By Alejandro Lazo
June 9, 2011, 10:11 a.m.
Three of the nation’s biggest banks have failed to live up to new performance guidelines under the Obama administration’s main foreclosure relief program and will be cut off from receiving financial incentives until they improve.
Bank of America, J.P. Morgan Chase and Wells Fargo were found to be in need of “substantial improvement” under the administration’s Home Affordable Modification Plan, the administration said Thursday.
The new assessments are intended to compel the nation’s biggest mortgage servicers to improve their practices in the program, officials said. The foreclosure program has long been criticized as ineffective and falling short of its goals in helping troubled borrowers. The program is voluntary and provides financial incentives for banks to modify loans.
“While we continue to get tens of thousands of new homeowners into mortgage modifications each month, we need servicers to step up their performance to meet the needs of those still struggling,” said Tim Massad, acting assistant secretary for financial stability in the Treasury Department. “These assessments set a new benchmark by providing an unprecedented level of disclosure around servicer performance and will serve to keep the pressure on servicers to more effectively assist struggling families.”
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