Obama Administration Blames Lenders For Program Failure

lenders are blamed for failure

Three major US mortgage lenders were blamed by the Obama administration for the foreclosure prevention program failures. Following the report, little assistance was provided by the banks to help people occurred at risk of losing their homes.

The Treasury Department stated that JPMorgan Chase & Co., Bank of America and Wells Fargo have got $24 million for the program from the government last month, however, they have failed to assist people in lowering their mortgage payments so that they can stay in their homes. Therefore, the government has removed the financial incentives provided to banks which amounted to nearly $1,000 for permanent loan modification.

According to the Treasury statement, people got ineligible for the program because the lenders determined the issue incorrectly.

Program Is Aimed To Help Homeowners

Being launched in 2009, the program was aimed to assist people who turned out to be at risk of foreclosure by means of lowering the monthly payments on the mortgage cash advance loans which were started by the borrowers on a trial basis. However, the program has struggled to convert the homeowners into the permanent loan modification. The homeowners consider that this program was a bureaucratic mess and the banks say that most people have just failed to submit the necessary paperwork.

The homeowners qualifying for the program get 2% interest rates for five years and the repayment period is extended. The Treasury Department stated that the lenders just lacked the necessary resources and staff to assist homeowners looking for the lower payments on mortgages when the program started.

The banks can’t be fined for the program failure as they are not obligated to participate in it, but still they can be publicly shamed by the administration at a time when foreclosures reached the record levels.