Chase Agrees to Modify Second Liens
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- Kara Johnson | March 22, 2010
JP Morgan Chase has become the third major lender to announce it will modify second-lien mortgages under the Obama Administration’s Home Affordable Modification Program (HAMP).
Mortgage servicers who commit to the program, known as 2MP, agree to automatically modify second liens that they hold when a borrower obtains a loan modification on their primary mortgage under HAMP. Bank of America and Wells Fargo previously agreed to participate in the program.
"We have invested significant resources to modify mortgages and keep more families in their homes," said David Lowman, head of home lending at Chase, part of JPMorgan Chase & Co. "This program makes it easier to coordinate with other servicers by using consistent 2MP standards."
HAMP is designed to help financially stressed homeowners avoid foreclosure by reducing their monthly mortgage payments through interest rate and principal reductions. At least 170,000 homeowners have received permanent loan modifications to date under the program, with another 835,000 presently in trial modifications.
With as many as half of all at-risk mortgages including second liens, the issue of second lien modifications have been an obstacle for many homeowners seeking mortgage relief under HAMP. The 2MP reduces the interest rate on second liens to as low as 1 percent when customers obtain a loan modification on their primary mortgage, and reduce principal in proportion to any principal reduction on the first mortgage.
After five years, the interest rate on both the primary and secondary liens may increase to a new rate based on then-current market conditions.
"We have invested significant resources to modify mortgages and keep more families in their homes," said David Lowman, head of home lending at Chase, part of JPMorgan Chase & Co. "This program makes it easier to coordinate with other servicers by using consistent 2MP standards."
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