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Monday Feb 16, 2009

Major US banks, mortgage giants freeze foreclosures

WASHINGTON, Feb 13, 2009 (AFP) - Two US banks and top mortgage finance giants have imposed moratoriums on home foreclosures until a comprehensive government plan emerges to ease the mortgage crisis, officials said Friday.

The moves came following calls by lawmakers for such a reprieve and as the White House announced President Barack Obama would unveil the plan on Wednesday.

JPMorgan Chase and Citigroup as well as government-controlled mortgage finance units Freddie Mac and Fanny Mae said they would freeze home foreclosures at the epicenter of global financial turmoil that has slammed the brakes on economic expansion.

Jamie Dimon, chief executive of JPMorgan Chase, said in a letter to a key Democractic lawmaker that his bank would impose a three-week foreclosure moratorium through March 6.

"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," he told Barney Frank, head of the House of Representatives financial committee.

"We believe three weeks is adequate time for the Treasury to announce -- and for us to implement -- a new plan."

Citigroup said in a statement Friday its moratorium, effective Thursday, could last until March 12.

Chief executive Vikram Pandit had told lawmakers on Wednesday that the bank would offer the reprieve, saying "We will commit to making sure that people stay in their houses," according to a Citigroup spokesman.

Citigroup said it would extend the moratorium until Obama has finalized the details of a loan modification program or March 12, whichever is earlier.

"The company will not initiate or complete any new foreclosures on eligible customers during this time," it said.

Obama is scheduled to outline a plan to address the home mortgage crisis next Wednesday, White House spokesman Robert Gibbs said Friday.

Freddie Mac and Fanny Mae said in separate statements Friday they were immediately suspending all foreclosure sales through March 6. The suspension does not apply to vacant properties.

"The extension will provide servicers with more time to help troubled borrowers find an alternative to foreclosure," Freddie Mac said in a statement.

Since the beginning of the US mortgage crisis in 2007 that sparked global financial turmoil, Citigroup said it had worked with about 440,000 homeowners to avoid potential foreclosures on combined mortgages totaling about 43 billion dollars.

The US Treasury said this week that it would committ 50 billion dollars to prevent home mortgage foreclosures.

"Stemming foreclosures and restructuring troubled mortgages will help slow the downward spiral harming financial institutions and the real American economy," according to a statement Tuesday.

"We will soon be announcing a comprehensive plan" that among others will drive down overall mortgage rates, the Treasury said.

To drive down mortgage rates, the authorities remained committed to spend as much as 600 billion dollars for purchasing of mortgage-backed securities and debt, it said.

chr-pp/vs - AFP

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