NEW YORK -
The American Banker, an affiliate of the Credit Union Journal, said interviews with JPMorgan Chase & Co., Fifth Third Bancorp, SunTrust Banks Inc., and HSBC Holdings PLC, found lenders have clearly stepped up their outreach in advance of interest rate resets. Where modifications are not feasible, short sales have caught on as a possibly less costly alternative.
At the same time, lenders remain wary of going too far in extending forbearance, in no small part because of the possibility of irritating holders of securities backed by the mortgages being modified. Both Fifth-Third and JPMorgan Chase, for instance, are calling borrowers whose ARMs are scheduled to reset in the near future to tell them what the rate and payment would look like if they adjusted now. The New York company asks customers whether they would have a problem paying that rate; for those who would, it says it tries to work out a refinancing or payment plan.
Meanwhile, delinquent home borrowers are called five days after a payment is late. If repeated calls are not answered, a JPMorgan Chase representative visits the borrower at home. HSBC, in London, said that by early this month its U.S. units –among the earliest to take up the task of reaching out to ARM borrowers–had contacted about 32,000 customers and modified more than 8,000 loans with a value of $1.2 billion.
The path to a price adjustment can be jarring. Gail Burks, the president of the Nevada Fair Housing Center, a nonprofit consumer advocate, offered a different perspective from the front lines of Nevada’s housing crisis. The organization hosted a one-day counseling program this month and had to turn away more than half the 700 borrowers who lined up to attend.
One out of every 122 homes in Las Vegas was in foreclosure in November, according to RealtyTrac. “We get a new list of foreclosures every day, and sometimes it’s 50 pages long,” Burks said. “And even I was surprised how many showed up that day for help.”
