Chase Signs on to Modify Second Lien Mortgages with HAMP
Chase, the consumer and commercial banking unit of JPMorgan Chase (JPM), signed on to participate in the Second Lien Modification Program (2MP) under the Home Affordable Modification Program (HAMP), the company announced today. 2MP will call for modifications that reduce monthly payments on qualifying home equity loans and lines of credit under certain conditions, including the completion of a HAMP modification of the first mortgage. "We have invested significant resources to modify mortgages and keep more families in their homes," said David Lowman, head of home lending at Chase, in a press statement. "This program makes it easier to coordinate with other servicers by using consistent 2MP standards." Chase converted the third-highest volume of permanent HAMP modifications of all servicers at 19,385 through February, up from 11,581 in January, according to the Treasury Department's latest report. In February, JPM had active modifications on 39% of the 437,323 loans in its HAMP-eligible portfolio, up from 38% in January. Last week, Wells Fargo (WFC) signed on to participate in 2MP after Bank of America (BAC) became the first to sign on in January. Until then, the HAMP program for second liens — announced in April 2009 and added to the HAMP Web site with administrative process apparently in place — had yet to result in a single servicer contract, prompting some to wonder whether the program was on hold. The Treasury Department, which administers HAMP, told HousingWire in January, 2MP was still on track despite reports to the contrary. Since then, the risk that “silent” second liens pose to first lien bond holders in residential mortgage-backed securities (RMBS) has only grown louder. Investor fears culminated this month in a letter from House Financial Services Committee chairman Barney Frank (D-Mass.) urging the top four lenders to pursue “immediate steps to write down second mortgages.” Write to Diana Golobay. Disclosure: The author holds no relevant investment positions.