If you're one of the many homeowners who have gone through the frustrating experience of trying to work with your lender to get a loan modification, this may serve as a bit of consolation.
The U.S. Treasury says it is withholding incentive payments owed to the three of largest servicers participating in the Home Affordable Modification Program until they get their act together and improve their handling of HAMP applications. The three servicers are Bank of America, JPMorgan Chase and Wells Fargo.
Like others participating in HAMP, they had been receiving at least $1,000 from the government for each loan modified under the program.
The announcement resulted from a performance assessment of the 10 largest servicers participating in HAMP, released Thursday. The government periodically publishes survey results related to HAMP, but for the first time, it has published a detailed report grading the servicers in specific areas.
The results come as no surprise for borrowers who have long complained about servicers losing their paperwork, miscalculating numbers or denying them a permanent modification after they made all the payments required under the trial modification period.
The three servicers failed to pass the test when it came to calculating borrowers' income to determine their eligibility. The government considers a 5 percent error benchmark acceptable. But Chase incorrectly calculated borrowers' income to determine HAMP eligibility in 31 percent of the cases; Bank of America, 22 percent and Well Fargo, 27 percent.
Here are some of the other categories assessed and how each lender performed.
- Missing modification status report: Bank of America failed in 19.1 percent of the cases in this category. Wells and Chase fared better here with 0.7 percent and 1.3 percent, respectively.
- Average calendar days to resolve escalated cases (HAMP sets a target of 30 days): Bank of America took on average 58 days; Chase, 55 days and Wells, 31 days.
- Conversion rate for trials started after June 1, 2010: Bank of America had 54 percent of trial modification converted to permanent, Chase had 57 percent and Wells had 65 percent.
According to report, Bank of America, Chase and Wells need to make "substantial improvement," to their HAMP modification process.
I asked the servicers if they would like to say something about the results.
Wells Fargo says it's "formally disputing this new report with the U.S. Treasury. It paints an unfairly negative picture of our modification efforts and contradicts previous written assessments shared with us by the Treasury."
A Wells spokeswoman says the report is based on data from August of 2010, rather than the first quarter of this year, as indicated in the report, and does not reflect recent improvements the bank made to its process.
Bank of America says it is "committed to continually improving our processes to assist distressed homeowners through HAMP and proprietary mortgage modification programs. … We acknowledge improvements must be made in key areas. …We have made great progress in several key performance areas and, in the first quarter, Bank of America was responsible for one of every four modifications completed under HAMP. We believe future reviews will confirm that progress."
Chase says "the bank respectfully disagrees with the assessment. We have made significant improvements since the modifications that Treasury reviewed and continue to work hard to keep improving our processes and controls."
Here's the report. Have fun!