Top US banks agree to temporarily suspend foreclosures
14 Feb 2009
Citigroup Inc, JP Morgan Chase & Co, Bank of America Corp, Morgan Stanley and Wells Fargo & Co on Friday announced that they would temporarily suspend foreclosures, as Washington's debate continued about how to save the US economy and moribund housing market.
In a letter to House Financial Services Committee chairman Barney Frank, JP Morgan CEO Jamie Dimon said he would set up a three-week moratorium on foreclosures. Morgan Stanley, based in New York, said its Saxon Mortgage Services Inc handled billing and collections on $26.6 billion of loans as of 30 September 2006, before the business was acquired, said spokeswoman Jennifer Sala.
Bank of America in Charlotte, North Carolina, would consider extending its moratorium beyond 6 March if Geither's plan is still being developed, spokeswoman Jumana Bauwens said. Wells Fargo, which acquired Wachovia Corp last month, extended until the end of February a freeze on foreclosure for Wachovia's loan holders, and will halt actions until a US plan is released, said Kevin Waetke, a bank spokesman.
"As part of this commitment, Citi has initiated a foreclosure moratorium on all Citi-owned first mortgage loans that are the principal residence of the customer, as well as all loans Citi services where we have reached an understanding with the investor," Citigroup said in a statement.
Frank asked chief executives of eight banks at a committee hearing on 11 February to freeze foreclosures until Treasury Secretary Timothy Geithner sets up a program. The Office of Thrift Supervision urged savings-and-loans to suspend foreclosures until a plan is ready.
US government-controlled mortgage finance companies Fannie Mae and Freddie Mac suspended foreclosure sales during the winter holidays and have halted evictions from foreclosed properties until next month. And earlier this week, John Reich, director of the Office of Thrift Supervision, urged the more than 800 thrift institutions nationwide to do the same.
Meanwhile, the administration is considering spending taxpayer money to cut monthly payments for homeowners on the verge of foreclosure. Still, deciding who would qualify would be a challenge, especially as foreclosures continue to soar. More than 274,000 US households received at least one foreclosure-related notice last month, according to RealtyTrac Inc.
