No bailout for you!

After taking billions in federal bailout money, large banks should find it in their alleged hearts to modify more mortgages for struggling homeowners.

But the Obama administration’s first report on mortgage modifications shows that many lenders are performing dismally on this front. From February through July, only 9 percent of eligible homeowners were accepted for trial programs.

Two major banks, Bank of America and Wells Fargo, were among the worst at helping homeowners lower their mortgage payments. That’s especially arrogant behavior, because these lenders received $45 billion and $25 billion, respectively, from taxpayers in the bailout.

Bank of America was servicing nearly 800,000 mortgages that were thought to be at least 60 days late on payments, thus making them eligible for lower rates. But BofA offered loan modifications to just 13 percent of those eligible, and began trial programs with just 4 percent.

Wells Fargo extended offers to only 12 percent of the 329,000 mortgages eligible. It accepted only 6 percent for trial loan modifications. Wachovia Corp., taken over by Wells Fargo in December, modified only 2 percent of loans.

CitiMortgage, whose parent, Citibank, received $45 billion from taxpayers, did slightly better. It provided modifications to 15 percent of eligible homeowners.

Ten lenders out of the 38 participating in the voluntary program had not changed a single mortgage.
J.P. Morgan Chase, the nation’s strongest bank, offered help to one in three homeowners and accepted about 20 percent into trial programs.

Bank of America and Wells Fargo said they are doing much outside the Obama administration’s Making Home Affordable program. But banks’ definition of loan modification includes merely allowing late payments, which doesn’t provide homeowners with permanent, long-term help.

The Obama administration must share some of the blame, too. It was slow to get the program under way this spring, and updated the guidelines last month.

Lenders have an obligation to do better, especially because unemployment remains high. Only 15 percent of the 2.7 million families eligible for help have been offered it, and the foreclosure problem persists.

In June, about 254,000 foreclosures were begun. About 1.5 million homeowners received foreclosure notices in the first six months of this year.

If lenders are unwilling to do more, it will only fuel the call for Congress to step in and give bankruptcy judges the authority to rework mortgages. That should be enough incentive for banks to open up more often to homeowners trying to keep their heads above water.