Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Economic News

Treasury to stop withholding funds from Chase, Bank of America

Banks have been penalized by the U.S. Treasury Department for not serving the consumer and failing to permanently modify loans as they have been receiving incentives for doing. The funds are no longer restricted, and Uncle Sam says the banks have a long way to go.

Lifting a hold on funds

The U.S. Treasury Department has said it will release $81.8 million to Bank of America and $89.1 million to JPMorgan Chase after withholding the funds from the banks because of their poor performance in government-backed mortgage modification programs. The funds were withheld from June 2011 to February 2012 and when finalized, the funds will be released to the banks.

The release is part of the $25 billion mortgage settlement between 49 states attorneys and the largest American mortgage servicers. The Treasury said in a statement that Chase and Bank of America will receive funds due to their improvement in the fourth quarter, yet the two need “moderate improvement,” in order to comply with the guidelines set forth in the government programs.

For nearly the last year, the Treasury Department has been monitoring the top ten largest mortgage servicers to insure they are in compliance with the guidelines of the initiatives the Obama Administration created to help keep homeowners in their home by modifying existing loans. The incentives were not withheld from other banks to make these modifications, and less than 60 days ago, the Treasury threatened Chase with permanent withholding of funds if they could not improve and serve the consumer.

Why funds were withheld

Take for example the $75 billion taxpayer funded Home Affordable Modification Program (HAMP) which has been criticized as a failure after two and a half years – with millions applying for a trial mortgage modification and being declined, and while 1.8 million trials were granted, only 43 percent were permanently granted. Consumer treatment by the servicers has taken heat from both sides of the aisle for failing to help most of the homeowners that the program was designed to rescue which is ultimately why incentives for participating in the programs were withheld.

Advertisement. Scroll to continue reading.

There was a recent acceleration in permanent modifications granted through HAMP due to “improved technology” allowing banks to process more effectively, but the White House will continue to be under scrutiny, given that the goal of HAMP alone was to help five million troubled homeowners prior to the program’s extension granted in 2010.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.


Leave a Reply

Your email address will not be published. Required fields are marked *


American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.



Business News

(FINANCE) An anti-trust lawsuit against major players in the residential real estate industry sheds light on misinformation and misunderstandings about commissions - when you're...

Business Marketing

(MARKETING) Opcity is the Austin startup making big changes to the ways that lead generation happens in real estate.

Business News

(REAL ESTATE NEWS) NAR CEO Dale Stinton is set to retire after his successor is named. Stinton is known for his steady leadership and...


When looking to buy a home, taking the long view is important before making such a huge investment - where are the best places...

The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.