Journalism in the Public Interest

Loan Mod Backlogs Continue Despite Servicers’ Pledges to Improve

Loan servicers in the federal mortgage modification program continue to have large backlogs, but the administration has not responded with penalties. Many homeowners continue to be stuck in trial modifications.


Rosa Morales works with a Bank of America negotiator as she tries to restructure her mortgage loan on Feb. 25, 2010, in Palm Beach, Fla. (Joe Raedle/Getty Images)

Update (8/12/2010): The Treasury Department released updated dataon the performance of permanent modifications in early August after it discovered errors, which made the default rate appear lower than it really is. The new, corrected data, however, still showed a relatively low default rate. This post has been updated to reflect that new data.

Two months ago, representatives of banks and other mortgage servicers participating in the administration's mortgage modification program visited the Treasury Department and made a commitment: they would drastically reduce the number of homeowners stuck in trial modifications by the end of June.

That hasn't happened. New data released today shows that about 166,000 homeowners have waited six or more months in plans that only temporarily reduce payments. That's about one-third of the current trials, but the trial period is supposed to last only three months.

For those homeowners who finally do get an answer, it's usually a denial. The number of homeowners being dropped from the program has continued to rise. While about 398,000 homeowners have received a final modification through the program, far more, 521,000, have been dropped.

See our interactive breakdown of the data. It shows which mortgage servicers are primarily responsible for the continued logjam.

JPMorgan Chase continues to have the biggest backlog, with about 46,000 homeowners in limbo. Chase's problem is not new -- we reported back in February that Chase had the worst backlog. The prolonged trials hurt homeowners by damaging their credit, increasing the balance of their mortgage, and preventing them from saving for the possibility of foreclosure. Chase declined to comment on the reason for its poor performance.

During a conference call with reporters Tuesday, Treasury official Phyllis Caldwell acknowledged the failure by servicers like Chase to live up to their pledge to clear their backlogs. When pressed whether the servicers would face penalties for breaking the program's guidelines, Caldwell said Treasury was "looking at every remedy we have."

Back in February, Treasury made the same vague reference to possible penalties. Despite frequent threats, Treasury has yet to actually penalize a servicer. The Government Accountability Office reported last month (PDF) that Treasury had not even established standards for how it might penalize servicers who break the program's rules.

The GAO also reported that the servicers frequently make errors calculating homeowners' income: it interviewed 10 servicers and found that at least half had discovered through internal reviews that their employees had miscalculated the income on at least 20 percent of the sampled modifications. As we've been reporting since the program launched, homeowners often encounter problems with their servicer -- lost documents, delays, and mistakes that can lead to foreclosure.

With relatively few homeowners having received permanent modifications through the government's program, administration officials have been stressing in recent months that many homeowners will still eventually receive a private offer of a modification from their servicer. But those offers will not necessarily comply with the program's guidelines, which require that the payments be set at a certain low rate: 31 percent of the homeowner's monthly gross income. Modifications outside the program have been outpacing modifications under the government plan by about two to one (PDF) in recent months.

Alys Cohen of the National Consumer Law Center said she thought servicer errors meant that homeowners were being wrongly steered into servicers' modification plans when they qualified for the government program. “We don't believe it's because more people qualify for the proprietary modifications than [the government program],” she said.

For homeowners who do receive a permanent modification under the government program, early results indicate the lower payment level may be sustainable. Treasury released data showing that only about 10 percent of borrowers who had been in a modification for six months or longer were more than two payments behind. The average homeowner in the program saves about $510 on monthly payments.

Penalties, I thought they were imposed only on the citizen on main street.

Big banks will always squeak by. They oil the right hands in Congress.

I believe it is time to organize, protest, and put pressure on politicians. Wall Street has been bailed out. Wall street has done nothing to help Main Street. When people make 80-100 million dollar a year they have no concern of the little people.(Maybe that is why these people should be in a 90%taxbracket)Could you be happy with $8million/year after taxes? Well these people just never can have enough.
To them we are in a different class. In there eyes we have to be exploited as long as they can get our last penny. This is why we hear when many people making the modified payments but banks are foreclosing on their homes anyway.
The Banks have no intention of helping struggeling homeowners. If the Banks would
want to help they could because the money
is there the government already gave it to them.
As long as our government won’t see angry homeowners protesting on the street this government will do nothing to help save our home.
I am not talking about 50 people at a time I am talking hundreds of thousands cross country.
So people if you want to save your home it is time to get organized and make your voice heard. It is time for our government to make Home Loan Modification Mandatory by these banks.


Exactly. It’s like screaming in the wind. Greed is God in America. The majority has long allowed it by continuing to elect members of Congress because of what they look like, not what they are inside. The majority of politicians are scum. Greedy, egotistical, arrogant scum caring only to line their pockets with campaign contributions they’re allowed to use like a personal ATM card. That they will outright lie, incite hatred in the minds of the delusional to keep them busy with ignorance & hatred so long as they’re looking the other way while they grab power is all they care to do. Only if the majority realize they are fools used by satan’s very vomit will anything ever change.

I read a story a week or two ago about some bank in I believe Ohio that was closed by the FDIC, the assets transferred to another bank that just happened to be owned by some of the Goldman Sachs boys. Seems that the new bank short sells the properties, but the Treasury Department reimburses the Company the difference that the original loan owed before default.

Just another scam for the taxpayer to pay for. It seems that there are no bounds that the Financial & the Government won’t go to in screwing American taxpayers. I’m beginning to think that there is nothing short of a Revolution which will change the greed & corruption that the country is caught up in.

N.J. Connolly

July 22, 2010, 2:06 a.m.

Norman - is there a link to the Ohio bank closure story, with G.S. waiting to receive payables from counterparties?
Gabor, a 90% tax rate would open a can of worms. I’d like to simply see some teeth in the home loan mpds program, a modest goal we could agree on?
Timmy G. has twice testified that there are teeth, using that word. Um, no.
Suggesting to banks that they cut homeowners a fraction of the break they have gotten was naive. Plus banks helped draft the terms of the almost-impossible-to-get loan mod deals. Treasury nodded and took their ideas, whole cloth.
What happens to the money the feds set aside, if unused? Does it get forfeited, or become part of the Fan Fred slush fund?

Thanks for the reporting Mr. Kiel. I found your articles and surveys on a great online forum for homeowers like ourselves at  . I have found more help and information there than anywhere else on the web. There are thousands of stories there just like the comments here. You should join forces with Moe Bedard to expose this BS loan mod circus. Power to the people.

Thanks for the reporting Mr. Kiel. I found your articles and surveys on a great online forum for homeowers like ourselves at Loansafe. I have found more help and information there than anywhere else on the web. There are thousands of stories there just like the comments here. You should join forces with Moe Bedard to expose this BS loan mod circus. Power to the people.

Thank you Paul for the article and link to data. There are many good comments posted here however we have to look at this situation from its beginnings and the mistake made by this administration to start with. Treasury decided early on to give a monopoly to the servicers’  even though the original TARP legislation (EESA 2008) called on the Treasury Secretary to use any means required to save real estate values in the US. I am hear to tell you they (Treasury) have not done so. The problem from the start was, and still remains, the servicing industry was not built to handle this business.  The industry does not have the trained professional processors and underwriters or technology require to deal with the volume of troubled mortgages. This help has been available and has been offered to Treasury, the GSE’s and all major servicers’ for the past 1.5 years.

Many of the servicers’ look at HAMP as a profit center, they are paid under HAMP to complete the administrative end of the process, they are also given incentives for success.  The only solution, in my opinion is for Treasury, Fannie Mae and Freddie Mac to outsource to the industry that has been doing this for sixty years and fund those operations. This is not that difficult; HAMP and other more convention modifications are nothing more than a mortgage product, financial information is received from the borrower , a processor assures all required information is provide and verified, than a underwriter determines if the application meets the guidelines of the program (HAMP).  Based on what has happen for the past 1.5 years as reported in the GAO report nothing will change until this monopoly is broken. I am sorry to report but the stabilizing of real estate values in the US is now left in the hands of Treasury, Fannie Mae and Freddie Mac.  Unfortunately, up until now these parties have not stepped up to the plate to make the moves required to implement HAMP properly.  My organization will continue to fight to make the required changes so desperately needed if HAMP is going to have any success.

After listening to a sub-committee hearing last night some banks are defaulting on their bailout repayments.

No Congress person seemed to be surprised or concerned.

I am not for redistribution of wealth. However the big banks made a pledge for loan modifications and they have not lived up to their obligations. I agree they have no intentions to do so.

To big to fail is a joke. The large banks are still eating the small banks aided by Obama’s Administration.

The Congress and Obama fails to listen to the wishes of we the people. As I have advocated before it is past time for we the people to come together for a revolution. While the Tea Party has been beat on at least they were trying. I don’t agree with all that they are advocating but I have to give it to them they have done something.

Zlatan Ibrahimovic

July 22, 2010, 8:31 p.m.

I’m moving to Canada.

Obama’s ratings are falling again. What happened to the fire on the campaign trail & his conviction to turn government around - make it more transparent and working for the real people? I voted for him but seems once in office he’s been too preoccupied with the same elements who tore this country & the world apart. Too bad. He could’ve made a difference if he’d really tried.

I agree with the other posters - waiting for the banks and servicers to live up to the letter of HAMP is like waiting for wolves to become vegetarians - won’t happen because Congress is allowing them to make all the rules with no penalties if they don’t cooperate. Hate to say it but this administration is beginning to look like a bust too.

No one cares or wants to listen.  It is David and Goliath
We have asked for a mod with Chase over a year ago
They now are having us send in papers and they
send back denied.  The homes were drastically inflated when we bought in 04 (like others) now they do not want to come down on the worth of the home today and give us a principle reduction.  We had to wait over a year for them to respond…They know what they are doing…..  This country needs to storm Washington regarding foreclosures , home

We all seem to agree that the banks dont care whether we are upside down in our mortgages with negative equity. Locked into these interest only option ARMS. Our Govt DOES CARE EITHER!! What do we as the middle class have to do to be heard?? All we do is talk no action!!. If every hardworking middle class American stopped paying his mortgage this is the way to send the banks and our Beloved Govt a clear message. You will listen to us or the economy and all of us are going off the CLIFF!!!!  I work hard for my money and I am not giving to the Bank Casinos anymore!!

Luis, what a great idea.

Now if all of us hard working Americans can bring ourselves to with hold payment like the Banks with hold paying back the American tax payers.

good idea   Luis- bankruptcy might be the answer too…

N.J. Connolly

July 23, 2010, 5:44 p.m.

whoa, don’t urge anyone into a BK!
calm down.
his state might mandate mediation pre-foreclosure, as mine does. the lender is forced to sit down with you, and an appointed mediator. a moment of relative equilibrium, maybe?
there might be light at the end of the tunnel. on the other hand, it could be a train bearing down on you…
hang in there, Luis. don’t destroy your credit, stage a face off. worth a try?

Well Connley thanks for the advice but I have been at this for 2 years with the lender. After 3 attempts for a loan mod all I get is the runaround. Made interst only payments on this 1st and second ARMS for 4 years $3000.00 mortgage. No equity my principal has gone up instead of down I am locked into this loan like a vice. Bank gets all my money I get nothing!! Its time to give myself a bail out! Starting this month no more mortgage payments the lender will not do the right thing I wont either! I will enjoy my bailout and save my money for the next 12 months! Merry Christmas and God Save America!

I think Steve G is on to something there.. about HAMP and the Servicer’s… they get the incentive funding upfront of the Loan MOD string people along add on thosouands of dollars in “fee’s” and then foreclose in the large majority of cases anyway.

If we are to believe the Republican rhetoric they are pushing today, that tax hikes are being prepared/are taking place, that the total looting by the banks in every which way they can, are one & the same for the American taxpayer. I believe every person who either is paying a mortgage or defaulted on one are victims of the political scams that this Congress has allowed. Irregardless of what party affiliation, remember that the Republicans have taken the stand to back/keep tax cuts that are adding to the National Debt, they are obstructionists, as are the Democrats who have allowed this to go on. As the P.O.T.U.S. said recently; the buck stop here, except now, he rescinds it & blames the media. There is no difference between the party’s today, as the Government is complicit in the destruction of the middle class.
I made a comment earlier about how the banks that are closed by the FDIC, the assets are assigned to another bank. Further, these banks carry the defaulted loans at full value on their books, then short sale them, charge the Government for the difference between the short sale price and the default price, thereby pocketing a nice profit as well as removing the default from their books.
The looting continues, and it starts at the top down. it’s up to both the tax payers and the those unemployed to change the system. Just don’t let the politicians sway your judgment, for while most of them tell you to your face that they are for you, they are stabbing you in the back, helping the financial looters screw you.

Thanks for writing this article Paul and devoting a lot of your time and effort to show the transparency of what the banksters are doing.

It is obvious MHA is failing and the failure to implement new legislation, possible severe penalties for banksters to abide by the Treasury guidelines might be a good starting point. 

L. Frey - you are correct about this is a David vs. Goliath.  The banks are too big to fail and without some new legislation in the form of supplements to the Fannie Mae Guidelines/Treasury Directives, nothing is going to chance. 

The Madoff ponzi scheme is minuscule in comparison to what the banksters have created.  And who has been arrested?  No one.  Enron conducted illegal activity.  Those at the top were arrested.  They were prosecuted for white collar crimes.  Why are there no people in jail over this disaster, the largest ponzi scheme in the history of the US?

If this banks continue their unethical and should-be illegal activities, not only will the housing market to continue to plummet, resulting in our economy’s continued out of control downward spiral, the middle class that has been strangled will be gasping for breath when this is over.  If it’s ever over.

Please join the middle class at where we share ideas and information, in an attempt to strengthen the middle class.

Luis: Please heed advice about not going the BK route - you may regret that. Trust me. I did that and I’m still in my home making payments (couldn’t let it go after all these years paying & fixing it up, etc.). Chase will eventually resolve this with you if you don’t give up - every large bank has an official “complaint” department - Administrative Complaints I think they call it. Most of the time the bank’s personnel won’t give you the number but try calling the loan dept. of the bank & pretend you want to speak to a loan officer about a loan - then ask for the admin complaint dept.

If you file BK you’ll probably still be in your home but Chase will stop reporting on your loan & it will “disappear” from your credit report after 7 years although you’ll still be paying for it.

Think first before you do anything. Try the Homeowner’s Hotline (they get a loan mod person on conference call w/you) - # is on website for

Good luck to you & God bless.

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

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