by Mark Johnston
JPMorgan Chase & Co. will begin to pay for the errors it made when it processed foreclosures when households defaulted on loans. Jamie Dimon, Chairman and Chief Executive Officer said that the processing errors were made while processing paperwork on foreclosures.
At a recent conference, Dimon said to the Council of Instatutional Investors in Washington that “some of the mistakes were egregious and they’re embarrassing”. Forcing his hand even further is the recent Florida lawsuit that revealed that bank officials had gone ahead and signed foreclosure affidavits without reading and verifying the accuracy of the documents. The bank now faces extra legal and regulatory hurdles after this revelation.
Insiders on the case have said that there are already agreements being struck up with the federal regulators to improve the procedures. Regulators and the State Attorneys General are trying to improve the codes of practice and industry standards while at the same time considering monetary fines.
Dimon said “We made a mistake, they were signing it based upon what they were told, not based upon checking the note file, checking the loan file,” Dimon said. “But the actual information in the affidavit was 99.5 percent accurate. We’re not foreclosing on people who we shouldn’t foreclose on. But we made a mistake, and we’re going to pay for that mistake.”
The bank will get through it, Dimon said but he also expressed concerns that the “excessive” capital adequacy rules may very well stifle economic growth. And in a bold statement, said that the more affluent section of the American population should be bearing most of the US Tax obligation. “Those well off should pay a lion’s share,” he said. “I have no problem with that.”
Two years ago, at the start of 2009, a ripple started in Chicago that resonated across America. The result was that a new housing programme was created aimed at helping the faltering economy of the USA and the beleaguered housing market.
Rick Santelli, a reporter from the windy city latched a tirade and attempted to maul the Obama Administrations endeavours to subsidise home owners who couldn’t afford their mortgages but took them out regardless.
The efforts of Rick centred on why ordinary and responsible American citizens should be providing support for enhancements to properties where mortgage repayments and other bills aren’t being maintained or paid. What would effectively be a bank roll for a group of financially irresponsible individuals with poor financial planning foresight? A rant that acutely captured the feelings of most citizens.
Two years later, the Obama administration is in open talks that will go a lot further and may even end up writing down the principal (the outstanding debt owed) on thousands of mortgages.
The write-down of principal has generally been seen as a positive and progressive step by many consumer groups. Rightly so but in need of finer details to be put to press and for the average Joe not to foot the entire bill. They feel that this may be the most efficient way to help the majority of the homeowners who are in trouble. Recent protests have demonstrated populist feeling and Washington is looking to push forward with principal write downs.
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