Banks want HAMP pay

JPMorgan Chase(JPM_) and Wells Fargo(WFC_) are refuting a study that could cost them hundreds of millions in payments from a government program that was intended keep people out of foreclosure but turned into an abject failure.



Banks are calling the study, which was released Thursday by the U.S. Department of Housing and Urban Development (HUD), as "stale and dated." The report argues that JPMorgan, Wells Fargo and Bank of America(BAC_) did not meet servicing compliance standards the Home Affordable Modification Program (HAMP)

"We are formally disputing this new report with the U.S. Treasury. It paints an unfairly negative picture of our modification efforts and contradicts previous written assessments shared with us by the Treasury," a Wells Fargo spokesperson said

The study's conclusion allows the government to withhold financial incentives for modifying delinquent loans. There have been $1.3 billion in incentive payments made through the U.S. Treasury Department for participating in the program to over 80 mortgage servicers. Both the Treasury and the banks declined to reveal the total payments that will be withheld for this quarter.

Read on.

Here are the reactions of the banks of the govenrment's withholding HAMP payments:

The immediate reactions from the large banks were mixed. Wells Fargo, in a sharply worded statement e-mailed by spokeswoman Vickee J. Adams, said that it would formally contest the characterization of its performance by the administration and that the report “does not fairly reflect” the bank's record.



“It paints an unfairly negative picture of our modification efforts and contradicts previous written assessments shared with us by the Treasury,” Adams said. “The report reviews activities that date back a year or more and in no way reflects the improvements Wells Fargo has made in our processes and the work we have done to help homeowners.”


Bank of America, in an emailed statement from spokesman Richard G. Simon, said that it acknowledged that it needed to improve its practices. The bank said that more than 127,000 of its homeowners had completed modifications through the HAMP program and more than 850,000 through other homeowner assistance programs.


“We acknowledge improvements must be made in key areas, particularly those affecting the customer experience,” Simon said. “We have made great progress in several key performance areas and, in the first quarter, Bank of America was responsible for one of every four modifications completed under HAMP. We believe future reviews will confirm that progress."