Feb 19

Obama to tout housing help Friday in Las Vegas

LAS VEGAS – President Barack Obama is unveiling $1.5 billion in housing help, a boost timed to his appearance in the city with the worst foreclosure crisis in the nation.

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President Barack Obama salutes during his arrival at McCarran International Airport in Las Vegas, Thursday, Feb. 18, 2010. (AP Photo/Pablo Martinez Monsivais)

Obama’s move, detailed by aides in advance of his town hall here Friday, is the latest by a White House determined to show it is helping families rebound from a deep recession. The downturn is taking an election-year toll on Obama’s party as voter frustration builds.

Obama was to announce that housing finance agencies in the five hardest-hit states in the housing crisis will receive $1.5 billion to help spur local solutions to the problem. Those five are Arizona, California, Florida, Michigan and Nevada.

The policy wrinkle comes during a two-day Western trip with different agendas for the president. He will be back in town-hall mode, a venue that aides say allows him to connect with people and distance himself from the messy process of Washington governing.

The president is also out to help vulnerable senators protect their seats and, in turn, gain as much legislative leverage as he can.

At the town hall and a business speech he will be lending his support to Senate Majority Leader Harry Reid of Nevada, a top 2010 election target of Republicans.

Obama’s political involvement comes as the Democrats’ command of the Senate grows shakier, jeopardizing the president’s agenda. The tide of change that Obama rode to office is threatening to slam against his own party.

The first day of the trip was all politics. Obama campaigned Thursday for Sen. Michael Bennet of Colorado in Denver, then held a $1 million fundraiser for Democrats in Las Vegas. Reid is one of Obama’s allies, despite a flap over the president’s tendency to refer to Las Vegas as a symbol of imprudent spending, which has the city’s mayor fuming at the president.

For Obama, slowing the foreclosure rate is a key step in the recovery of the overall economy. Millions of people have lost their homes because they couldn’t afford the mortgages anymore, and millions lost jobs because of the associated slowdown in new home building.

Reid’s state leads the nation in home foreclosures; Las Vegas was the metro area with the highest foreclosure rate in January, with one in every 82 homes receiving such a filing.

The money for the new rescue effort will come from the $700 billion financial industry bailout program, according to a senior administration official who spoke anonymously Thursday night because the formal announcement had not been made.

Economic issues, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year. Initially, subprime mortgages were mostly the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

Obama will cap his Las Vegas trip with a speech to the city’s Chamber of Commerce before returning to Washington later Friday.

Associated Press writers Darlene Superville and Adrian Sainz contributed to this report.

Dec 10

Winning Lower Payments Takes Patience, and Luck

Published: November 28, 2009
On the day in June when her mortgage company finally agreed to lower her monthly payments, Yolanda Thomas felt a twinge of hope that she would hold on to her Queens apartment, the first home she had ever owned. The loan modification extended by Chase Home Finance was technically a trial, not a permanent alteration, but this fact seemed of lesser significance.

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U.S. Will Push Mortgage Firms to Reduce More Loan Payments (November 29, 2009) ?I felt they were working with me,? Ms. Thomas said. ?I felt very positive and hopeful, like I had a chance to keep my house.?

But five months later, Ms. Thomas, 35, is back at the beginning. She has made her reduced payments on time. She has submitted the proper paperwork, she says, while enduring a bewildering array of conflicting instructions from her bank. But last month, Chase rejected her application for a permanent loan modification and invited her to start over and send in a new application, for another trial.

?At this point, I don?t know what is going on,? she said.

Ms. Thomas?s experience shows the confusing and frustrating ways of the Obama administration program aimed at keeping millions of troubled American borrowers in their homes.

Four years ago, she bought her apartment ? a three-bedroom condominium in Ozone Park ? for $530,000, putting down about 10 percent and borrowing the rest through an interest-only loan from Washington Mutual. Given her $130,000 salary at a marketing job, she had no difficulty making the $2,700 monthly payments. Indeed, she continued to add to her savings, which grew to about $80,000, while paying college tuition for two younger brothers.

But in April 2008, amid the recession, Ms. Thomas was laid off. She continued to make her mortgage payments by tapping her savings. By that fall, with her savings nearly exhausted and credit-card debt mounting, she turned to a housing counselor at the Ridgewood Bushwick Senior Citizens Council, a nonprofit group based in Brooklyn. The counselor began seeking a loan modification from Washington Mutual, which had been purchased in distress by JPMorgan Chase.

This March ? after several rounds of mislaid paperwork and resubmitted forms ? Chase extended a so-called forbearance arrangement, allowing her to make no payments for two months while she continued to look for a job.

Ms. Thomas soon found a new marketing job that paid roughly half as much as her previous position. In June, on the basis of that income, Chase approved her for a trial loan modification, which reduced her payments to $1,174.30 a month.

The trial loan modification documents that Ms. Thomas signed promised that the new payments would become permanent, provided she made her three trial payments on time and then submitted required documents confirming her financial situation.

According to notes kept by Ms. Thomas, Chase promised not to report her to credit agencies as delinquent while she made her lowered payments. But by early July, Chase collection agents were calling regularly, threatening to foreclose. Chase reported her to credit agencies as delinquent, which increased the interest on her credit card debt and her car insurance rates. When Ms. Thomas began calling Chase to try to reverse this, she got nowhere.

?Once, I was told this happens all the time,? she said. ?Then I was told that this never happens and there was nothing that could be done. It was just bad information all the time.?

In a letter this month, Chase told Ms. Thomas that it had asked major credit rating agencies to ?remove any negative payment history? from her credit profile. But this admission that the bank had made a mistake was itself made in error, Tom Kelly, a Chase spokesman, said.

?We actually should not have sent her the letter,? Mr. Kelly said, maintaining that Ms. Thomas should indeed have been reported to the credit agencies. ?We?re not always perfect.?

As her trial period ended at the beginning of October, Ms. Thomas still had no word about a permanent loan modification, so she sent in a fourth month?s payment.

In late October, Chase told her that she had been turned down for a permanent loan modification because her income was insufficient. She insists that her income remained the same, though Chase produced a pay stub showing that she had in fact worked full-time in May and only part-time in September, earning less.

Two days later, Ms. Thomas received a letter from Chase saying that her application was still being considered, but missing a required tax document. Then, by phone, Chase told her that, never mind, she should start over.

Despite the mishaps, the Chase spokesman says, Ms. Thomas?s case amounts to a success story.

?She?s ahead of where she would have been without this program,? Mr. Kelly said.

Where she is now is in limbo, awaiting word on another trial modification, this time based on her new salary of about $100,000, courtesy of a new job.

?I?ve been working my whole life and paying my bills,? she said. ?I just want to pay my mortgage.?

Dec 08

Hit Hard By Home Foreclosures

At a Congressional hearing on the foreclosure crisis, a Cuyahoga County official said the situation is “worse than it’s ever been – far worse.”

Paul Bellamy, who oversees the Foreclosure Prevention Program for County Treasurer Jim Rokakis, says the problem is quiet because the banking industry has changed the rules. “The industry is not processing loans the way it used to,” Bellamy says. “It makes it look liked we’ve leveled off, and in fact, we haven’t.”

Chairing the hearing was Congressman Dennis Kucinich, who called Cleveland “the epicenter of home foreclosures in the United States.”

Kucinich said the government had not adequately addressed the crisis when it gave the nation’s major banks bailout money last fall. One proposal put on the table was to force banks that took bailout money to offer better terms to people facing foreclosure.

But Rep. Jim Jordan, a Republican from southern Ohio, said government is not the answer. “If big federal government spending, big federal government regulation was going to get us out of this economic downturn,” Jordan said, “we’d have been out of it a long time ago because that’s all the government has been doing.”

Oct 14

JPMorgan earns $3.6B, but loan losses remain high

JPMorgan Chase & Co. reported strong third-quarter earnings Wednesday as its thriving investment banking business more than offset rising loan losses that the bank warned would continue for the forseeable future.

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JPMorgan, the first of the big banks to report earnings for the July-September period, reported a $3.59 billion profit but also said it roughly doubled the amount of money it set aside for failed home and credit card loans in the quarter.

The bank’s earnings cheered investors, who sent JPMorgan stock and the overall market higher. Still, the bank’s performance shouldn’t be taken as a forecast for how well other banks did. Many financial companies don’t have such big investment banking operations, which includes trading of stocks and bonds and allowed JPMorgan to overcome its loan losses.

Banks including JPMorgan have predicted for some time that their loan losses would keep rising. And in JPMorgan’s earnings statement, CEO Jamie Dimon confirmed that this trend continues.

“Credit costs remain high and are expected to stay elevated for the foreseeable future in the consumer lending and card services loan portfolios,” Dimon said.

The company said for the second straight quarter that there are some signs of stabilization in delinquencies among consumer loans that are only recently past due. But Chief Financial Officer Mike Cavanagh said during a conference call with reporters that the bank “can’t at the moment be certain” that the trend will continue.

JPMorgan may be able to raise its 5 cent per share quarterly dividend to as much as 25 cents if loan losses stabilize and the company’s credit costs fall, Cavanagh said. The CFO said that an increase could come early next year, but he again cautioned that’s it too soon to know if the economy will recover enough to make a higher dividend possible.

Investors didn’t seem troubled by the bank’s dim credit outlook, and likely were more focused on the fact that big profits in divisions such as investment banking helped the New York-based bank earn 82 cents per share during the third quarter. Analysts forecast a profit of 52 cents per share.

JPMorgan said its investment bank net income came to $1.92 billion, up $1 billion from a year earlier as fixed income trading thrived.

The company’s stock jumped $1.34, or 2.9 percent, to $47 in morning trading.

JPMorgan, the nation’s largest bank by assets, has been considered one of the strongest financial companies during the past year’s turmoil. It has performed better than other large competitors in part because of its relatively light exposure to troubled subprime mortgages and commercial real estate.

However, traditional residential mortgages and home equity loans as well as credit cards continue to default at a rapid pace and that has eaten into JPMorgan’s profits.

In its earnings statement, the bank also described the near-term path of the economy as uncertain.

JPMorgan’s loss provision to cover current and future home loan defaults jumped to $3.99 billion, while its provision for credit card losses surged to $4.97 billion.

Cavanagh said that if the economy continues on a recovery path and doesn’t falter again, JPMorgan is probably close to reaching its peak loan-loss reserve levels.

Credit card defaults and mortgage losses are likely to continue to creep higher and lag an overall economic recovery. Losses on credit cards typically mirror unemployment, which rose to 9.8 percent in September.

Economists predict the jobless rate will eclipse 10 percent in the coming months.

JPMorgan said the percentage of credit card loans it wrote off as not being repayable in the third quarter reached 10.3 percent of its total portfolio. Cavanagh said during a separate call with analysts that the card loss rate is expected to reach 10.5 percent in the first half of 2010 and could go higher depending on the unemployment rate.

Loan losses were also pushed higher by weakness in the portfolios JPMorgan acquired when it purchased the failed bank Washington Mutual a year ago.

Fixed income markets accounted for two-thirds of the investment bank’s $7.51 billion in revenue. While the company’s trading operations were strong, JPMorgan was also able to write up the value of some investments that have started to recover after souring during the peak of the credit crisis.

Overall, JPMorgan generated $28.78 billion in revenue during the quarter, better than the $24.96 billion predicted by analysts.