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Watchdog says Bank of America, JPMorgan have most mortgage complaints under TARP

A report Wednesday by a federal watchdog singles out Bank of America and JPMorgan Chase & Co. as receiving the most complaints from struggling homeowners participating in housing programs created under the financial-system bailout.

The two banks are among the largest mortgage servicers under the Troubled Asset Relief Program, according to the report by TARP’s special inspector general. TARP is the name for the $700 billion federal bailout created in 2008 in response to the mortgage meltdown. The Home Affordable Modification Program, designed to help homeowners avoid foreclosure by modifying their mortgages to more affordable payments, is among TARP’s housing programs.

According to the report, borrowers serviced by Bank of America and JPMorgan under the TARP-related housing programs complain about lack of communication and misplaced application documents. Borrowers have also complained about trial modification problems, among other issues, in calls to the inspector general’s hotline.

Other servicers are not generating the same volume of complaints about those issues, the report says.

Charlotte-based Bank of America declined to comment on the complaints, saying the inspector general’s report lacked supporting data. New York-based JPMorgan noted that it received 113 complaints out of 145,000 permanent HAMP modifications.

The report calls on the U.S. Treasury Department to “move more aggressively to improve servicer performance” under TARP programs. The Treasury’s Office of Financial Stability manages TARP.

The report underscores complaints about big-bank mortgage servicing that have continued even after a national legal settlement attempted to put them to an end.

Bank of America and JPMorgan were among five mortgage servicers included in the $25 billion national legal settlement announced in 2012.

The settlement required banks to comply with a slate of more than 300 rules governing everything from how banks should reach out to delinquent borrowers to how many days a borrower has to submit a refinance application. They were intended to give homeowners more ability to work with their bank and avoid foreclosure.

Even after the new rules were required to be in place, a watchdog overseeing the settlement received thousands of complaints from homeowners who said they were still having trouble working with their bank.

Both banks failed tests last year that were designed to see whether they were effectively servicing delinquent mortgages.

In December, the settlement’s watchdog, former N.C. Banking Commissioner Joseph Smith, said Bank of America and San Francisco’s Wells Fargo were changing some of their practices to comply with the settlement’s terms.

Bank of America repaid its $45 billion in bailout funds under TARP in 2009.

Roberts: 704-358-5248; Twitter: @DeonERoberts
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