JPMorgan Chase has moved to ease the burden of struggling US homeowners and avoid taking over thousands of houses, revealing plans on Friday to renegotiate $70bn of mortgages and freeze foreclosures for up to three months.

The measures are expected to stave off the threat of home repossessions for 400,000 families by cutting their mortgage bills through reductions in interest rates or principal repayments and other loan modifications reports the Financial Times.

JPMorgan’s move, made after talks with local and federal authorities, comes as the Bush administration is urging lenders to keep people in their homes.

One in every 475 homes was going through the foreclosure process in September, a decrease of 12 per cent from August but 21 per cent higher than the previous year, reported RealtyTrac.

The pledge to change terms on $70bn of mortgages – on top of the $40bn it has already modified – is a sign of large lenders’ desire to be seen to be helping homeowners at a time of rising public antipathy towards banks.

JPMorgan received government help in its purchases of two rivals, Bear Stearns, the investment bank, and Washington Mutual, the lender, and is one of the nine banks to have received $125bn in federal investments.

The WaMu deal added $176bn to JPMorgan’s home loan portfolio, including $50bn of adjustable rate mortgages, one of the most troubled categories. JPMorgan has said it would write down $31bn of WaMu’s home loans.

Analysts said modifying loans and freezing foreclosures would help JPMorgan, which has weathered the financial storm better than most rivals, avoid repossessing hundreds of thousands of depreciating homes. Keeping customers in their homes and receiving monthly payments – albeit at a reduced rate – would benefit both the company’s image and its finances, they said.

Charlie Scharf, head of JPMorgan’s retail financial services division, told the Financial Times the company would establish 24 more regional loan centres and add 300 loan “counsellors” to the 2,200 it already employs.

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