Chase Tops 900,000 Modifications - Analyst Blog

JPMorgan Chase & Co.’s (JPM) U.S. consumer and commercial banking arm Chase said on Wednesday that it has offered more than 900,000 mortgage modifications since the beginning of 2009.
 
Chase continues to proceed swiftly with its extensive and incessant use of the federal Home Affordable Modification Program (HAMP) along with its other modification programs in an attempt to reduce the number of foreclosed homes across the U.S.
 
Of the total modifications offered, more than 270,000 have been approved for permanent modifications and Chase has completed more than 214,500 permanent modifications.
 
Chase offered a total of 263,553 modifications under HAMP, 346,642 under its own modification programs and 303,114 under agencies since the beginning of its mortgage modifications. 
 
Over the last three months, Chase has set on more than 61,000 aged HAMP trial modifications and has made decisions for more than 80% of the customers with remaining aged trials.
 
Chase is the first major mortgage servicer to provide face-to-face counseling in the hardest-hit areas. The company has met 140,000 homeowners in face-to-face counseling sessions. Also, over the last 18 months, Chase has appointed 8,000 staffs including mortgage counselors to work for struggling homeowners.
 
Chase has also donated or sold at a substantial discount more than 900 homes to non-profit organizations.
 
During 2009, JPMorgan Chase reviewed its residential real estate portfolio to identify homeowners who need assistance the most. Consequently, it started opening new regional counseling centers and hiring additional loan counselors.

Apart from JPMorgan Chase, the other companies that are actively engaged in HAMP and other modification programs to prevent foreclosures include Bank of America Corp. (BAC), Wells Fargo & Co. (WFC), Citigroup Inc. (C) and USB Bancorp (USB).
 
The participating banks receive incentive payments under the mortgage modification program for altering the interest rates and payments for distressed homeowners. Following a trial modification for three months, qualifying homeowners’ mortgage burdens are expected to permanently reduce.
 
At a time when the pace of economic recovery is slow, JPMorgan Chase is exploring all options to prevent a foreclosure. Though foreclosure prevention does not benefit the company’s financials to a great extent, it hopes to restore investor and customer confidence through this initiative.
 
JPMorgan Chase currently retains its Zacks #3 Rank (short-term Hold rating), implying that the stock is expected to perform in line with the broader U.S. equity market in the near term. While we anticipate continued synergies from the company’s diversified operations and a strong capital position, a pressured credit quality and reduced levels of client activity will drag future earnings.
 
However, we are impressed to see some improvement in credit quality in the last three quarters. Therefore, we maintain our long-term Neutral recommendation on the stock.

 
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