by TheStreet.com Staff
JPMorgan Chase is joining Citigroup in temporarily halting new foreclosures on mortgages they hold, as the Obama administration finalizes a plan to aid homeowners.
U.S. Rep. Barney Frank (D., Mass.), who a day before proposed a moratorium on new foreclosures until the Obama plan is completed, on Friday made public a letter from JPMorgan CEO Jamie Dimon making the pledge to halt new foreclosures through March 6. Citi CEO Vikram Pandit on Wednesday made a similar pledge in testimony to the House Financial Services Committee Frank chairs.
"We stand ready to work with you to put the appropriate processes in place, including a national modification standard, to reduce the incidence of foreclosure and to encourage long-term, sustainable home mortgages," Dimon said in the letter to Frank.
Citi, in a company press release on Friday, reiterated Pandit's pledge to Congress. The company said it would expand an ongoing moratorium in which the bank is working with homeowners that have "sufficient income for affordable mortgage payments" and are trying to stay in their primary home. Citi said it was committed to the moratorium through March 12, or until the Obama plan is finalized.
"Citi is taking the necessary steps to help American homeowners keep their homes," the company said.
Obama is devising a program that would use tax dollars to subsidize mortgage payments for certain homeowners who are struggling financially. Numerous reports citing sources close to the matter say the administration is committed to spend $50 billion on foreclosure prevention and establish national standards for modifying home loans.
The plan is said to require homeowners to undergo a reappraisal and affordability test before they become delinquent in mortgage payments.
Pandit, Dimon and CEOs of Wells Fargo (Stock Quote: WFC), Bank of America (Stock Quote: BAC), Goldman Sachs (Stock Quote: GS) and Morgan Stanley (Stock Quote: MS), State Street (Stock Quote: STT) and Bank of New York Mellon (Stock Quote: BK) all were before Frank's committee Wednesday to testify about how they were spending government investments made through the $700 billion Troubled Asset Relief Program, or TARP.
In recent trading, Citi was flat, while JPMorgan was down 3.4%.