Treasury Calls Out Four Banks Over Mortgage Practices

In its quarterly report on the Obama Administration's home loan modification program, the U.S. Treasury Department singled out four loan servicers it said need to improve their mortgage servicing processes.

Getting the unwelcome attention are Bank of America, JP Morgan Chase, Ocwen Loan Servicing and Wells Fargo. There were singled out in the department's new assessments of the 10 largest mortgage servicers participating in the Administration’s Making Home Affordable Program (HAMP), a program designed to assist struggling homeowners.

“While we continue to get tens of thousands of new homeowners into mortgage modifications each month, we need servicers to step up their performance to meet the needs of those still struggling,” said acting Treasury Assistant Secretary for Financial Stability Tim Massad. “These assessments set a new benchmark by providing an unprecedented level of disclosure around servicer performance and will serve to keep the pressure on servicers to more effectively assist struggling families.”

Complaints

The government said compliance was so poor among three of the servicers – Bank of America, Chase and Wells Fargo – that it was withholding financial incentives from them until performance improves. All three have be the subject of numerous complaints from homeowners writing to ConsumerAffairs.com

“In March 2011, I received information from Chase regarding an outreach program where I could sell my house, short sale, and avoid foreclosure,” Vicky, of Pleasonton, Colo., wrote. “My house is set to foreclose and be sold at auction on 6/23/2011 even though I signed all paper work, found a person to sell the house and kept in contact with Chase regarding process. They never intended to give me incentive of $25,000.00 to short-sale. I feel cheated. I will be kicked out in 20 days with elderly mother and grandchild of 13 yrs of age.”

“I applied for the Bank of America loan modification program to lower my mortgage payments at the beginning of 2010,” Michelle, of Davenport, Iowa, told ConsumerAffairs.com. By mid 2010 I was classified as a foreclosure status customer and could no longer pay my mortgage online. I was told to send many confidential papers to their loan modification department which I did. I was told I qualified for a much lower mortgage which would have helped a ton! However by the end of 2010 I had heard nothing back from them and could not pay my mortgage online.”

The HAMP program has come under criticism for a lack of effectiveness. About 600,000 have successfully completed mortgage modifications, but that falls far short of the four million the program was designed to help.