Mortgage Debt Relief For Distressed Homeowners Won’t Hurt Big Banks, IMF Says

NEW YORK — A broad mortgage debt-relief program for distressed homeowners would not significantly impact the nation’s four biggest banks, according to a report released this week by the International Monetary Fund.

Bank of America, JPMorgan Chase, Citigroup and Wells Fargo have enough money to withstand the resulting losses, IMF economists projected in their report.

The findings cast doubt on the notion that a broad-based program to reduce troubled homeowners’ mortgage debt would hurt the nation’s financial system.

If the four lenders established a year-and-a-half long program to reduce debt on first mortgages by 15 percent for borrowers at risk of foreclosure, and also worked to lower loan balances by 30 percent until 2015 for seriously-delinquent borrowers and those in foreclosure, they’d face little consequence, the IMF said.

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