We were one of the better actors in this
situation – but not good enough; we made
too many mistakes. We generally
were a
better
underwriter. We did not originate
option-ARMs.
Many of our problems were
inherited
from Bear Stearns and WaMu.
Even our
subprime mortgages outperformed
most
other subprime mortgages. Early in the
crisis,
we also stopped dealing with mortgage
brokers,
some of whom underwrote the
worst of
the mortgages and probably missold
mortgages more than most.
But we
did participate in this disaster by
originating
mortgages that wouldn’t have
been
given a decade earlier (and won’t be
given a
decade later). And when delinquencies
and
foreclosures grew dramatically, we
were
ill-prepared operationally to deal with
the
extraordinary volume of troubled mortgages
and
upset borrowers. Our servicing
operations
left a lot to be desired: There were
too many
paperwork errors, including affidavits
that were
improperly signed because
the
signers did not have personal knowledge
about
what was in the affidavits but, instead,
relied
on the company’s processes. However,
the
information in the affidavits was largely
accurate
– i.e., the borrower, in fact, was in
default, we did have the
mortgage and so on.
Gearing
up to deal with this problem meant
overcoming
the multiple and poor systems
we
inherited from our acquisitions of Bear
Stearns
and WaMu. In addition, there
were
numerous government modification
and
refinancing programs and multiple
changes
to these programs to contend with,
some of
which involved extensive and
hard-to-complete
paperwork. We now have
23,000
people servicing delinquent loans
or
dealing with foreclosures – up from
6,800
people in 2008.
These
problems, as one might expect, led to a
myriad
of lawsuits from various U.S. government
agencies,
attorneys general from the 50
states and private
investors.
We have settled with the U.S. government
and state attorneys general and implemented
strong new policies – for the good
of all. In February 2012, JPMorgan
Chase
and four
other top mortgage servicers
agreed
to a global settlement with the U.S.
Department
of Justice, the U.S. Department
of
Housing and Urban Development, the
Consumer
Financial Protection Bureau and
the
state attorneys general. The settlement
relates
to the servicing and origination problems
mentioned above.
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