The Obama administration is placing pressure on JP Morgan Chase (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC) as part of an attempt to bring the government’s $75 billion Home Affordable Modification Program (HAMP) back on track.
The administration has decided to increase the available resources to institutions that do offer homeowner assistance and will be requiring participating institutions to report the number of homeowners that are receiving permanent mortgage adjustments. While banks have begun offering large numbers of trial modifications, the Obama administration has largely been disappointed with the percentage of those loans that have been converted to permanent modifications.
It’s estimated that there’s about 650,000 homeowners that are receiving trial loan modifications through the federal government’s Home Affordable Modification Program. Out of the customers that are eligible for trial modifications, Citibank has provided modifications to 40% of its customers, Chase has provided modifications to 32% of its customers and Wells Fargo has provided modifications to 29% of its eligible customers. Bank of America, which has extended nearly 1 million trial offers, has only provided trial modifications to about 14% of its eligible customers.
The numbers almost certainly point to the need to make modifications to this program. The real issue is some of major banks hesitance to turn temporary modifications into permanent ones.
According to data from Freddie Mac, only 5% of the 650,000 homeowners receiving trial modifications have been converted to permanent loan modifications.
