Some of the country's biggest lenders are planning to hire at least 7,000 additional people to modify mortgages in a bid to quell government criticism.
Bank of America plans to add another 5,000 employees by the end of the year to structure more lenient loans for struggling homeowners, according to spokesman Rick Simon. Since the end of 2008, Bank of America has tripled its mortgage modification staff to about 30,000.
Many of the new workers will be assigned to several customer-service centers that the firm is rushing to build. The company has about 12 such centers already and plans to cut ribbons on another 28 or so in coming weeks. Specifically, the firm is hiring for centers in Atlanta, Detroit and Houston.
Meanwhile, JPMorgan Chase, another home-loan giant, is on the hunt for an additional 2,000 mortgage modifiers, according to spokesman Tom Kelly. Since the start of 2009, the firm has hired 10,100 new workers to work on mortgage defaults, almost doubling its staff in that area.
Working out more lenient payment schedules for homeowners has helped banks head off a wave of foreclosures, but the efforts have faltered. Of the 1.8 million new loan terms offered under the federal Making Home Affordable program, only about one-third have stuck as permanent modifications, according to a June 9 report from the Treasury Department.
A huge share of struggling homeowners have failed to consistently make payments under the more lenient terms and the masses of new mortgage modifiers have made a rash of mistakes calculating the income of delinquent borrowers.
In the report, the Treasury Department said the efforts of Bank of America, JPMorgan and Wells Fargo needed "substantial" improvement. It also announced that it would stop paying the trio of banks modification subsidies until they streamline their efforts and post a better record of success. The three firms pocketed a collective $24 million in mortgage subsidies last month alone.
The banks took issue with the penalty. Wells Fargo spokeswoman Vickee Adams said the report painted "an unfairly negative picture" of her firm's modification efforts and contradicted previous assessments by the Treasury Department.
Performance aside, there is much work to be done. U.S. lenders have only offered lower payments to about two-thirds of the 2.7 million loans that qualify for the federal modification program.
Write to Kyle Stock