JPMorgan Chase & Co., the largest U.S. bank by market value, said it will suspend any new foreclosure proceedings while it determines ways to make payments easier on $110 billion of problem mortgages.
Within the next 90 days, the bank said in a statement Friday, two weeks after accepting a $25 billion cash infusion from the government, it may agree to reduce interest rates or principal amounts. It will also open 24 centers to provide counseling in areas with high delinquency rates.
Congress has been urging financial-services companies to work with borrowers and avoid foreclosures, which rose to the highest on record in the third quarter. Charlotte's Bank of America Corp. said in July it would help more than 250,000 at-risk borrowers stay in their homes. The states with some of the highest foreclosure rates, including Florida, Ohio and Nevada, will be pivotal in the results of the Nov. 4 U.S. presidential election.
“Politics is playing such a huge role in this process, the banks have to be very cognizant of how they're perceived,” said Charles Peabody, partner and research analyst at Portales Partners LLC in New York. “What they want to do is show they deserve this good deal from the government by helping out the average man.”
Federal Deposit Insurance Corp. Chairman Sheila Bair has proposed a plan to guarantee mortgages to help stem foreclosures, according to two congressional aides briefed on the matter. Her idea is to use as much as $50 billion of the $700 billion financial-services industry bailout package approved by lawmakers this month.
Bair called the JPMorgan plan a “welcome development” for the $10.6 trillion mortgage market.
“A clear consensus is emerging that broad-based and systematic loan modifications are the best way to maximize the value of mortgages while preserving homeownership,” she said in an e-mailed statement.
The JPMorgan program is expected to help 400,000 families with $70 billion in loans in the next two years, the bank said. An additional 250,000 families with $40 billion in mortgages have already been helped under existing loan-modification programs.
“We will work with families who want to save their homes but are struggling to make their payments,” said JPMorgan executive Charlie Scharf.
Bank of America helped more than 117,000 homeowners avoid foreclosure from January through June, almost double the pace in the second half of 2007, it said in July. The bank said at the time it would modify at least $40 billion in troubled mortgages by the end of 2009.
As part of a settlement with 11 states over fraud complaints, Countrywide Financial Corp., the mortgage lender acquired by Bank of America, agreed earlier this month to help about 400,000 customers facing foreclosure or having problems paying their loans.
A boost in sales worldwide helped Burger King post a 2 percent quarterly profit increase Friday, but higher food costs and other expenses still took a bite out of its earnings.
Net income for the fiscal first quarter – the three months through Sept. 30 – climbed to $50 million, or 36 cents a share, from $49 million, or 35 cents, a year earlier, the Miami-based company said. Revenue rose 12 percent to $674 million.
The nation's No. 2 hamburger chain reported increases in commodity, remodeling and acquisition startup costs, leading the chain to miss Wall Street's profit estimates by a penny per share. Higher commodity costs have been a problem for virtually all restaurant chains, with the price of beef, chicken, cheese and cooking oil all rising.
Oil prices kept falling Friday, heading for their biggest monthly drop since futures trading began 25 years ago on signs that a contracting U.S. economy will suppress energy demand well into 2009.
Oil's monumental collapse – prices are down 36 percent for the month and 56 percent from their July record – has stunned oil-producing countries while giving cash-strapped U.S. consumers a rare dose of relief. Pump prices have fallen by half since their summer peak above $4 a gallon – a huge drop that's expected to result in over $100 billion in annual savings for American households.
Light, sweet crude for December delivery fell $1.35 to $64.61 a barrel on the New York Mercantile Exchange. Crude hit a record price of $147.27 on July 11. Associated Press