JPM Chase's Jamie Dimon on Mortgage Mod's

JP Morgan Chase
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“It’s up to us”
Mar. 19, 2009:

Jamie Dimon discussed the government’s mortgage-modification plan and other steps to address the financial crisis.

After his speech at the Chamber of Commerce last week, Jamie Dimon was asked whether longer-term mortgages would be a better alternative to the government’s mortgage-modification plan. Highlights of Dimon’s response follow.

You know, we’re one of the bigger mortgage lenders and servicers in the country, and we’ve gotten hundreds of ideas. The time for ideas is over.

The President passed a mortgage modification bill which we think is completely appropriate and proper. It has a waterfall of benefits. It wants to get the debt payment-to-income ratio down to 31%.

First it cuts interest. Then it extends out the loan. If it has to, it cuts principal. But the most important thing is debt to income.

Rational plan
It’s not perfect. There could be better ideas. There are other ideas. We’re not for letting judges modify—we think that could cause another whole round of problems in the capital markets. But we think this is rational.

It’s no different than if you live in a town with 20 houses and someone with a medical problem loses their job. The local bank in that town will go to that family and say, “We understand; we’ll cut your rate for a while; we’ll do what we have to so you can stay in your home.” And the other 19 people benefit from there not being a foreclosure on the house.

The government has put together a rational, thoughtful plan, and we should get behind it and start executing it.

I know we’re going to get a lot of complaints from investors in pools of mortgage-backed securities who think that maybe they’re going to be hurt modestly by it. Well, they should get over it.

‘Up to us’
Another audience member asked Dimon what he thought would happen by year-end, in terms of the government’s measures to address the financial crisis.

I hate forecasting the future. But I believe we are at a point where if our Congress, the Senate, Democrats, Republicans, our Treasury, our Fed and our President all work together, we could start coming out of this by the end of the year.

But if we act like a dysfunctional family and don’t finish these things and we’re forever debating them—I think this could go on for several years. I think it’s completely up to us at this point.

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