Banks Stop Foreclosures While Administration Finishes Plan

Posted by Orb Staff on February 16, 2009 No Comments
Categories : Mortgage Servicing

Several major financial institutions – awaiting the Obama administration's foreclosure prevention plans that are expected to be announced midweek – have heeded the calls of one federal regulator and temporarily stopped foreclosures.

Citigroup, JPMorgan Chase, Wells Fargo, Bank of America and Morgan Stanley have all agreed to halt foreclosure proceedings while the administration works out the details of its plan – a move urged by the Office of Thrift Supervision. Additionally, government-sponsored enterprises (GSEs) Freddie Mac and Fannie Mae have again extended their moratorium on foreclosure sales. The GSE moratorium now runs through March 6.

Regional banks have also jumped in, as BankUnited and BankAtlantic, both based in Florida, say they will not foreclose until the Financial Stability Plan's loan modification program is finalized. President Obama is expected to talk about the program as early as Wednesday.

"We will not add to the foreclosure process any new owner-occupied residential loans that are owned and serviced by JPMorgan Chase," CEO Jamie Dimon wrote to members of the House Financial Services Committee and to Treasury Secretary Timothy Geithner.

Commenting on Geithner's speech last week, the committee's head, Rep. Barney Frank, D-Mass., requested that banks halt foreclosures pending the administration's announcement. Chase's foreclosure freeze replicates the company's initiative announced last October and continues through March 6.

"Citi has initiated a foreclosure moratorium on all 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," reads a Citi statement. The moratorium will extend until the new foreclosure plan's details are announced or through March 12 – whichever is earlier.

Bloomberg reports that Bank of America might extend its moratorium beyond March 6 if the Treasury plan is not yet finalized. Wells Fargo, which acquired Wachovia last December, extends its foreclosure freeze for Wachovia borrowers and will stop foreclosure actions until the plan is released.

SOURCE: Citigroup, JPMorgan Chase, Reuters

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