Gov’t Criticizes Banks for Failing More Home Owners
Bank of America and JPMorgan Chase, two of the country’s largest lenders, are not doing enough to help home owners avoid foreclosure, the Treasury Department said Thursday.
Many home owners who have been eligible for loan modifications have been denied one, the Treasury Department said. The Treasury Department also criticized the lending giants for not doing enough to help home owners permanently lower their mortgage payments in the government’s Home Affordable Modification Program (HAMP).
Both JPMorgan Chase and Bank of America said they are working to improve their efforts with the program.
HAMP, which was launched in 2009, has been criticized for falling short of its goals to help millions of home owners avoid foreclosure by lowering their monthly payments. In the program, eligible home owners can receive interest rates as low as 2 percent for five years and repay their loans over a longer period.
About 1.7 million home owners have received trial modifications through HAMP over the last two years, but more than half by the end of July had dropped out of the program before their loan modifications were made permanent.
Home owners have accused banks of losing their documents or being slow in returning their phone calls, while banks have blamed home owners for failing to submit the necessary paperwork to make the loan modifications permanent.
Meanwhile, in other news on Thursday, banks are facing more criticism and possibly a lawsuit from the government. The Federal Housing Finance Agency, which oversees U.S. mortgage markets, reportedly plans to file a lawsuit against more than a dozen big banks–including Bank of America, JPMorgan Chase, Goldman Sachs, and Deutsche Bank, among others–accusing them of misrepresenting the quality of mortgages they packaged and sold during the housing bubble, The New York Times reports. The lawsuit is expected to be filed in federal court in the coming days.
Source: “Government says Bank of America, JPMorgan Chase Need to Help More People Stay in their Homes,” Associated Press (Sept. 1, 2011) and “U.S. Is Set to Sue a Dozen Big Banks Over Mortgages,” The New York Times (Sept. 1, 2011)