Friday, February 13, 2009

Major Lenders Suspend Residential Foreclosures

Citigroup, Morgan Stanley, Fannie Mae and JPMorgan Chase announced that they have committed to a temporary halt of some residential foreclosures.

Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services Committee, had suggested such a moratorium, in order to give the Treasury Department more time to implement its own foreclosure-reduction plan. Treasury Secretary Timothy Geithner on Tuesday released outlines of an economic-revival effort that are slated to include about $50 billion in assistance to "prevent avoidable foreclosures" of some owner-occupied homes, and this moratorium would serve as a lead-in to the federal plan.

Frank suggested the moratorium on Wednesday, the day the CEOs of eight major financial-services companies testified before Congress about their roles in the economic downturn.

Frank released a letter sent to him by JPMorgan CEO Jamie Dimon on Thursday, in which he said his company would have a foreclosure moratorium through March 6 for any owner-occupied residential loans that are owned and serviced by JPMorgan Chase.

"We believe three weeks is adequate time for the Treasury to announce -- and for us to implement -- a new plan," Dimon's letter said. He continued, "We stand ready to work with you to put the appropriate processes in place, including a national modification standard, to reduce the incidence of foreclosure and to encourage long-term, sustainable home mortgages.

A JPMorgan spokesman said that in the last two years, the company has helped around 330,000 foreclosures be avoided on about $50 billion in mortgages. He said that the company already has a number of programs in place to help homeowners, in addition to this one just implemented.

Citigroup said on Friday that it's expanding a foreclosure moratorium already in place that's effective through March 12 or until the government's new loan modification program is finalized, "whichever is earlier."

Citi's foreclosure moratorium will apply to Citi-owned first-mortgage loans that are the principal residence of the customer "as well as all loans Citi services where we have reached an understanding with the investor," the company said in a press release.

Citi said that since the housing crisis started in 2007, it has worked with 440,000 homeowners to avoid potential foreclosure on combined mortgages totaling around $43 billion.

A Morgan Stanley spokeswoman confirmed that it also has a moratorium on foreclosures that started this week and will last through March 6, which will apply to the bank's Saxon unit, which collects payments on loans.

Fannie Mae also said in a statement that it is suspending all foreclosure sales and evictions of occupied properties through March 6.

Joanna Ossinger, FOXBusiness

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