Chase Leaves Thousands Stuck in Loan Mod Limbo

New data show that Chase has the most homeowners who have waited more than six months for a final answer on whether they’ll get a permanent mortgage modification. Trial modifications are supposed to last only three months.

by Paul Kiel
ProPublica, May 18, 2010, 11:05 p.m.

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(Chris Hondros/Getty Images) As we wrote on Tuesday, the new data the Treasury Department released show a number of problems with the mortgage modification program. But JPMorgan Chase leads the pack when it comes to those stuck in loan mod limbo.

JPMorgan Chase, the data show, has the most homeowners waiting more than six months for a final answer on whether they’ll get a permanent modification. (What we still don’t have data on is how many many homeowners have applied for a modification to begin with and how long they've waited.)

Although we’ve been providing estimates on this backlog for months, this was the first time the Treasury had divulged the exact numbers. Only one other servicer, the relatively small Saxon, has a higher proportion of homeowners who’ve been waiting for months to hear whether their trial modifications will become permanent.

Forty-five percent of all trial modifications that Chase has begun—which are supposed to last no longer than three months—have dragged on for at least six months without a final answer from the bank. (See how other banks are doing.)

The especially large backlogs at Chase and Saxon stem from the disproportionate number of trials both servicers began in the first months of the program. JPMorgan began about 106,000 trials in the program’s first four months (through August of 2009). In the eight months since then, only 83,000 homeowners have begun trials. The same is true of Saxon: it began 29,000 trials in the first four months, and only 11,000 since. A large proportion of those homeowners remain stuck in those trials.

Treasury officials have attributed the backlogs largely to the fact that servicers were initially allowed to begin trials without first verifying homeowners’ incomes. Treasury allowed servicers to do that in order to boost the number of trials in the program’s first months, and recently implemented guidelines to require documentation of income before a homeowner can start a trial.

Christine Holevas, a Chase spokeswoman, said she expected that measure to "dramatically improve the approval rate." The change has already dramatically reduced the number of homeowners who are beginning new trial mods.

Treasury’s early decision to allow homeowners to get trial modifications without verifying their income is far from the only reason Chase has left so many homeowners in limbo. We’ve done a number of stories that detail other problems homeowners have experienced with Chase.

Chase is of course far from the only bank and servicer with which homeowners have been having problems. Take a look at our breakdown of the data, and you can see vastly differing results at the different servicers. We’ll continue to track the program and seek to understand the reasons behind the differences.

Follow @paulkiel

3 comments

MEC

June 1, 2010, 9:03 a.m.

Chase is an absolute nightmare. They’ve had me going in circles for over a year, keep “misplacing documents,” reps. have different answers each time I call/get transferred,etc. They make it impossible to keep your home even when you do everything they ask AND have the means to handle a modified payment. No clue what to do next? HOPE Hotline tells me to call Chase - I have at least 4 reams of docs that I’ve sent 4x!!!

christina wishrad

June 7, 2010, 3:19 p.m.

Chase is a horrible institution. We have been in the temporary loan mod program for 10 months, with no end in sight. We sent the same information they requested every month as they required, then we got a foreclosure notice, because they said we neglected to give them the documents they required within the time limit. My husband has spoke to the person that was in charge of our modification every month, and was told all they had all the documents they needed, and the modification was being processed.We sent the new document that they required, and were told all the paperwork was being reviewed, now, we were given the name of another person who is allegedly handling our loan, and we have called 4 times just today, to find out if they will except our payment this month, we just get an answering machine, and no one has returned our calls. We have the sinking suspicion, that we will soon be homeless, this is a horrible way for people to live, not knowing if you will be homeless tomorrow, and we made of all of the scheduled mod payments on time, haven’t missed one. To think we the people, bailed this bank out, and now we are being tortured by them, and the government is nowhere to be found to help us. What a way to live the American Dream, only big money gets to have a happy life, the rest of us, whose backs they break, can just wither away!! How sad for America, and all of us little people that keep it running.

MEC

June 10, 2010, 9:54 a.m.

Well, I finally decided to file a complaint against Chase Home Financial with the Dept. of Treasury after sending my “final docs” for the 4th time directly to the VP - Larry Thole. I sent them certified mail, return receipt last week, along with my June payment (which hasn’t been cashed yet). I haven’t received the return receipt from Mr. Thole as of yet. However, I DID receive a call from someone at the Dept. of Treasury yesterday and told her what’s been going on for the past 18 months. She’s supposed to speak with her supervisor to have this “escalated and handled appropriately with Chase.” Let’s see what happens!! I explained that Chase couldn’t have even reviewed my financial docs because the mod. pmt. is STILL over 40% of my monthly gross income (it’s an FHA loan) AND a rep (Denise Strother - Arizona office) from Chase told me “we don’t follow those gov. guidelines - we have our own programs. It’s all in the hands of the investor.” Guess what? NOT TRUE. Sounds like Chase just does whatever they want to do, including adding 34K to my principal balance, making it impossible for me to ever refinance.

Let’s see what the Dept. of Treasury does. I’m supposed to be getting a phone call from them this afternoon.

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Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

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Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.