What Banks Have Loan Workout Programs?
December 9th, 2008
Categories:Real Estate News
The nine largest banks, Countrywide, Bank of America, M&I, JP Morgan Chase / Wamu / EMC, Wells Fargo Home Mortgage, Citigroup / Wachovia, GMAC Mortgage, Downey Savings and Loan, and IndyMac have all been under a great deal of pressure to work with homeowners to help them through a tough economy. Infact, many see these banks as being capable of producing the biggest and fastest changes for this economy.
However, many to this day continue to fail in staffing their departments with enough help and fail to develop programs to help homeowners.
Here is a quick look at each company’s current situation.
Countrywide:
As many know Countrywide was purchased recently by Bank of America (B of A) when they realized the large sum of money they loaned to Countrywide would likely never be paid back. At this time Countrywide is slow to make approvals and put the systems in place to help homeowners. However, B of A has created a comprehensive application and alternative plan that will hopefully be implemented and used effectively by Countrywide in the near future.
Bank of America:
Bank of America reports to have a system in place, however they are also very slow to respond and act on the system. At this point B of A has not made their program available to the public, which makes some believe the program does not exist. B of A is also the contact point for Countrywide’s workouts.
M&I Bank:
M&I also does not appear to have a program in place. However depending on who you get a hold of will greatly affect the outcome as some individuals appear to be knowledgeable with the workout process.
JP Morgan Chase, WAMU, EMC:
JP Morgan/Chase appears more organized and has announced a plan to offer $100 Billion to loan modifications or mortgages with place to expand the program in the next 90 days. The expansion will come around in February and is projected to help 400,000 homeowners avoid foreclosure. The loan modification program is also extended to customers of WAMU, which was purchased by JP Morgan in November and it will be available to EMC customers.
Loan modifications may include principle or interest-rate reduction on owner-occupied mortgages for homeowners who show a willingness to pay. Chase plans to establish 24 regional mortgage counseling centers in areas with high foreclosures rates. Chase will also start a new process to evaluate each loan individually before moving it into the foreclosure process. As a result they will temporarily suspend foreclosures while the changes are being implemented.
Wells Fargo Home Mortgage:
Wells Fargo is one of the few banks that are well staffed and have a program in place they are willing to publish. They have made it clear, they are willing to deal and they are dealing. They are currently most receptive to homeowners who are 80 days or more delinquent to qualify for their “Project Life Line”. This program offer customers a fresh start. However it is expected that program will likely change as it was stated by Blair, chair of FDIC who recently stated that “waiting until default makes it tougher to rehabilitate”.
Citigroup and Wachovia:
Being referred to as one of the big five banks also known as a “fortress bank”, Citigroup appears to have a policy in place and established criterion. They recently received a huge bailout package from the feds. On November 24th, 2008 the Feds signed off on a bailout for Citigroup and was one of the first bailouts to have strings attached. The Feds agreed to infuse the company with capital to “back up” failed assets. The Feds announced two days later the affected assets would be subject to the same write down program handed to IndyMac. The formula in brief means the mortgage payments can be lowered to 38% of less of a homeowners monthly income for qualified applicants. To reach the target payment the lending rate may drop to as low as 3% and stay there for five years with payment re amortized accordingly.
GMAC Mortgage:
GMAC appears to have a plan and stated options firmly in place. Their plan is available online.
Downey Savings and Loan:
Downey Savings and Loan were taken over by regulators just before Thanksgiving, 2008. It is unclear what will happen, or what regulators will require, however it is expected they will immolate the plan given to IndyMac.
IndyMac:
IndyMac was the first big take over that occurred in early 2008. Lenders are typically more motivated when they are under regulation and so what happens with IndyMac is significant. The programs put in place with IndyMac will likely suggest what will happen with other banks taken over. At this point, the IndyMac program is well-spelled out and actually appears to be a program that could give a lot of borrowers some real relief. The modification plan tries to “back down” the mortgage terms, amounts, interest-rates to equal not more than 38% of the borrowers household income. Which works out pretty good for a borrower who has income, but not so great for a borrower without an income.
Most banks offer some program information and contact points for workout programs, although some can be harder to find than others. As time progresses more programs will be made public, the best solution is to good the bank of interest for workout programs.
Related posts:
- Government Workout Programs
- Current Workout Programs Accepted Most Banks
- Banks Get Wise?
- Big 3 – Loan Programs
- New Housing Bill