The Treasury Department singled out the three largest banks — Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. — for failing to properly solicit and consider homeowners for the government's loan modification program.

All three companies were directed to change their processes and to reevaluate borrowers who were not offered mods, the Treasury said in its monthly scorecard for the Home Affordable Modification Program, released last week.

The disclosures serve as a stark reminder of the widespread frustrations with both the way the program was set up and the performance of participating mortgage servicers.

"They're doing a terrible job," said Ira Rheingold, the executive director of the National Association of Consumer Advocates. "The whole program has been poorly designed from the get-go because it was designed to help investors and servicers, not homeowners."

Audits of seven servicers conducted in the first quarter by Freddie Mac, which is serving as the compliance agent for Hamp, found that JPMorgan Chase and Wells had "above-average" noncompliance rates.

Freddie disagreed with both servicers' actions on more than 10% of all cases, compared with disagreement on about 5% of cases, on average, for the group.

B of A was not included in the "second look" audits, but other compliance problems were found at the company during the same period, the report stated in a footnote.

Freddie is reviewing an additional sampling of 10% to 15% of cases by JPMorgan Chase and Wells to determine if their actions toward borrowers were appropriate. It also conducted "further compliance activities to help ensure changes were being implemented" at Bank of America.

Though the Treasury has threatened to deny or even claw back incentive payments to servicers, in these cases most borrowers were not offered a modification at all, so there was no incentive payment to return.

A Treasury spokesman did not respond to repeated requests for comment.

"We've already made the requested changes to our solicitations," said Tom Kelly, a JPMorgan Chase spokesman, who declined to say how many borrowers were affected.

Tom Goyda, a Wells spokesman, said one of its five servicing units had a large number of loan files that were not reviewed for Hamp because Wells was late in implementing the government program due to "systems issues."

Rick Simon, a Bank of America spokesman, said in an e-mail: "We have or are in the process of implementing any required changes."

The other servicers Freddie audited were American Home Mortgage Servicing Inc., Citigroup Inc.'s CitiMortgage Inc., Ally Financial Inc.'s GMAC Mortgage, Goldman Sachs Group Inc.'s Litton Loan Servicing and OneWest Bank.

American Home and Citi had average noncompliance rates, while the other servicers had below-average rates.

Ari Brown, a lawyer at Hagens Berman Sobol Shapiro LLP in Seattle who has sued Bank of America on behalf of hundreds of such borrowers for failing to comply with Hamp, said the report raised more questions than answers.

"No one is following up and doing what they have to do to keep companies like Bank of America following this program," Brown said. "We're not surprised B of A is not on the chart because from the anecdotal evidence we've gotten, we have seen no evidence of any intent to comply."

Lawyers representing borrowers in eight separate class-action lawsuits against B of A have filed a motion to be heard this week on consolidating the actions into a single case, Brown said.

"We have heard the same story over and over about lost documents or being denied a mod, so that it is hard to believe the servicers are acting in good faith," Brown said.

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