June 6, 2012
Mr. James Dimon
JPMorgan Chase & Company
President and Chief Executive Officer
270 Park Ave
New York, NY 10017
Dear Mr. Dimon:
We are writing to you and the CEOs of the nation’s four other mortgage loan servicers that
settled in the joint federal-state mortgage settlement to ask that your company pause foreclosure proceedings against eligible borrowers until the settlement is finalized and the monitoring mechanisms are fully in place.
As the terms of this landmark agreement evolve from language into action, our residents deserve interim protections until the monitoring administrators are fully in place. After years of uncertainty, California’s homeowners need the opportunity to participate under the terms of the federal-state settlement agreement that is just months away from being available. A temporary pause in foreclosures against only eligible borrowers would provide this relief.
Over the next six to nine months, the settlement administrator, attorneys general, your company and the other mortgage servicers – Bank of America Corporation, Wells Fargo & Company, Citigroup Inc., and Ally Financial Inc. – will work to identify homeowners eligible for the immediate cash payments, principal reductions, short sales, and refinancing. Those borrowers who are eligible will receive letters informing them of next steps.
While this process unfolds, we are asking your company to pause foreclosure proceedings against borrowers who could receive a letter in the future informing them of their eligibility for relief as outlined in Exhibit D of the five lenders’ consent judgments. The settlement is targeted toward homeowners who could remain in their homes if a principal reduction or refinancing option were available to make their loan more affordable. Some of those homeowners you agreed to evaluate are currently delinquent on their mortgages, while others are underwater but current on their mortgages. We believe the settlement’s specific eligibility requirements adequately constrain the pause such that borrowers must continue to make payments, or risk losing protection from this temporary halt in foreclosures.
Unfortunately, the California cities we represent are at the center of our nation’s foreclosure crisis. The residents of our state, who California State Attorney General Kamala Harris represented at the bargaining table, deserve the opportunity to participate in the terms of the agreement for which her office advocated and to which your company agreed. This includes:
• Providing a minimum of $12 billion in principal reductions on loans or offering short sales to approximately 250,000 California homeowners who are underwater on their loans and behind – or almost behind – in their payments.
• Refinancing the loans of 28,000 homeowners who are current on their payments but underwater on their loans using an estimated $849 million of the refinance program.
• Receiving assistance from the $1.1 billion estimated to be distributed to homeowners for unemployed payment forbearance and transition assistance, as well as to communities to repair the blight and devastation left by approximately 16,000 recent foreclosures. Vacant homes would not be included in the pause, as we can all agree that it is in the best interest of the neighborhood those homes are located in, their city and our economy in general for those homes to return to market as quickly as possible.
• Monitoring by UC Irvine law professor Katherine Porter, a noted specialist in foreclosures and bankruptcy, with an agreement that allows Attorney General Harris to enforce the penalty provisions in California state court.
As your servicing staff know well, distressed borrowers are very difficult to reach. The pause will allow our cities the time to partner with your servicing staff, the Attorney General’s office, and local HUD-certified counseling agencies to plan a comprehensive communication and outreach strategy to identify eligible borrowers and inform them of their rights under the settlement. As a result, we believe borrowers will be more informed of their rights, more organized with their financial documentation, more willing to stick through the process of having their loan evaluated for modification, and ultimately, more likely to receive relief under the settlement.
Thank you for your consideration of this request.
Mayor Edwin Lee, San Francisco
Mayor Chuck Reed, San Jose
Mayor Kevin Johnson, Sacramento
Mayor Jean Quan, Oakland
Mayor Ashley Swearengin, Fresno