JPMorgan Chase Simplifies Mortgage Disclosures, Product Choices for Non-Prime Consumers

Continuing its commitment to affordable and sustainable homeownership, JPMorgan Chase (NYSE: JPM) today announced plans to help borrowers - especially non-prime borrowers - better understand their mortgage choices and select an appropriate loan.

“We work closely with borrowers because we know how important it is for a family to own their own home,” said David Lowman, CEO of Chase Home Lending, the mortgage unit of JPMorgan Chase. “Our simplified mortgage disclosure and product choices will help meet the goals of borrowers as well as investors, community leaders and regulators in today’s challenging housing market and beyond.”

Last month, Chase announced a similar simplification for credit card customers with the expansion of its Clear & Simple program to help customers better understand and manage their accounts.

Federal banking regulators have encouraged lenders to improve upfront disclosures to consumers, enhance their focus on the borrower’s ability to repay before approving a mortgage, and modify qualification standards on some products to reduce the potential for future payment shock.

Chase today announced it:


Has developed a new upfront disclosure in a simple format. Consumers now can compare important product features for traditional as well as non-traditional mortgages, including more information on how an adjustable-rate feature can affect the monthly payment


Will require an initial fixed rate for at least five years on adjustable-rate mortgages for non-prime borrowers to reduce payment shock risk


Will employ underwriting guidelines that require borrowers to demonstrate their ability to handle increases in interest rates on non-traditional mortgages


Has tightened credit standards, including making adjustments to acknowledge declining home values in certain markets and reducing the use of high loan-to-value ratios and stated-income products


Will continue to consider borrowers’ required property tax and homeowners’ insurance payments in determining affordability. Chase offers all its borrowers an option to escrow those payments with Chase


Will continue its practice of not offering option ARMs, which can expose borrowers to negative amortization when their monthly payment does not cover interest costs

Chase will continue to review its underwriting standards and take additional actions when appropriate, as it continues to innovate in a safe and sound manner to provide mortgage financing options that help its customers achieve and sustain home ownership.

This commitment to ongoing innovation builds on a number of strategies already used by Chase to assist borrowers facing financial difficulties, including:


Creating its own Homeownership Preservation Office in 2004 to work with community leaders, housing advocates, public officials and investors to help homeowners stay in their homes. Since then, the office has facilitated more than 45 foreclosure prevention training sessions for non-profit counselors, housing advocates and public officials and has trained more than 1,500 individual participants


Consistently reviewing loan information to identify at-risk borrowers in advance to allow these borrowers more time to consider available options


Considering all options available to modify loans


Continuing to streamline its modification process to make it more efficient for borrowers to obtain workable and affordable solutions

Chase originates $170 billion in residential mortgages and home equity annually, and services a portfolio of more than $500 billion. Parent company JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $1.5 trillion and operations in more than 50 countries. Information about Chase’s mortgage products and services is available at www.chase.com.