Treasury scolds mortgage servicers at Chase, Bank of America

The Treasury Department said Wednesday it would withhold loan modification incentive payments from Bank of America Corp. and JPMorgan Chase & Co. for the third consecutive quarter, and took Chase in particular to task for its poor compliance with federal loan modification programs.
Chase was found to be the only servicer whose processes tied to helping struggling borrowers still require “substantial improvement,” according to the report. In addition to again withholding incentive payments, Treasury said it will permanently reduce incentives owed to Chase unless the issues outstanding are addressed before the next quarterly assessment.
According to the assessment, as of September, 72 percent of Chase’s trial loan modifications were converted to permanent modifications, compared to 90 percent for the best servicers. It also logged an average of 39 days to resolve escalated cases, compared with nine days for the best performing servicers. Chase also did not meet the government’s benchmarks for the processes it is using to identify and contact homeowners and how it is calculating borrowers’ incomes.
Bank of America, whose incentive payments also continue to be withheld, was found to be in need of moderate improvement. Treasury noted that it has made progress in addressing a number of deficiencies found in previous reports.
Treasury officials began publicly releasing the results of servicer evaluations in the first quarter.
The monthly report on the administration’ loan modification efforts also found that of the more than 1.7 million trial modifications begun under the program, only 735,464, or about 42 percent, have resulted in permanent loan modifications.


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