Banks Agree To Foreclosure Moratoriums
February 13, 2009
By Meena Thiruvengadam
WASHINGTON -(Dow Jones)- JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) have committed to temporary moratoriums on foreclosures as the government works on a financial stability plan slated to include billions of dollars aimed at keeping people in their homes.
"We will not add to the foreclosure process any new owner-occupied residential loans that are owned and serviced by JPMorgan Chase," the company's chief executive, Jamie Dimon, said in a letter Thursday to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.
The moratorium on new foreclosure actions will remain in effect through March 6 and is similar to a 90-day foreclosure freeze JPMorgan announced Oct. 31.
"We believe three weeks is adequate time for the Treasury to announce - and for us to implement - a new plan," Dimon said.
Citigroup in a statement issued Friday said it will place a moratorium on foreclosures for all Citi-owned first mortgage loans that are on principal residences and on loans for which understandings with investors have been reached. The moratorium is scheduled to last until March 12 unless the government finalizes a loan-modification program before that date.
Bank of America on Friday said it will delay foreclosure sales on owner- occupied properties whose mortgage loans are owned and serviced by it or Countrywide Financial Corp. through March 6. Bank of America acquired Countrywide in July.
"If the program's development is not complete in three weeks, we will consider a possible extension," a Bank of America spokeswoman said.
Wells Fargo, which recently acquired Wachovia Corp., has imposed a moratorium on foreclosures for loans it holds, company spokesman Kevin Waetke said Friday. That moratorium is expected to remain in place until the government's foreclosure prevention plan is announced.
The majority of Wells Fargo's mortgage loans, however, are serviced by it and owned by other investors. The company is "working with these investors and related contractual commitments to determine how we will support the moratorium request," it said in a statement issued Friday.
Lawmakers in a congressional hearing Wednesday asked the executives of several of the nation's largest banks to institute a moratorium on foreclosures until the details of a revamped government bailout effort are announced. The Office of Thrift Supervision, which regulates U.S. thrifts, on Wednesday also called for institutions it oversees to suspend foreclosures for the next few weeks.
U.S. Treasury Secretary Timothy Geithner on Tuesday unveiled the outlines of the revamped government effort and said details will be released later. Geithner has been meeting with other members of President Barack Obama's economic team and the secretary of housing and urban development to discuss foreclosure prevention.
Obama is scheduled to outline his plan to stem foreclosures next week.
"I am asking you at this time to commit to this committee and to the people across America that you will do something here ... and that is to commit to having a moratorium on all foreclosures that each of your banks and affiliates deal with until the Treasury secretary can put together this package," Rep. David Scott, D-Ga., said at Wednesday's hearing.
Citigroup Chief Executive Vikram Pandit in that hearing first told lawmakers of his company's intent to institute a foreclosure moratorium, saying Citigroup "would commit to making sure that people stay in their houses."
Also in that hearing, Bank of America Chief Executive Ken Lewis indicated his firm would consider freezing its foreclosure activity. "If we could put a time frame on it, ... say it's two weeks or three weeks, we would do that," he told lawmakers.
Some lawmakers have suggested Geithner "strongly encourage" banks receiving government capital through the controversial $700 billion Troubled Asset Relief Program, or TARP, to temporarily stop foreclosures. "TARP-assisted financial institutions should allow struggling homeowners more time to qualify for any systematic loan modification plan," Frank and Rep. Doris Matsui, D-Calif., wrote in a letter to Geithner on Wednesday.
JPMorgan, Citigroup, Bank of America and Wells Fargo each have received billions of dollars in federal aid through TARP.
-By Meena Thiruvengadam, Dow Jones Newswires; 202-862-6629; email@example.com
(Henry J. Pulizzi contributed to this article.)