Big Banks Ramp Up Mortgage Mod Program

By Ben Protess

The list of banks joining the Obama administration’s foreclosure relief program is growing—and so is the cost.

So far, the Treasury Department has committed more than $13 billion to 11 loan servicers participating in Making Home Affordable, the administration’s plan to modify mortgages for people on the verge of losing their homes. The servicers include some of the nation’s largest banks, which have already received billions in government bailout bucks.

The program will eventually cost about $75 billion—$50 billion in TARP money and $25 billion from Fannie Mae and Freddie Mac. Although it’s optional for loan servicers to join the program, Treasury Secretary Tim Geithner has said that banks must participate to qualify for government assistance.

Leading the way is JPMorgan Chase, which is expected to eventually receive more than $3.5 billion. That figure is based on the number of Chase borrowers potentially applying for modifications.

“We expect to help 650,000 people avoid foreclosure,” Chase spokesman Tom Kelly told us. Chase started modifying loans under the Obama plan earlier this month, Kelly said.

Two servicers signed up yesterday, both owned by Bank of America: Countrywide received $1.9 billion and BoA’s servicing arm got almost $800 million. And more are on the way. (Servicers have until the end of the year to join. For you loan mod junkies, our bailout site is tracking every servicer participating in the program and what the government is likely to pay them.)