Saturday, October 26, 2013



Although it was great to hear the news on TV last month, I enjoyed opening my local newspaper (The Seattle Times, Oct. 26, 2013) and reading that JPMorgan/Chase had reached a deal with the Federal Housing Finance Agency  The FHFA regulates banks and apparently are the only ones who can pressure the banks to consider some loan principal forgiveness or deferment (or offer lower interest rates) for homeowners struggling to meet their mortgage obligations, especially those who are "underwater.".  [The current acting director Edward DeMarco has not been willing to offer any relief for underwater homeowners.  All eyes are turned toward President Obama's nominee Rep. Mel Watts, to head the agency, upon Senate confirmation,  hopefully early next year.]

Now that they have reached a $13 billion dollar settlement of a 2011 lawsuit brought by our government, providing a $4 billion homeowner relief payout from JPMorgan Chase - maybe some of us struggling homeowners will be given a little help in modifying our mortgages.  The article stated that "The bank is committing $4 billion to help struggling homeowners reduce their mortgage balances".  Those, like me, who have a history of refinances with Washington Mutual - which Chase bought in 2008 - should be first in line to receive assistance of some kind.  (Anything would help.)   Washington Mutual lied when they submitted my mortgage re-fi applications (and many others', of course) for approval.  During that time period (2002 to 2008) ownership of my loan reverted to FannieMae.  (If you are not sure whether your mortgage is owned by Fannie Mae or Freddie Mac, go to their website: and

"JPMorgan sold $33 billion in mortgage securities to Fannie and Freddie between 2005 and 2007 . . . that was the second-most sold to those agencies ahead of the crisis, behind only Bank of America.  The securities soured after the housing bubble burst in 2007, losing billions in value."

To summarize, the U.S. Department of Justice accused JPMorgan, Bear Stearns and Seattle-based Washington Mutual  - the country's largest savings and loan bank, of selling mortgage securities to Fannie Mae and Freddie Mac but did not fully disclose the risks of the securities, which ultimately imploded, and added to the burgeoning financial crisis.  The mortgage securities that JPMorgan sold to Fannie and Freddie included billions that were packaged by two institutions that failed in 2008 - Wall Street bank Bear Stearns and the savings and loan institution Washington Mutual.  JPMorgan bought Bear Stearns and Washington Mutual in deals brokered by the government.  [Author's note:  2008 was the year my spouse died and I had to take $10,000 of his $16,000 in life insurance benefits to pay for a re-fi to get out from under a negative amortization loan, raising my mortgage payment by $500 monthly while, at the same time, having to contend with $1,000 a month less in income upon my husband's death through loss of half his pension and all of his Social Security benefits.]

This $13 billion settlement is the largest sum a single company has ever paid to the government.

DeMarco was quoted as saying, "This is a significant step as the government and JPMorgan Chase move to address outstanding mortgage-related issues."  A larger amount, $6 billion, will be passed on to investors who sustained losses on mortgage securities.  [The same investors who refused to allow some principal forgiveness on my mortgage last year and the year before that, and the year before that?  The same investors who are still getting a large portion of my interest at $1650 a month for the past five years?]

The articles goes on to say that JP Morgan will pay about $2.74 billion to Freddie and $1.26 billion to Fannie for the securities it sold.  The bank is also paying $1 billion for home loans it sold to Fannie and Freddie ahead of the crisis.

UPDATE:  Newswires today (Nov. 19, 2013) reporter the JPM settlement has now been signed.  Struggling homeowners, including those who had refinanced with Washington Mutual, will be receiving some relief in the way of mortgage principal forgiveness or a lower rate of interest, resulting in many of us having to pay only a third of our income toward mortgages rather than the two-thirds that so many of us are struggling with today (and have been doing so for several years).

The Associated Press article goes on to state:  "The magnitude of the payout reflects a broader strategy shift within the Justice Department to hit Wall Street where it hurts most: the bottom line.  Once content to extract multimillion dollar fines that critics dismissed as little more than a slap n the wrist, prosecutors ave signaled to the nation's biggest banks that the billion-dollar mark is a floor rather than a ceiling." 

The State of New York will receive $400 million, part of which will go toward helping the people who need relief from the damaged wreaked by Superstorm Sandy.  The rest will fund underwater homeowners.,
There will be a third party administrator to see that qualifying homeowners obtain some relief.  More information is expected from the Obama Administration on Tuesday, November 26, 2013.

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