Banks that are failing to help struggling American homeowners refinance their mortgages are being named and shamed by the US Treasury.
A new league table shows that the beleaguered Bank of America is among the worst performers, so far having restructured home loans for just 4 per cent of the borrowers eligible under a government bailout scheme. BofA is the recipient of $45bn (£27bn) in taxpayer financing because of losses it sustained during the credit crisis.
By contrast, JPMorgan Chase, which has already paid back the government funds it received during last year's financial panic, is helping 20 per cent of the borrowers on its books.
The publication of the Treasury's league table is designed to put public pressure on banks that are falling behind the average, which is 9 per cent of eligible borrowers so far.
In February, the Treasury unveiled a housing rescue plan intended to lower monthly mortgage costs for struggling borrowers. The scheme doles out incentives to the mortgage service companies that collect monthly checks from borrowers and act as caretakers for the Wall Street investor or bank behind a loan.
Some mortgage companies are falling flat and must speed up their assistance, the Treasury insisted yesterday. "It's safe to say we're disappointed in the performance of some of the servicers," Michael Barr, assistant secretary for financial institutions, said. "We expect them to do more."
By November officials hope to see 500,000 home loans modified under the rescue terms, Mr Barr said, adding that over 200,000 troubled borrowers have already seen their monthly mortgage payments lowered under the plan.
By providing government subsidies to mortgage firms to help borrowers stay in their homes, the Treasury is hoping to slow down the numbers of foreclosures. As well as the human misery caused by soaring repossessions, the glut of foreclosed homes coming on the market has depressed home prices and caused a chain reaction of financial losses for banks and other investors in mortgage-related securities.
Economists say that tackling the housing market is one important key to restoring the stability of the financial system and ending the economic downturn.Reuse content