payment but then saw my reckless irresponsible neighbor getting a loan modification, I'd stop making my mortgage payment immediately. From what I understand, you only have to wait 2 years after foreclosure before you can get another home loan. So if you stop paying, you will either get a modification now by the banks, or get foreclosed on but only have to wait two years before you can buy a much nicer home for far less money. And if the foreclosure process takes the average 18 months of time, guess what? - no rent or payments for 18 months! It's a win win self sponsored bailout. So why continue to pay on a house that is light years underwater? If the banks get bailed out, why not you too? You're paying for their bailout, shouldn't they pay for yours? Moral hazard folks. Congress really opened the gates on this one. Housing recovery will now take many many years.

[spoonbill1963]

12:01 PM on 07/05/2011

Loans are actually much harder to get these days.

[arlandbaee]

12:21 AM on 07/05/2011

I wonder if these mortgages are on first time owners or second houses for the wealthy?

[spoonbill1963]

11:06 AM on 07/05/2011

It doesn't matter. I think they are targeting those most likely to end up defaulting. That could be either category.

[shadow013]

12:15 AM on 07/06/2011

Maybe targeting those on which they lost the paperwork that proves they own the loan and have the right to the house after default. One former Countrywide employee testified that it was routine for the company to destroy original notes and mortgage documents.

[pup sydney]

12:02 AM on 07/05/2011

This is the classic example of capitalism gone amok. Who is in order is royally F()$

[LoyalDem4646]

10:52 PM on 07/04/2011

Every time I ask BofA to consider remodifying my loan like the ones I read about, they tell me they don't know what I'm talking about or I don't qualify. Instead of cutting my principal they added $20,000 and can't explain why. This just looks like a PR stunt because of the earlier article about the lawsuit they lost.

[pepper1311]

04:01 AM on 07/05/2011

Did you agree to the loan amount? If I owed you ten dollars and told I could only pay you one dollar would you take it?

[LoyalDem4646]

06:48 AM on 07/06/2011

That's exactly what BOA keeps asking without accepting any responsibility. I'd take the dollar if I continually kept persuading you to borrow $10 and go out and have a good time. You take the money and get drunk and end up with a DUI on your record plus a fine. Feeling guilty, I'd probably wouldn't even take the $1 because you are worse off now. Countrywide sent out letters every month persuading homeowners to refinance - knowing that the housing market was already overpriced. I refinance and BOA buys my bad loan, taking Countrywide off the hook, and tells me it's all my fault for listening. The banks should take some responsibility for their actions. Even it they reduce my principal to the actual value of my house, they still stand to make a lot of money and I can gain equity faster and have emergency money should I need it. I'm $150,000 underwater so I won't be spending heavily anytime soon and the market will suffer for it since I'm not the only one in hot water.

[jcaunter]

04:16 AM on 07/05/2011

If you read zerohedge regularly, not only would you understand what is actually going on, but you also probably wouldn't be a loyal Democrat when you realized the extent of their corruption:

http://www.zerohedge.com/article/banks-commence-wholesale-unsolicited-mortgage-forgiveness?page=2

[rabiddog6708]

10:48 PM on 07/04/2011

The banks are doing this in their own interests, of course. They can't keep foreclosing at the record rates they have been and have all these empty homes sitting on the market, driving down prices and not having anyone maintaining these properties. Better to modify and get some payments out of the owners rather than having them sit empty and have no money coming in....and a difficult selling them again due to the weak market.

[Realtors Are Liars]

08:03 AM on 07/05/2011

Lower the price and the market it will strengthen. It's really that simple.