Chase warns investors of borrowers walking away from their homes
Apparently Chase’s loan portfolio continues to sour and they recently warned investors of a substantial risk from borrowers walking away from their homes and their debt with Chase. This includes homeowners that can still afford their payments but are walking away in so called strategic defaults because they owe much more than the value of their home.
Good luck with that Chase.
Foreclosure | admin May 12, 2010
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By coakl, January 11, 2011 @ 12:08 pm
Nice link and a good article. Here’s something that was not mentioned: as part of the deal for acquiring WaMu for a measly $2 billion, Chase agreed to absorb all losses on WaMu’s loan portfolio (i.e. loans not sold into the secondary market but retained by WaMu).
The $98 billion of WaMu loans now on Chase’s books, mainly the deadly Option-ARM adjustables and 2nd lien home equity lines of credit, are a huge time bomb for Chase. Chase will recover little or nothing from the equity lines when there’s a short sale. A walk-away will wipe out both types of loans.
As more borrowers realize that their best option is to walk away, you get a slow-motion explosion on Chase’s financial statement. Why would you NOT walk away? Businesses do that all the time.
Once borrowers understand that it’s a hard-nosed financial decision and leave their homeowner emotions out of it, the choice is easy: WALK AWAY.