Wells Fargo & Company (WFC) and Bank of America Corporation (BAC) showed impressive improvements in their loan-modification rates in August 2009 after experiencing poor rates in July 2009. 

However, both Wells Fargo and Bank of America still remain way behind their competitors such as JP Morgan Chase & Co. (JPM), but both have ramped up refinancing efforts significantly. 

Wells loan-modification rates increased 64%, completing 33,172 modifications under the Home Affordable Modification Program (HAMP) by the end of August. On the other hand, Bank of America more than doubled its loan-modification rates, completing 59,891 modifications. HAMP is a Government-sponsored program that aims at helping people who can no longer afford to make their monthly mortgage payments. 

Wells Fargo expects to exceed its goal under the program, which is about 60,000 modifications. The company has modified 251,244 home loans using its own programs, bringing the total number of modifications or trial modifications started or completed year-to-date to 284,416. 

Bank of America extended offers to 15% of borrowers that were eligible for HAMP. Wells Fargo extended offers to 25% and assisted 12%. Wachovia offered to help 3% of its eligible mortgages, and began to modify 2%. JP Morgan continues to top loan-modification program as it has offered to help 33% of borrowers and completed modifications for 25% whereas Citigroup Inc. (C) extended offers to 31% and helped 23%. 

These companies are striving hard to work out troubled loans because it helps them as well as taxpayers, customers and investors as foreclosures bring losses to all of them. 

However, despite the improvements in the modification rates and the upsurge of refinancing activity across the country, concerns regarding the rising tide of delinquencies, defaults and foreclosures have not yet alleviated. Fitch Ratings released a report this week citing more danger from a large amount of risky mortgages called Option-ARMs, that are about to reset at higher rates. 

Furthermore, Standard & Poor’s (S&P) warned that credit card losses will escalate again as the economy continues to shed thousands of jobs every month with the unemployment rate at a 26-year high of 9.7% in August 2009. S&P expects credit card loss rates to rise to a range of 10.5% to 13% based on its assumption that the unemployment rate would rise to the range of 10.4% to 12.7% and will remain in that range for the next 1–2 years.
Read the full analyst report on “WFC”
Read the full analyst report on “BAC”
Read the full analyst report on “C”
Read the full analyst report on “JPM”
Zacks Investment Research