WASHINGTON — The Treasury Department said Friday it has agreed to pay $171 million it had withheld from Bank of America Corp. and JPMorgan Chase & Co. after the lenders fixed problems in how they handle loan assistance programs.
Since last June, the Treasury had suspended incentive payments owed to the two big banks under the federal Home Affordable Modification Program, or HAMP. The Treasury said the agreement to resume payments to the two large lenders was part of a broad agreement settling allegations of foreclosure abuses that state and federal officials reached with mortgage lenders last month.
Payments should be made to the two banks in the weeks after the foreclosure settlement is filed in court, which is expected to be imminent. JPMorgan had $89.1 million in incentive payments withheld through February, while Bank of America had $81.8 million in incentive money withheld.
"By shining the spotlight on key practices, we have prompted servicers to improve their implementation" of the loan-assistance program, said Tim Massad, an assistant Treasury secretary. "However, there is still more work to be done to ensure that the industry treats all borrowers properly."
The HAMP program was announced in early 2009 as a way to aid homeowners struggling in the wake of the housing bust. The government pays lenders incentives to help borrowers avoid foreclosure by reducing their mortgage payments.
The program has helped nearly 769,000 U.S. homeowners avoid losing their homes through permanent loan modifications as of the end of January, up from around 763,000 in December, according to Treasury statistics.
Nearly 1.8 million homeowners have started the program since its launch, but many didn't qualify for the program after an initial trial phase. Others were unable to make payments, even at lower levels, and dropped out. The administration initially projected that between 3 million and 4 million borrowers would be helped.
