By Alan White
Looking at the October mortgage modifications (actually 9/25 to 10/25) I noticed that 40% of them were adjustable rate loans with reset dates in the next six months (November to April). Thinking these might be rate freezes, where the servicer agrees to keep the interest rate and payment the same by delaying or cancelling a rate adjustment, I checked the before and after monthly payments. Strangely, only 10% remained the same. About 40% of the mods with imminent rate resets resulted in lower monthly payments, while 50% resulted in current payments being higher than the initial payment.
Two things seem to be happening. One is that servicers are concentrating some efforts on working with homeowners whose rates are about to adjust, but then are tailoring modifications according to some unknown set of rules. Second, some servicers apparently still prefer to make a bad situation worse by increasing borrowers' monthly payments to recover past arrears.
Meanwhile, JPMorganChase announced today that it will open 24 regional homeowner counseling centers and modify up to 400,000 mortgages in the next two years. JPMorgan is now the owner of not only Chase Mortgage but also Washington Mutual's portfolio of subprime and option-ARMs, as well as Bear Sterns/EMC Mortgage.