Banks Struggle to Modify Loans for Struggling Homeowners, Treasury Report Shows

The Treasury Department has released a report highlighting the performance of the nation's largest banks in modifying loans for struggling homeowners under the government's Making Home Affordable Program. According to the report, Bank of America and Wells Fargo were the worst performers among the biggest U.S. banks, with Bank of America modifying only 4% of its eligible loans and Wells Fargo modifying 6%. In contrast, smaller servicers and non-bank institutions showed higher modification rates, with some achieving as high as 28%.

Key Takeaways:

• Bank of America modified only 27,985 trial loan modifications, or 4% of its eligible loans, under the Making Home Affordable Program.
• Wells Fargo had a modification rate of 6%, trailing behind JPMorgan Chase's 20% and Citigroup's 15%.
• Wachovia Corp., which Wells Fargo acquired, had a modification rate of 2%.
• Smaller servicers and non-bank institutions, such as Wescom Central Credit Union, had higher modification rates, with some achieving as high as 28%.
• The report shows that overall, 15% of borrowers eligible for the program have been offered changes to their mortgage terms and 9% have entered into a trial modification.
• The Obama administration has set a goal of starting at least 500,000 trial modifications by November 1.

Statistics:

• 15% of borrowers eligible for the Making Home Affordable Program have been offered changes to their mortgage terms.
• 9% of borrowers eligible for the program have entered into a trial modification.
• Bank of America modified 27,985 trial loan modifications, or 4% of its eligible loans.
• Wells Fargo had a modification rate of 6% of its eligible loans.
• JPMorgan Chase had a modification rate of 20% of its eligible loans.
• Citigroup had a modification rate of 15% of its eligible loans.
• Wachovia Corp. had a modification rate of 2% of its eligible loans.

Sources:

• Treasury Department report
• Interview with Michael Barr, Assistant Treasury Secretary for Financial Institutions
• Interview with Seth Wheeler, Deputy Assistant Treasury Secretary for Federal Finance
• Interview with David Sisko, Head of Default Management Services for Deloitte & Touche LLP
• News article by Euclid Infotech Pvt. Ltd., provided by Syndigate.info an Albawaba.com company