JP Morgan Chase 2012 Annual Report Download - page 250

Notes to consolidated financial statements
260 JPMorgan Chase & Co./2012 Annual Report
Loan modifications
The global settlement, which became effective on April 5,
2012, required the Firm to, among other things, provide
approximately $500 million of refinancing relief to certain
“underwater” borrowers under the Refi Program and
approximately $3.7 billion of additional relief to certain
borrowers under the Consumer Relief Program, including
reductions of principal on first and second liens.
The purpose of the Refi Program was to allow eligible
borrowers who were current on their mortgage loans to
refinance their existing loans; such borrowers were
otherwise unable to do so because they had no equity or, in
many cases, negative equity in their homes. Under the Refi
Program, the interest rate on each refinanced loan could
have been reduced either for the remaining life of the loan
or for five years. The Firm reduced the interest rates on
loans that it refinanced under the Refi Program for the
remaining lives of those loans. The refinancings generally
did not result in term extensions and accordingly, in that
regard, were more similar to loan modifications than to
traditional refinancings.
The Firm continues to modify first and second lien loans
under the Consumer Relief Program. These loan
modifications are primarily expected to be executed under
the terms of either the U.S. Treasury’s Making Home
Affordable (“MHA”) programs (e.g., the Home Affordable
Modification Program (“HAMP”), the Second Lien
Modification Program (“2MP”)) or one of the Firm’s
proprietary modification programs. For further information
on the global settlement, see Global settlement on servicing
and origination of mortgages in Note 2 on page 195 of this
Annual Report.
Modifications of residential real estate loans, excluding PCI
loans, are generally accounted for and reported as TDRs.
There were no additional commitments to lend to
borrowers whose residential real estate loans, excluding PCI
loans, have been modified in TDRs.
TDR activity rollforward
The following table reconciles the beginning and ending balances of residential real estate loans, excluding PCI loans, modified
in TDRs for the periods presented.
Year ended December 31,
(in millions)
Home equity Mortgages Total residential
real estate –
excluding PCISenior lien Junior lien Prime, including
option ARMs Subprime
2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
Beginning balance of TDRs $ 335 $ 226 $ 657 $ 283 $ 4,877 $ 2,084 $ 3,219 $ 2,751 $ 9,088 $ 5,344
New TDRs(a) 835 138 711 518 2,918 3,268 1,043 883 5,507 4,807
Charge-offs post-modification(b) (31) (15) (2) (78) (135) (119) (208) (234) (376) (446)
Foreclosures and other
liquidations (e.g., short sales) (5) —(21) (11) (138) (108) (113) (82) (277) (201)
Principal payments and other (42) (14) (122) (55) (404) (248) (129) (99) (697) (416)
Ending balance of TDRs $ 1,092 $ 335 $ 1,223 $ 657 $ 7,118 $ 4,877 $ 3,812 $ 3,219 $ 13,245 $ 9,088
Permanent modifications(a) $ 1,058 $ 285 $ 1,218 $ 634 $ 6,834 $ 4,601 $ 3,661 $ 3,029 $ 12,771 $ 8,549
Trial modifications $ 34 $ 50 $ 5 $ 23 $ 284 $ 276 $ 151 $ 190 $ 474 $ 539
(a) For the year ended December 31, 2012, included $1.6 billion of Chapter 7 loans consisting of $450 million of senior lien home equity loans, $448 million
of junior lien home equity loans, $465 million of prime, including option ARMs, and $245 million of subprime mortgages. Certain of these loans were
previously reported as nonaccrual loans (e.g., based upon the delinquency status of the loan).
(b) Includes charge-offs on unsuccessful trial modifications.