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Obama administration criticizes JPMorgan over mortgages

@CNNMoney December 7, 2011: 7:32 PM ET
The Obama administration criticized JPMorgan Chase on Wednesday for failing to effectively assist struggling homeowners.

The Obama administration has struggled to ease the foreclosure crisis.

NEW YORK (CNNMoney) -- The Obama administration criticized JPMorgan Chase on Wednesday for failing to effectively assist struggling homeowners.

In the November edition of the administration's "Housing Scorecard" on the performance of mortgage servicers, Chase (JPM, Fortune 500) "was found to be in need of substantial improvement" in its dealings with homeowners, the departments of Treasury and Housing and Urban Development said in a statement.

The report came in conjunction with the administration's Making Home Affordable program, which works with mortgage services to help homeowners in danger of foreclosure.

The report said Chase needed to improve its communication with struggling homeowners and has demonstrated a "lack of progress in implementing previously identified improvements." As a result, the Treasury Department will withhold servicer incentive payments to the bank for the third consecutive quarter.

Tom Kelly, a spokesman for Chase, said in an email that the bank was "disappointed with our rating, and will continue to work hard to improve our processes and controls."

The Treasury Department is also withholding servicer incentive payments from previous quarters for Bank of America (BAC, Fortune 500) due to its limited improvements in performance versus prior months.

Rick Simon, a spokesman for BofA, said in an email that the bank had made strides in assisting homeowners, with more than 180,000 of its customers completing modifications under the Obama administration's Home Affordable Modification Program (HAMP).

"In spite of progress made, the committee has chosen to continue to withhold incentive payments," Simon said. "While we are disappointed with this decision, these financial incentives do not drive our efforts to help our customers in need of assistance."

Chase and BofA were among the banks named in a lawsuit filed last week by Massachusetts Attorney General Martha Coakley that accused them of large-scale fraud in the foreclosure process.

The Obama administration has unveiled a variety of programs to assist homeowners and promote loan modifications, though these initiatives have had limited success. The Home Affordable Modification Program has secured 1.7 million trial modifications since it began in 2009, Wednesday's report said, though the program has fallen short of initial promises to lower mortgage payments for 3 to 4 million borrowers. To top of page

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