US Treasury names, prods banks on home rescue plan

Some mortgage companies are helping a great number of troubled homeowners take advantage of a government-backed rescue plan but other firms are falling flat and must do more, the U.S. Treasury Department said on Tuesday.

The most effective mortgage service companies are helping one in five eligible borrowers find aid while 11 of the largest 25 servicers are helping less than 5 percent of those eligible.

"It's safe to say we're disappointed in the performance of some of the servicers," said Michael Barr, Treasury assistant secretary for financial institutions. "We expect them to do more."

JPMorgan Chase and Co is helping one in five troubled homeowners eligible for a government-sponsored housing rescue, while Wells Fargo & Co is reaching 6 percent of eligible borrowers, and Bank of America Corp is aiding 4 percent, the U.S. Treasury Department said on Tuesday.

Officials are going to give more scrutiny to the mortgage services "that have been slow out of the block" in terms of embracing the housing rescue plan, Barr told reporters on a conference call after the mortgage report was released.

A link to the Treasury report can be found here: http://www.treas.gov/press/releases/docs/MHA_public_report.pdf



HOUSING RESCUE PLAN TAKES SHAPE

In February, U.S. President Barack Obama unveiled a housing rescue plan intended to lower monthly mortgage costs for struggling borrowers.

The program doles out incentives to the mortgage service companies that collect monthly checks from borrowers and act as caretaker for the Wall Street investor or bank behind a loan.

Last week, the Treasury Department and Department of Housing and Urban Development (HUD) asked 25 mortgage servicers to expand their help. Officials have promised to name and shame the service companies that do not meet their expectations.

Bank of America, which has taken $45 billion in taxpayer aid, is ranked 11th among servicers helping troubled borrowers. Citigroup Inc, which has also received a $45 billion bailout, has helped 15 percent of eligible borrowers and is ranked seventh among its peers.

National City Corp, which was acquired by PNC Financial Services Group Inc, has over 37,000 troubled loans eligible for modification but has only helped four borrowers.

Saxon Mortgage Servicers Inc., a subsidiary of Morgan Stanley, had the highest participation rate at 25 percent.

Wells Fargo said that it modifies many home loans outside the parameters of the Obama administration's Home Affordable Modifications program and has success keeping borrowers current.

"Wells Fargo continues to have the lowest delinquency rate of the top four lenders in the nation," the lender said in a statement.

Officials hope to see 500,000 home loans modified under the terms of the Obama rescue by November, Barr said, and noted that over 200,000 troubled borrowers have seen their monthly mortgage payments lowered under the plan.