Bank of America Blames Customers for HAMP Problems

Bank of America (BAC) has a crummy record of helping homeowners revise their mortgages, which would help stem the tide of foreclosures sweeping across the U.S. Of the company's roughly 158,000 customers who have started a "trial modification" under the federal Home Affordable Modification Program, only 58 have been able to get their mortgages permanently changed.

Why the microscopic batting average? Here's B of A's alibi: It's got crummy customers. The company says that more of its borrowers are ineligible for HAMP than other banks' clientele. Another excuse is that many B of A customers are no good at paperwork.

Of course, if so many B of A patrons are feckless deadbeats, it raises the question of how they got a loan in the first place. But never mind all that -- logic should never interfere with the buck being passed.

Only in August, B of A home loans division president Barbara Desoer sounded more conciliatory in conceding that the company was partly to blame for its sluggish work with homeowners. B of A "must improve our processes for reaching those in need," she noted.

At risk of repeating myself, let me repeat myself. This has nothing to do with B of A's customers or its customer service. Banks don't want to modify mortgages because it doesn't pay, as the Federal Reserve Bank of Boston explained earlier this year. The bottom line is that mortgage servicers lose less money in foreclosing on a home than from cutting interest rates on a loan or adjusting the principal.

Until those financial incentives change, HAMP will continue to disappoint, and ailing homeowners will continue to ail.