In the News: Banks Fall Short on Mortgage Help

Govt. Report Shows 15 Percent of Eligible Borrowers Offered Help; Bank of America, Wells Fargo Lag Behind Other Big Banks

August 4, 2009

Fewer than one in five homeowners eligible for the Obama administration's loan modification program have received offers of help from their banks; Bank of America and Wells Fargo have offered loan modifications to 13 and 12 percent of eligible borrowers.

Fewer than one in five homeowners eligible for the Obama administration’s loan modification program… Expand
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The Treasury Department today released the first report on the performance of loan servicers in the Obama administration’s home mortgage modification program — and the numbers weren’t pretty.

Only 15 percent of eligible homeownershave been offered assistance under the Home Affordable Modification Program thus far, according to the report, and some loan servicers have yet to modify a single loan.

“There are some institutions that have done an infinitesimally small amount,” Assistant Treasury Secretary for Financial Institutions Michael Barr told reporters on a conference call this morning.

“We are going to be requiring ramped-up effort across the board,” he noted. “We’re going to pay more specific attention to ensuring that institutions that have been slow out of the blocks ramp up more quickly and more effectively.”

Among the companies that have not modified any loans were American Home Mortgage Servicing and National City Bank. Bank of America had a 4 percent assistance rate for trial modifications, with Wells Fargo marginally better at 6 percent.

“We’re disappointed in the performance of some of the servicers,” Barr said. “We think they could have ramped up better, faster, more consistently and done a better job of serving borrowers and bringing stabilization to the broader mortgage markets and economy and we expect them to do more.”

Wells Fargo defended its loan modification results in an interview with today.