JP Morgan Chase, the bank that took over Washington Mutual (WaMu) recently, had announced that it will halt foreclosures for the next 90 days, according to an article in the San Diego Mail today.
During this period, the bank will attempt to re-negotiate loans with delinquent borrowers. Since WaMu was big into the "option ARM" program, this is exceptionally good news for WaMu customers. The "option ARM," also known as the "pay option ARM," is a potential negative amortization product that was used extensively through the WaMu retail outlets.
The main difficulty with the "option ARM" is that the loan program had a minimum payment that allowed accrued interest to be added to the loan balance each month. As long as property values were increasing, this didn't cause much of a problem, the home was always worth more than was owed. When property values started leveling off and then declining, the "option ARM" portfolio became a real problem.
JP Morgan Chase has also offered to donate 500 homes to community groups and non profits to help stabilize property values. You can read the complete story here.
Comments (41)Subscribe to CommentsComment