Chase opens La Mesa office to help reduce foreclosures.

JPMorgan Chase, which now owns Washington Mutual Bank, opened one of its homeownership centers in La Mesa on March 25, offering assistance in an effort to stem a growing flood of mortgage defaults and foreclosures.

The office is one of five in Southern California and 22 nationwide opened in recent months as part of Chase's plan for modifying mortgages made by three subsidiary banks, and which are defaulting in record numbers.

In addition to WaMu, Chase owns EMC, the mortgage unit of Bear Stearns, a failed investment bank it acquired last year.

Vicki Korporaal, manager of the La Mesa center, said the seven advisers there have the ability to determine whether a mortgage can be restructured so monthly payments can be reduced.

A common fix is extending the terms of the mortgage to 40 years from 30 years. However, every mortgage is different, and there's no guarantee that terms can be amended, she said.

A key prerequisite is financial hardship such as the loss of employment or major medical expense.

Another possible impediment to amending terms is determining who owns the mortgages. Chase retains servicing on the loans, but usually sold the loans to other investors, she said.

Chase instituted a three-month moratorium on filing mortgage default notices in October as it awaited to see what type of housing plans would be adopted by the Obama administration.

In January, Chase extended its loan modification program, stating that it had obtained agreements with most investor groups that hold $1.1 trillion in mortgages to modify loan terms where appropriate.

Loan Workouts

Since early 2007, Chase has done loan workouts on 330,000 loans nationally, and expects to increase that figure by about 400,000 during the next two years, according to Chase spokesman Gary Kishner.

Chase did not provide the amount of mortgages in foreclosure in California, but in January it said it delayed foreclosing on $22 billion in problem loans held by some 80,000 homeowners nationwide.

Cynthia Thompson, Chase western regional manager for the homeownership centers, said while a good number of borrowers are facing the fact that their mortgages are now much higher than the market value of their homes, it doesn't mean some loan modifications aren't possible.

With a loan forbearance, for example, the monthly payment could be reduced. But a forbearance doesn't mean the loan is forgiven; the debt still needs to be repaid, she said.

Defaults began rising again in February after slowing in the latter part of 2008 as lenders installed moratoriums.

Yet in February, California's foreclosure filings, including the initial notice of default, increased 51 percent from the prior February to 80,775, according to RealtyTrac.

In San Diego, default notices for that month rose 17 percent from the prior year to 3,471, according to La Jolla research firm MDA DataQuick.

Vino Pajanor, president of Housing Opportunities Collaborative, a coalition of nonprofits, builders and related groups, said while he didn't want to be pessimistic, the foreclosures may get worse before they get better.

In the last two years, the resetting of interest rates on subprime mortgages has forced $640 billion in loans into foreclosure, Pajanor said.

However, the pipeline of bad mortgages that includes such loans as option ARMS, or adjustable rate mortgages, made starting in 2005 are still resetting. These make up an estimated $700 billion in potential defaults, he said.

BY MIKE ALLEN

Staff Writer