Surprise! Bank Slashes Some Mortgage Rates

Surprise! Bank Slashes Some Mortgage Rates Photo (cc) by Greencolander

CNN reports Chase is surprising some homeowners with mortgage refinances. All they have to do is sign and return a letter they didn’t know was coming:

This summer, [Michelle and Bob Irwin] received a letter from JPMorgan Chase, their mortgage servicer, informing them that it was going to slash the interest rate on their mortgage to 2.8 percent from their current rate of 6.5 percent for the next five years and then adjust it to a fixed 3.9 percent for the remaining 18-year term of their loan — a move that would reduce their payments by $229 a month.

This is not out of the goodness of the bank’s corporate heart, of course. It’s part of a $25 billion settlement between big banks and the government. “Chase had pledged $4.2 billion in mortgage relief for tens of thousands of borrowers by either reducing the interest rate or the principal owed (or both) on their loans,” says CNN.

To qualify, homeowners’ loans have to be held exclusively by Chase (not backed by Fannie Mae or Freddie Mac) and most borrowers had to be behind on payments or owe much more than the home is worth.

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