Bank of America and J.P. Morgan Chase Bank are in substantial need of improvement when it comes to helping troubled borrowers modify their mortgages, the government said Thursday.
The Obama administration said the two banks were in need of substantial improvement, judging them unworthy of receiving financial incentives through its signature foreclosure relief program until they improve their practices. The banks will be denied financial incentives for completing modifications until they improve.
Wells Fargo and Ocwen Loan Servicing had previously been on the list of banks that needed "substantial" improvement. Those two banks are now only in need of moderate improvement, according to the administration, as were American Home Mortgage Servicing; CitiMortgage; and Select Portfolio Servicing. The banks that were in need of minor improvement included GMAC Mortgage; Litton Loan Servicing and OneWest Bank.
The assessments of the 10 largest servicers in the program were intended to compel the nation's biggest mortgage servicers to improve their practices in the program, officials said.
The mortgage modification program has long been criticized as ineffective and falling short of its goal of helping 3 million to 4 million borrowers escape foreclosure by December 2012.
A total of 675,447 active permanent modifications through the Obama administration's program existed at the end of July, up 3% from the previous month.
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-- Alejandro Lazo
Twitter: @AlejandroLazo
Photo: A representative from Bank of America meets with a homeowner to discuss mortgage modifications at a workshop in New York City this week. Credit: Spencer Platt/Getty Images
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