MAJOR U.S. BANKS TO TEMPORARILY HALT FORECLOSURES!
BANKS WITH BIG CHICAGO PRESENCE - CHASE, BANK OF AMERICA, CITIGROUP - AMONG EIGHT LENDERS TO SUSPEND FORECLOSURES!
With President Obama's nearly-$800 Billion Economic Stimulus Program scheduled for signature this week, and the next phase of the Trouble Asset Relief Funding being discussed and soon to be finalized, some of the big U.S. Banks are looking for ways to stem the growing tide of home foreclosures.
Now, according to a Bloomberg News story in yesterday's Chicago Tribune, as the new administration attempts to formulate a plan to help homeowners in deep financial distress, several large banks have elected to pause the foreclosure process until early next month, or, in some cases, until a homeowner assistance program is put in place.
Citigroup has put a moratorium on foreclosures until March 12th. Bank of America, Morgan Stanley, Goldman Sachs, State Street Bank, and Bank of New York Mellon will hold off foreclosures until at least March 6th. Wells Fargo says they will hold foreclosures until the Fed plan is in place, without giving a date.
Chief Executives at the eight participating banks appeared at a House Financial Services Committee meeting last Wednesday. Committee Chairman Representative Barney Frank (D-MA) asked the bank executives for the freeze until the Obama Administration, and U.S. Treasury Secretary Timothy Geithner, develops the homeowner assistance program. According to White House Press Secretary Robert Gibbs, President Obama will provided some of the details of his program on Tuesday and Wednesday this coming week, during a two-day stopover in Denver and Phoenix.
The banks seemed initially seemed inclined to extend their moratoriums is the assistance plan needs more time to be formulated.
According to Realty Trac, a CA based provider of home foreclosure statistics, foreclosures across the U.S. totaled nearly 275,000 during January. This figure is 18% higher than January, 2008, but nearly 10% lower than it was last December.
In Cook County IL, the county in which the City of Chicago is located, there were 7,903 new foreclosures filed last month. Foreclosure filings in 2008 nationwide jumped 81%, to 2.3 Million, as home prices tumbled and options for refinancing evaporated for many.
Often, modification of in-place high-interest loans is cited as a way to reduce home foreclosures. However, statistics from U.S. Bank Regulators indicate that 55% of loans modified during the First Quarter, 2008 fell 30 days or more delinquent within six months after being modified.
Expected aspects of the new Obama Plan would removed troubled mortgage assets from bank's balance sheets, hopefully encouraging new lending. Treasury Secretary Geithner promised to buy and then modify distressed mortgages from troubled homeowners. U.S. Senate Banking Committee Chair Christopher Dodd (D-CT) estimated last week the aid would total as much as $100 Billion.
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