NEW YORK -- JPMorgan Chase jpm said Friday that it is expanding its program to modify mortgages to try to avoid foreclosures on up to $70 billion in loans.
The loan-modification program will also be offered to customers with loans held by Washington Mutual and EMC. JPMorgan acquired Washington Mutual last month after the bank became the largest in the nation's history to fail. EMC was a mortgage unit of Bear Stearns, which JPMorgan acquired in February.
The modification program applies only to owner-occupied properties with mortgages owned by JPMorgan, Washington Mutual or EMC, with investor approval.
The program will include opening 24 regional counseling centers, hiring of 300 more loan counselors, new financing alternatives, reaching out to borrowers with pre-qualified modification terms and a new process to independently review each loan before it is moved into foreclosure.
Chase says the changes are expected to be implemented within 90 days, and until the changes are made, it will not put any loans into foreclosure.
When JPMorgan acquired Washington Mutual and EMC, it also acquired portfolios of mortgages that included option adjustable-rate mortgages. Option ARMs allow customers to choose from multiple payment options each month, including paying less than the interest owed on the loan, thereby increasing the loan balance. JPMorgan said modifications for those loans would eliminate the monthly options.
Option ARMs have been among the worst performing loans since the middle of 2007 as mortgage defaults have skyrocketed and the housing market deteriorated.