While many policymakers were still describing the housing crisis as "contained," Molly Sheehan knew better.
The JPMorgan Chase & Co. executive saw the payment shock brewing as a wave of hybrid adjustable mortgages were due to reset at higher rates, and she was determined to get ahead of it. She worked up a loan modification program - before that term was even in wide use - that alerted borrowers to coming rate hikes, gauged their ability to absorb the increases and, if needed, offered to lower rates.
Sheehan's efforts put JPMorgan Chase at the forefront of industry efforts to work with borrowers, and they won her a promotion to the newly created job of Housing Policy Executive. Sheehan, a lawyer who is a mortgage-servicing expert, made frequent Amtrak trips to Washington to consult with officials in both the Bush and Obama administrations on efforts to stem the rising volume of foreclosures. It paid off for JPMorgan Chase.
"One of the things that did give us an advantage when the Obama plan came out is we had a number of people already in the pipeline and we'd already been gathering documentation and other things we'd need to at least pre-qualify them for a modification," Sheehan says.
In August when the administration ranked lenders by the number of modifications they had started under its Home Affordable Modification Program, JPMorgan Chase bested its peers with 79,304 modifications, or 20 percent of all its eligible delinquent loans. And under its own program, JPMorgan Chase has approved another 65,400 modifications.
Sheehan, who has testified frequently on Capitol Hill, says a major hurdle in the loan-mod process has been a public expectation for immediate results.
"People take it for granted if they are going to get a mortgage loan it's going to take 30 to 90 days but somehow they think they should get their mod in a day," she says. "The process for doing this you could paper my office with."
Sheehan is still consulting with administration officials on ways to modify Obama's program including a forbearance program for the rising number of unemployed borrowers. She attributes her foresight to 35 years in banking. "It's just years of experience saying you've got to get ahead of the problems; you can't put your head in the sand," she says.