The Treasury Department yesterday penalized three of the nation's largest banks "for subpar performance in administrating a government sponsored program to modify mortgage loans for distressed homeowners," according to an article by Andrew Martin in today's edition of The New York Times.
"As part of a new assessment of mortgage servicers, Treasury officials said they would withhold incentive payments for the three banks - Bank of America, JPMorgan Chase and Wells Fargo - until the problems are resolved. At that point, those payments would be made, a Treasury spokesman said. In May, the three banks received $24 million in incentives as part of the modification program. The Treasury Department has previously withheld payments from mortgage servicers, but Thursday's action focused on some of the biggest players in the program. Called the Home Affordable modification Program, or HAMP, it is voluntary for mortgage servicers. Nearly all of the nation's largest banks have signed contracts to participate," the article said.
The Obama administration has been criticized as being too easy on the mortgage servicers and Neil M. Barofsky, who resigned in March as special inspector general for the bank bailout, described the assessments and penalties as a "lost opportunity" to hold lenders more accountable, the article continued. "It further reaffirms Treasury's long-running toothless response to the servicers' disregard of their contract with Treasury, and by extension, the American taxpayer," Mr. Barofsky said in an e-mail to The Times.
According to the article, "the mortgage servicers were evaluated on a scale of one to three stars during the first quarter on whether they had identified and searched for eligible homeowners; assessed homeowners' eligibility correctly; and maintained effective program management, governance and reporting. Bank of America received the lowest grade, one star, on four of seven areas that were evaluated; Wells received one star in three areas; and Chase, in one."
Wells Fargo issued a statement saying it was "formally disputing" the Treasury's findings, claiming that "it paints an unfairly negative picture of our modification efforts and contradicts previous written assessments shared with us by the Treasury." Chase said it too had made significant improvements and in a statement it said the "respectfully disagrees with the assessment."
The administration had predicted that three to four million Americans would benefit from the program, but the article said that "so far only 699,053 permanent modifications have been started."
"As part of a new assessment of mortgage servicers, Treasury officials said they would withhold incentive payments for the three banks - Bank of America, JPMorgan Chase and Wells Fargo - until the problems are resolved. At that point, those payments would be made, a Treasury spokesman said. In May, the three banks received $24 million in incentives as part of the modification program. The Treasury Department has previously withheld payments from mortgage servicers, but Thursday's action focused on some of the biggest players in the program. Called the Home Affordable modification Program, or HAMP, it is voluntary for mortgage servicers. Nearly all of the nation's largest banks have signed contracts to participate," the article said.
The Obama administration has been criticized as being too easy on the mortgage servicers and Neil M. Barofsky, who resigned in March as special inspector general for the bank bailout, described the assessments and penalties as a "lost opportunity" to hold lenders more accountable, the article continued. "It further reaffirms Treasury's long-running toothless response to the servicers' disregard of their contract with Treasury, and by extension, the American taxpayer," Mr. Barofsky said in an e-mail to The Times.
According to the article, "the mortgage servicers were evaluated on a scale of one to three stars during the first quarter on whether they had identified and searched for eligible homeowners; assessed homeowners' eligibility correctly; and maintained effective program management, governance and reporting. Bank of America received the lowest grade, one star, on four of seven areas that were evaluated; Wells received one star in three areas; and Chase, in one."
Wells Fargo issued a statement saying it was "formally disputing" the Treasury's findings, claiming that "it paints an unfairly negative picture of our modification efforts and contradicts previous written assessments shared with us by the Treasury." Chase said it too had made significant improvements and in a statement it said the "respectfully disagrees with the assessment."
The administration had predicted that three to four million Americans would benefit from the program, but the article said that "so far only 699,053 permanent modifications have been started."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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