Big Banks Had 800K Needless Foreclosures

Study says big banks reacted sluggishly to modification program
By Kevin Spak,  Newser Staff
Posted Sep 16, 2012 10:36 AM CDT
Big Banks Had 800K Needless Foreclosures
In this April 4, 2010 file photo, a forclosure sign tops the for sale sign outside a home in Denver.   (AP Photo/David Zalubowski, File)

The big banks moved sluggishly to implement the Obama administration's Home Affordable Modification Program, forcing hundreds of thousands of families out of their home unnecessarily, according to a new study. Office of the Comptroller of Currency data indicates that while many banks had sufficient staff and expertise to implement the program and keep people in their homes, "a few large servicers [have offered] modifications at half the rate of others," Pro Publica reports.

If those bigger lenders had modified loans at the same pace as the rest, about 800,000 more families could have kept their homes, bringing the number of modifications up from 1.2 million to 2 million. The HAMP gave banks money to encourage them to modify loans, but Pro Publica alleges that lax Treasury oversight allowed the banks to ignore its rules. Though the report doesn't specifically name offenders, Bank of America, Wells Fargo, Citi, and JPMorgan Chase are the biggest mortgage servicers. Bank of America in particular has been notoriously slow to modify. (Read more big banks stories.)

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