If you have spent countless hours on the phone with your bank over your delinquent mortgage, odds are, you’ve resigned yourself to the very real probability of a foreclosure in your near future. Now, though, at least one bank, JPMorgan Chase, is doing an about face.

One woman in Washington State says she and her husband had braced themselves for the foreclosure notice they were sure was on the way. Instead, when the FedEx envelope arrived with JPMorgan Chase as the sender, Michelle Irwin said she took a deep breath and realized she was about to experience something millions of Americans already had: being forced to abandon their home. Instead, what she found was paperwork for a mortgage re-modification that would allow them to stay in their home, with a mortgage that’s not only no longer delinquent, but with significantly lower payments. Suddenly, all the hoops she and her husband jumped through had paid off. They had tried for months to negotiate a re-modification, but JPMorgan Chase wouldn’t budge. Now, though, and as part of the $25 billion mortgage settlement that was struck between the nation’s five biggest banks and the state attorneys general and federal 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. The Irwins were one of the lucky families.

The letter spelled out the new terms on their mortgage: the interest rate on their mortgage, which was at 6.5% would be cut drastically to 2.8% for the next sixty months. After that, it will adjust to a fixed rate of 3.9% for the remainder of the loan. Even better was their payments were now $230 less each month than they had been paying. It couldn’t have come at a better time, either. The couple had been trying to do that very thing after Bob Irwin lost his job more than year earlier. The couple was almost two years behind in their mortgage payments. When he finally was able to secure employment, efforts to fix the problem fell on deaf ears. And now, as Michelle Irwin read and then re-read what she called “her own lottery”, they knew they were finally on the right road to financial recovery. Michelle told CNN,

I felt like I won the lottery. I ran out into the front yard, screaming like a kid.

The settlement, which was approved earlier this year, allows banks to get more credit for modifications that are completed in the first year. It makes sense, then, that the banks are trying to move quickly. In fact, the bank, anticipating the ultimate ruling, already had teams in place to go through the thousands of home mortgages that would qualify for a re-modification. The biggest hurdles for the banks was to find those mortgages that it holds directly with no backing from Fannie Mae or Freddie Mac. Homeowners had to be in arrears or they had to be upside down in their mortgage – meaning they had to owe more than the house was worth.

Before long, Chase had found thousands of customers who meet the criteria. It immediately began sending out letters requesting the homeowners contact the bank. Few did. Most believed the writing was on the wall and opted to put it out of their minds. From there, and with the countdown on, Chase took a more proactive approach: it does the work ahead of time, then spells it out in a letter sent to the homeowners, which includes lower interest, lower payments and most importantly, the instant change from “delinquent” to “current’. The customers don’t even have to call the bank – they simply sign the paperwork and return it.

Both the homeowners and the bank says it’s a win-win all the way around. Because Chase is modifying mortgages it already has, there’s no need to go through the red tap of the traditional approval process. It’s instantly lifting a massive burden off of homeowners, who as recently as the night before might have been losing sleep, who are now instantly current in their mortgages.

Wondering how well the program is going? Consider this – Chase, in its first preliminary report, says it’s already claimed $369 million in credits for modifying 3,086 mortgages between March 1 and the end of June. That’s massive! Not only that, but JPMorgan Chase also has offered another 11,500 borrowers the option to do the same thing. These credits will equate to $1.2 billion for the bank if and when they are completed. For now, the Irwins owe $100,000 on their mortgage and with their monthly mortgage payments cut by a third, they are now in a better position to begin planning for the future while also paying down credit card debt and rebuild their savings.

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