Feb 26

Dimon Decries Washington?s Treatment of Banks

Jamie Dimon, the chief executive of JPMorgan Chase, says he believes Washington has become increasingly erratic and unfair in its treatment of the banks over the last few months, and he now has some regrets about participating in the government?s Troubled Asset Relief Program.
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?F.D.I.C. is going to cost us a lot of money. TARP cost us a lot of money. This bank tax, my first reaction was, ?That will cost us a lot of money,?? Mr. Dimon said Thursday at the bank?s annual Investor Day conference in New York. ?I think we are getting into the capricious, arbitrary and punitive behavior.?

Mr. Dimon said he did not know whether he would have taken the $25 billion that the government lent to JPMorgan during the 2008 financial crisis to bolster its capital if he knew then how troublesome the TARP money would be for the bank.

?The mistake was we let the government and the politicians not differentiate between irresponsible companies and prudent companies, from irresponsible, imprudent, and everybody got lumped together in the same boat,? Mr. Dimon said ?Yes, a lot of those companies needed TARP to survive, and yes, a lot did not.?

Mr. Dimon has expressed some of these complaints before. During JPMorgan?s earnings conference call in January, he said it was unfair that the big banks would be the only ones forced to pay the Obama administration?s proposed bank tax to ensure that all the TARP money is repaid.

Mr. Dimon said Thursday at the Investor Day conference that he supported certain new regulations to secure the financial system, but not all of them. He said JPMorgan had always supported the creation of a systemic risk regulator, which would be controlled by the Federal Reserve, to monitor the largest and most interconnected banks in the nation.

He disagreed with one proposal to create a separate agency devoted to consumer protection, which would regulate a whole host of activities from mortgages to credit cards.

?We want better consumer protection; we just don?t want a new agency. We think it should be done by the O.C.C. and the Fed,? Mr. Dimon said, referring to the Office of the Comptroller of the Currency.

?Yes, you can say they didn?t do a great job, but they are professional people,? he said. The elegant solution is for Congress to tell them do a better job.?

Mr. Dimon may get his wish, thanks to some persuasive lobbyists in Washington. Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Senate Banking Committee, said last month that he might drop demands for a new agency after pushing for its creation.

Thursday was certainly a day for JPMorgan to express its concerns about regulatory changes in Washington. Earlier in the day, James E. Staley, the bank?s investment banking chief, acknowledged that regulatory changes being considered in Congress had influenced the bank?s acquisition strategy.

? Cyrus Sanati

Feb 09

Mortgage hardship applicants in limbo

Chase denied an untold number of loan modifications for a reason that is now prohibited: It determined that homeowners’ financial troubles were temporary.
[Related content: homes, home financing, mortgage, refinance, foreclosure]
By ProPublica

On the Saturday before Thanksgiving, Lesa Herron of Santa Rosa, Calif., opened a letter from Chase Home Finance (.pdf file). She’d been denied a permanent modification under the federal government’s loan-modification program, Chase said, because her “hardship is not of a permanent nature.” No other reason was given.

For Herron, that was hard to understand. She was working two jobs, and her mortgage payment still amounted to more than half of her income. She’d fallen two payments behind. If her money troubles were only temporary, it was news to her.

We at ProPublica reported last month that mortgage servicers are often not following the Treasury Department’s rules for the program. One example involved another homeowner who, like Herron, had been denied a modification because his hardship was not “permanent.”
Letter from Chase.

Homeowner Lesa Herron’s letter from Chase Home Finance states that she was denied a loan modification because her ‘hardship is not of a permanent nature.’
Since that story, we have found several other similar cases: homeowners who may well be eligible for the program but who were denied because their troubles were not deemed permanent.

The cases ProPublica found all occurred before the Treasury explicitly barred such denials in December. Despite the change in guidelines, however, those homeowners are still in limbo. Some face possible foreclosure.
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Through interviews with housing counselors and homeowners, we found six cases in which homeowners were denied because the hardship was found not to be permanent. All were in November, and all were denied by Chase Home Finance, JPMorgan Chase’s mortgage servicing arm.

Chase seems to be alone among the largest servicers in having used that reason for denial. The criteria Chase used to judge a hardship temporary are unclear.

Housing counselors told us that homeowners denied a modification for that reason should reapply. The program does not allow homeowners to appeal denials, and housing advocates have criticized the program for not providing an effective way to challenge servicers’ determinations.

Christine Holevas, a spokeswoman for Chase, said the company “adapts as quickly as possible” to the Treasury’s guidelines. When asked, she did not say whether Chase would review the applications of homeowners who’d been denied because their hardships were considered temporary.
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Getting a mortgage modification
As previously reported, the largest servicers have lagged in approving homeowners for modifications. Together, those servicers account for more than 60% of the 3.4 million mortgages eligible for the program, but few homeowners have been approved for lasting modifications. About 425,000 Chase customers are eligible for loan modifications, according to the Treasury Department. Only a little more than 7,000 have received permanent modifications.

The Treasury Department has laid out extensive guidelines for the $75 billion program in an attempt to standardize servicers’ evaluations of applicants. When a servicer joins the program, it signs a contract that says it will abide by those guidelines. In return, the servicers receive incentive payments from the government for each modified mortgage.

* Guide for first-time homebuyers

To receive a modification under the program, homeowners must demonstrate that they can’t afford their mortgage payments. But the Treasury’s guidelines, initially issued last April and updated repeatedly since, never mentioned testing the permanence of a homeowner’s difficulties when evaluating an application. In December, a new guideline explicitly prohibited (.pdf file) servicers from distinguishing “between short-term and long-term hardships.”

A Treasury spokeswoman said that since the program’s launch, servicers had developed “varying interpretations of the guidelines” and that Chase’s use of the “temporary hardship” denial before the guideline update was “reasonably consistent” with the program’s rules. She said that homeowners who’d been denied for that reason can contact a hot line (1-888-995-HOPE) staffed with housing counselors for help.