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.
But will the punishments meted out to these banks really matter? It seems that many of the mortgage lenders are not that motivated to prevent foreclosures in the first place. Therefore it is questionable if they will be compelled to improve their standards in an effort to receive foreclosure prevention funding again. The HAMP program has shown repeatedly that many mortgage lenders simply cannot be motivated to make an effective effort to prevent foreclosures. Some say that it’s because the banks are overwhelmed with the sheer numbers of foreclosures pending on their books and that they are not prepared to handle the foreclosure crisis even with the help and financial incentives of the HAMP program. Also, there may not be much financial incentive to invest in foreclosure prevention infrastructure when it’s just as profitable to simply allow homeowners to lose their property. It will be quite interesting to see if these major banks ever meet the HAMP guidelines and if they do how long it will take for them to come into compliance.
(source: LAtimesblogs.com )