RTTNews - A report released by the U.S. Treasury Department shows that Bank of America (BAC) and Wells Fargo & Co. (WFC) have not performed well in modifying loans for struggling homeowners.
On Tuesday, the Treasury released its first monthly service report detailing the progress of its Making Home Affordable loan modification program, which said that BofA has only begun loan modification for four percent-or 27,985-of its eligible loans. Wells Fargo has only begun six percent, according to the report.
J.P Morgan Chase (JPM) is one of the better performing big banks, beginning 20 percent of its eligible loan modifications since the program was implemented in March.
CitiMortgage, Inc., has also performed relatively well, beginning 15 percent. Saxon Mortgage Services, a subsidiary of Morgan Stanley (MS), has put 25 percent of its delinquent loans into modifications.
The $75 billion loan modification program has so far helped 235,250 struggling borrowers out of four million that the program originally hoped to help.
The plan requires banks who have received federal aid from the Troubled Asset Relief Program to lower monthly payments for borrowers at risk of default by lengthening repayment terms, lowering interest rates and forbearing outstanding principal, along with other methods.
According to a statement released by the Treasury, however, the MHA program has been making rapid progress.
Servicers covering more than 85 percent of loans in the country are already modifying loans under the program, the Treasury said. More than 400,000 modification offers have been extended and more than 230,000 trial modifications have begun.
This pace of modifications puts the program on track to offer assistance to up to 3 to 4 million homeowners over the next three years, our target on February 18, the Treasury added.
The report also said that the Obama Administration has asked mortgage servicers to increase implementation of the loans so that at least 500,000 trial modifications will have been started by November 1.
This would more than double in three months the number of trial modifications started in the first five months of the program, the Treasury said.
The report showed that, in total, mortgage servicers have put 9 percent of borrowers who have been delinquent for at least 60 days into modifications, and that they have offered modifications to 15 percent who are behind in their payments.
The housing plan, which has come under fire for its rocky start, allows eligible borrowers who are at risk of default to lower their payments to no more than 31 percent of their pre-tax income. These adjustments are made permanent after the homeowner makes three payments on time.
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