JPMorgan Chase & Co is putting on a kinder, gentler face as it overhauls a unit that negotiates with borrowers whose homes are headed into foreclosure.
In a sign of the bank's sensitivity to the issue of callousness to borrowers, it is re-christening its "Loss Mitigation" department as "Borrower Assistance," according to Frank Bisignano, JPMorgan's chief administrative officer who was assigned by Chief Executive Jamie Dimon in February to fix the bank's mortgage problems.
Bisignano sent a memo to bank employees on Monday announcing a reorganization of the bank's residential mortgage business under new executives. JPMorgan's mortgage problems, including allegations of abusive foreclosure practices, are the main reason the bank fell as much as USD 7 billion short of its profit potential last year, Chief Executive Jamie Dimon told shareholders earlier this year.
Bisignano said in an interview with Reuters that JPMorgan is shifting its foreclosure unit more aggressively toward offering affordable terms to delinquent borrowers to help both consumers and the bank.
"Modifying a loan is much more economical for the firm than foreclosing," he also noted in the memo to employees that was obtained by Reuters.
On another front, Bisignano is deploying risk-management experts from JPMorgan's investment bank to work through problem portfolios of mortgage loans and bank-owned real estate. The effort will be led by Craig Delany, who handled critical short-term funding of JPMorgan during the financial crisis.
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