Mortgage-Servicer Performance Is 'Uneven'

By MAYA JACKSON RANDALL and JESSICA HOLZER
WASHINGTON -- Some 9% of eligible borrowers have received trial modifications under the Obama administration's ambitious effort to help struggling homeowners, according to data released by the Treasury Department Tuesday.

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.The administration announced its highly anticipated plan to stabilize the housing market in February through a program that provides $75 billion in incentives for borrowers, mortgage servicers and investors. However, foreclosures are still mounting amid ongoing weakness in the labor market. U.S. foreclosure activity in the second quarter was up 11%, according to a July RealtyTrac report.

The administration Tuesday acknowledged that the performance of participating mortgage servicers has been "uneven."

For instance, Bank of America Corp. has started trial modifications with only 4% of the eligible mortgages in its servicing portfolio, according to a report Treasury provided. Meanwhile, J.P. Morgan Chase & Co. has started trial modifications on behalf of 20% of its eligible delinquencies. Wells Fargo Bank's share is 6% while trial modifications started by Wachovia Mortgage make up just 2% of estimated eligible delinquent loans, the data show.

Despite the low numbers, Treasury still says the "Making Home Affordable" loan modification program is on pace to offer assistance to up to 4 million homeowners over the next three years.

For each homeowner who makes regular payments for three months, the loan servicer collects $1,000 from the government. If the borrower stays current for three years, the servicer gets a maximum of $4,500.

The administration said it has asked servicers to more than double the total of trial modifications started by Nov. 1, which would bring the cumulative total to 500,000 in a few months. Currently, only 235,247 modifications have been started.

Additionally, the administration said it has asked Freddie Mac to audit loan modification applications that have been declined.

Meanwhile, Treasury on Tuesday announced plans to provide transparency reports on modifications on a monthly basis.