Big banks are easing loan terms for many borrowers even if they aren't asking for them, The New York Times reports. JPMorgan Chase and Bank of America, for example, are modifying home loan terms for thousands of borrowers who the banks deem to be at special risk.
Take Rula Giosmas, a Miami acupuncturist and real estate investor who received a letter from Chase telling her the bank was cutting in half the amount she owed on her condominium.
She wasn't in default on the $300,000 loan.
"I used to say every day, 'Why doesn't anyone get rewarded for doing the right thing and paying their bills on time?' " Giosmas says.
"And I got rewarded."
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Some experts say banks are taking steps to cut the number of people who owe more on their homes than they're worth, as by doing so, they'll help the housing sector recover.
"It's a huge problem," economist Sam Khater tells the newspaper.
"Reducing negative equity would spark a housing recovery."
The International Monetary Fund cut its U.S. growth forecast for 2011 down to 2.5 percent from 2.8 percent in part due to the weak housing market.
Pending sales of existing homes rose 8.2 percent in May from April, outpacing expectations, the National Association of Realtors reports.
Analysts advise against breaking out the champagne just yet.
"The market for existing homes is still extremely weak," says Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, according to Bloomberg.
"Existing-home sales will probably improve in June based on this reading, but probably not a lot."
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