U.S. To Fine Mortgage Banks

The Huffington Post reports:

WASHINGTON -- The Treasury Department will temporarily withhold payments to the nation's three largest mortgage companies for failing to comply with the Obama administration's signature foreclosure-prevention effort, perhaps finally making good on a 19-month-old threat, officials announced Thursday.

Bank of America, Wells Fargo and JPMorgan Chase, which collectively service about half of all home loans, abused homeowners and violated the rules of the Making Home Affordable (MHA) program, Treasury said. The initiative aims to lower monthly payments, reduce loan balances or enable distressed borrowers to sell their homes before they're seized by awarding a series of incentive payments to banks, investors and homeowners when foreclosures are averted. Treasury is only withholding pay to the three banks.

The three were found to need "substantial improvement," the agency said in a statement. Cumulatively, they received $24 million in government incentive payments last month. Last quarter, the three financial behemoths collectively reported about $11.4 billion in net income. (Another firm came in for criticism, but it was spared the momentary financial penalty because its results were skewed due to an acquisition.)

The remaining six of the 10 largest mortgage companies that were audited were found to need "moderate improvement." None passed with flying colors.