What do Big Profits for Banks Mean for Loan Modifications and Foreclosures

In recent news, the big three banking institutions in the country and some of the largest mortgage issuers as well recorded increased profits.

Mortgage News Daily writes that:

“Chase, the largest U.S. bank, posted net income of $5.6 billion or $1.36 per share.  In the third quarter of 2013 the company had a net loss of $380 million or $0.17 per share.  Chase said it had reserved $1 billion for legal expenses which reduced its net earnings by $0.26 per share.

Citigroup announced an adjusted net profit for the quarter of $3.67 billion or $1.15 per share.  This was a 13 percent increase year-over-year from the $3.26 billion or $1.02 per share earned in the third quarter of 2013.   Citigroup said its improved financial picture was driven by better results from the residual of troubled assets in its portfolio following the housing crisis.

Wells Fargo‘s profits increased only slightly from a year earlier with net income of $5.41 billion or $1.02 per share, up 1.7 percent from the $5.52 billion and $0.99 per share in the third quarter last year.”

For homeowners struggling to pay their mortgages, the question is how does the billions in profits impact their ability to modify their loans and avoid foreclosure. The sad fact is probably the profits do not impact the modification process. Corporate profits have seldom resulted in discounts for consumers in the banking or any other industry.

It will be interesting to watch as the modification struggles continue and foreclosure rates remain steady in Maryland whether government or other outside pressures will get the banks to re-evaluate their positions. I get the feeling that the banks having withstood the crisis and the government investigation and settlements of the past several years are looking to the future and feel that they have done more than their fair share to help homeowners.

But ironically Maryland’s new foreclosure laws enacted in 2009 and 2011 mean that folks who would have being in foreclosure months or years earlier are just now getting there. Therefore, these folks still need the help and the same protections that those who faced foreclosure in the past four years did.

We will have to see how the new glut of foreclosures are treated by the banks and how many opportunities borrowers have to stay in their homes at an affordable monthly payment as the banks build up their profits.