Three Banks Spanked for Subpar Mortgage Practices
Posted on Jun 10, 2011
In a startling move, the Obama administration is holding three major banks—Wells Fargo, Bank of America and JPMorgan Chase—accountable for their bad lending habits on the mortgage market, cutting off funds from the Home Affordable Modification Program until they shape up.
While the other two megabanks are taking the hit, Wells Fargo plans to push back on the government’s decision, claiming that the evaluation was inaccurate and outdated. —KA
Los Angeles Times:
After a review of the 10 largest mortgage servicers in its program, the Treasury Department found that Bank of America, JPMorgan Chase and Wells Fargo needed substantial improvement in correctly evaluating borrowers’ incomes — a key component of determining eligibility for the program.
Bank of America, the nation’s largest mortgage servicer, appeared to fare the worst in the administration’s evaluation. The bank also needs to make substantial improvement in identifying and contacting borrowers for the program, clearly demonstrating how the bank reaches its loan-modification decisions and ensuring the bank was receiving the correct incentive payments through the program, the government said.
Wells Fargo also was deemed as needing substantial improvement in contacting borrowers, in effectively processing and evaluating borrowers in accordance with the program’s guidelines and in ensuring the bank was receiving the correct incentive payments.
AP / Paul Sakuma