JP Morgan Chase (Washington Mutual) Stops Foreclosures for 90 Days

By
Mortgage and Lending with Guild Mortgage Co - Oak Harbor WA

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.

Hopefully this announcement will signify a change in Chase's attitude toward modifications. Call me if I can give you more information about this program.

Authored by Fred Chamberlin, a mortgage loan consultant, Eugene/Springfield Oregon

Comments (41)

John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Fred - I HAD to call our rep and confirm.  You were correct.  The product went away a short while ago.  No notice was sent to our office.  He was unsure why... anyway... I apologize for the incorrect statement made.  Goes to show you how often I do those.  LOL

Nov 04, 2008 08:36 AM
Greg Nino
RE/MAX Compass - Houston, TX
Houston, Texas

Fred,

As usual I am flagging your post for feature. Great work sir. I had no idea what an "option" arm was until today.

Now I'll go run around like I knew it all along! ;)

Nov 04, 2008 09:03 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Joey - Yes they were. JP wanted them for a long time but waited until they could get them in a fire sale. I would have bought them for what they paid.....of course, I was a bit short of the funds for the purchase.

John - Thanks for clearing that up. I was wondering if you guys got special treatment.

Thanks Greg - I appreciate your kind words. Where are you flagging my post to feature? I figured it out. Didn't know you were moderating Internet Empowered Consumer. Thanks

Nov 04, 2008 11:30 AM
Thesa Chambers
West + Main - Bend, OR
Principal Broker - Licensed in Oregon

I had heard of the stop of foreclosure - but not about the donating of homes - that is great on one hand - and on the other it is so sad

Nov 04, 2008 03:21 PM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Thesa - Sad in one respect, but the chance of having the home rehabed and then a deserving family, one that help bring the home back to life, getting it is a wonderful option.

Nov 04, 2008 03:28 PM
Danny Thornton
R & D Art - Knoxville, TN
WordPress Guru

Fred, as good as this news is, there is still a down side to it. Most of the people that took the Pay Option Arm did so to afford the home.

Nov 04, 2008 11:55 PM
Richard Stabile
Re/Max Real Estate Limited - Oradell, NJ
Bergen County New Homes Builder Realtor

Fred,

Option arms are the toxic mortgages of all time. I guess if they have some mortgages that are possible to restructure in a normal fashion they should. Even credit worthy people who hold them are not able to get jumbo that easy to replace them.

Richard

Nov 05, 2008 12:55 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Danny - So true but maybe they can be restructured in such a way, they can keep them.

Richard - Many of the people put into these products were not done a service, however, like stated income, they had their place. Every loan product had a use, it was misuse that put us where we are in many ways.

Nov 05, 2008 05:40 AM
Danny Thornton
R & D Art - Knoxville, TN
WordPress Guru

Fred, that would seem to be the hope, but from my experiece a lot of these type loans are attached to investment property.

Nov 05, 2008 06:13 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

You are right Danny, so it will be interesting to see how they are handled.

Nov 05, 2008 06:51 AM
Greg Nino
RE/MAX Compass - Houston, TX
Houston, Texas

Fred - you didn't know you could "flag" someones post? Go for it!

Nov 05, 2008 07:14 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

I will have to try that. Thanks. Can I flag my own? LOL

Nov 05, 2008 11:50 AM
Timothy Butterworth
Taking a break - Portland, OR

Wow, with all these changes do you see the foreclosures increasing in 2009 some since the tail end of Arms will be coming doing in mid 2009? For those 5 year option arms that were taken out in 2004.

Great post Fred.

Nov 05, 2008 04:59 PM
Leslie Stewart
Oregon Licensed Broker with Berkshire Hathaway HomeServices Real Estate Professionals - Stayton, OR
Realtor, ABR, CRS, Oregon Licensed Broker

Boy am I out of the loop.  I tried not to watch TV yesterday and didn't read the paper.  I tried to not answer the home phone with all the politicallies on the line... It will be interesting to see how this plays out for Chase.  I know a realtor that has been trying to negotiate with his bank for 8 months with no results...

Nov 05, 2008 05:26 PM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Hey Timothy, I don't know, but if these modifications catch on, we could see them start stabilizing. I have been calling for modification, but not voluntary, but required with a mediator. We will see.

That's OK Leslie, all you need to do is read my blog and you get all you need to know. LOL. I hope this is a great start to an increased willingness to negotiate.

Nov 05, 2008 05:46 PM
Danny Thornton
R & D Art - Knoxville, TN
WordPress Guru

WOW, I guess having a magical crystal ball to tell you when the right time to get your mortgage takes out all the guess work out of getting a mortgage.

Nov 28, 2008 01:39 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Sorry Danny - I deleted the spam so your comment is kind of ??. LOL

Nov 28, 2008 09:45 AM
Danny Thornton
R & D Art - Knoxville, TN
WordPress Guru

Fred, yeah, I see that. Well, I guess you could delete it too if you like.

Nov 28, 2008 10:36 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Naw, I like seeing your name Danny.

Nov 28, 2008 04:30 PM
Paul Gapski
Berkshire Hathaway / Prudential Ca Realty - El Cajon, CA
619-504-8999,#1 Resource SD Relo

yes they look so nice but Foreclosures are such tough on to stomach.

Dec 20, 2011 01:47 PM