The Treasury Department has instructed three of the nation’s largest mortgage servicers to make changes to the way they solicit distressed borrowers for the government’s loan modification program and evaluate applicants for eligibility.

In Treasury’s latest report card on the Home Affordable Modification Program (HAMP), JPMorgan Chase, Wells Fargo, and Bank of America were called out by name as receiving sub-par grades in complying with the program’s guidelines for reaching out to delinquent borrowers and considering them for a HAMP modification.

As the compliance agent for HAMP, Freddie Mac conducts what the Treasury calls “Second Look” reviews of loan files on homeowners that were not solicited or evaluated for HAMP modifications to ensure that the servicer’s actions were appropriate.

If Freddie disagrees with the end result, Treasury says servicers are required to reevaluate loans not offered HAMP modifications, submit additional supporting documentation, clarify the status of the loan, or remedy their processes and provide additional staff training.

According to Treasury, if Freddie “disagrees with the disposition of a loan or is unable to determine if the loan was evaluated properly, servicers are reminded to continue forestalling foreclosure of the loan until these items are resolved,” and suspend foreclosure sales on loans where results are under review.

“Non-compliance rates for both Wells Fargo and JPMorgan Chase were above the average and resulted in requiring the servicers to make changes to their solicitation and eligibility processes,” Treasury said in the report, adding that further evaluations have been conducted to ensure the companies are making the mandated changes.

In its Second Look reviews of loans sampled from seven selected servicers during the first quarter, Freddie determined that an average of 4.8 percent of the cases were evaluated incorrectly.

Both JPMorgan and Wells “incorrect” numbers came in above the 10 percent mark.

The most recent “Second Look” evaluations do not include results from Bank of America, but other compliance issues have been identified at BofA, the report stated.

“Other compliance activities were conducted [at BofA] in this time period that include the same processes (e.g. solicitation, eligibility). Those activities identified required changes to Bank of America’s solicitation and eligibility processes,” according to Treasury.

All three companies have said they are in the process of implementing or have already made the necessary adjustments to satisfy Treasury’s directive.

But the report is fodder for the fire for those critics who say the large servicers are circumventing clear HAMP guidelines and mishandling homeowners who need their assistance to avoid foreclosure.