NPA Chides Chase on Foreclosures

National People's Action has been a thorn in the side of lenders for 35 years but it is still continuing to pressure banks on community reinvestment and predatory lending issues as well as foreclosure prevention.

Recently, the community activist coalition has focused on making large interstate banks more responsive by entering to agreements.

In announcing an agreement with J.P. Morgan Chase, NPA co-chair Brenda LaBlanc said, "We are making agreements with the major banks so that when we do have trouble with a local bank we have a connection with the top guys."

The agreement calls on the New York banking company to improve its banking and credit services in minority communities and to assist local NPA organizations in resolving foreclosure issues.

"The hallmarks of this agreement are regular meetings with high-level decision makers," Ms. LaBlanc said at NPA's annual Washington conference.

J.P. Morgan Chase has been working with the community activist group since the banking company formed a homeownership preservation office 18 months ago. Chase recently conducted a loss mitigation seminar with NPA, according to executive vice president Mark Willis.

"We have been together for a while and I think we have developed a terrific relationship," Mr. Willis told the NPA members attending the Washington conference.

The Chase executive told Mortgage Servicing News that the seminars are designed so community groups have a better understanding of what can be done to prevent foreclosure and keep people in their homes.

"Individual homeowners should deal directly with Chase's servicing shop," Mr. Willis said. "But for organizations like this, we are trying very hard to work with them and be supportive."

NPA has agreements with several subprime lenders and servicers - CitiFinance, Baltimore, Ocwen Financial Corp., West Palm Beach, Fla., and Select Portfolio Servicing (formerly Fairbanks Capital), Salt Lake City.

And it is quite clear they expect a lot from these companies. At the conference, the NPA co-chair introduced Paula Harrison of Raleigh, N.C., who was dealing with an "outrageous" 11.5% CitiFinancial loan and fighting foreclosure.

After contacting NPA, "it was solved in two weeks," Ms. Harrison said. The interest rate was reduced and she saved her home.

Co-chair LaBlanc stressed that NPA is not afraid to go after lenders when they don't treat people fairly. "NPA has been fighting and winning for 35 year," she said. "It has been proven time and time again that what we do does get results."

Chase Home Finance, Iselin, N.J., is the fourth largest servicer and it is working with community groups, state and local governments, and other organizations to prevent foreclosures.

At a bankers conference recently, one of Chase's homeownership preservative officers noted that first-time homebuyers in Indiana are getting into trouble because they don't have the resources to deal with rising interest rates on adjustable-rate mortgages and rising energy prices.

Chase vice president Bonnie Boards told a Consumer Bankers Association conference heating bills and the cost of gasoline also are contributing to foreclosure rates.

In addition, many subprime borrowers have to pay property taxes and insurance after the first year because they don't have escrow accounts. "We see a lot people get into trouble when they have to pay their yearly taxes," the vice president and director of J.P. Morgan Chase's homeownership preservation office in Indianapolis said.

"In many cases, there is not enough equity in the home to protect the investors. And short sales are becoming the workout option of choice," Ms. Boards said.

In Indianapolis, the default rate on subprime loans is 15%. On FHA loans, the default rate is 10.4%.

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