Bank of America and JPMorgan Chase Modifying Mortgages
Bank of America Corp and JPMorgan Chase have reportedly begun modifying tens of thousands of mortgages which bank officials have singled out as risky, even though in many cases the borrowers have not requested the modifications. News of the modifications was broke by the New York Times, who said that the banks are greatly reducing the amounts owed on the loans, in one case cutting a woman's remaining balance in half.
Most of the modified mortgages are pay option adjustable-rate loans, where borrowers have the option of skipping some principal and interest payments, adding the amount onto the loan. This type of option ARM loan was seen as especially high-risk at the height of the financial crisis and BAC and JPMorgan both have billions of dollars worth of them on their books.
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