The mortgage servicers accused of abusing mortgage borrowers are the ones receiving much of the billions of dollars allocated to the Obama administration’s Making Home Affordable Program, which aimed to help Americans keep their houses from becoming foreclosed houses, according to a study made by Associated Press.

AP said also that the federal government has to work with mortgage servicers despite their blemished records in treating borrowers because they stand as the only connection between mortgage lenders and borrowers.

Mortgage servicers are entities that collect monthly loan payments from borrowers and then distribute collections to the lenders or investors holding the mortgages.

According to the AP, the servicers are the ones in the best position to restructure distressed home loans under the federal government’s $50 billion home loan reduction program and they are also rewarded for their service.

Despite their role in the Home Affordable Modification Program, the AP found that more than 30 mortgage servicers have been sued for systematically charging illegal fees and harassing borrowers. Recently, they are again accused of hindering efforts to modify loans, increasing the fees they earn while delaying the delivery of help to borrowers.

Even the biggest names in the mortgage servicing industry, like Bank of America, JPMorgan Chase, Wells Fargo and Citigroup, have been sued for mortgage lending and servicing abuses and some of them have made settlement agreements with entities that represent homeowners. They are also being rewarded for every loan modification they work out.

Meanwhile, the smaller players which are now servicing the majority of subprime loans and holding volumes of delinquent loans have been sued for worse accusations.

The biggest abuse lawsuit pursued against a mortgage servicing company was the suit brought by the Federal Trade Commission and the Department of Housing and Urban Development against Select Portfolio Servicing. The servicer was accused of charging illegal fees, including costs for insurance not needed by borrowers.

Select Portfolio settled in 2003 and paid $55 million, but now it can receive up to $660 million for working out loans under HAMP.

According to AP, more than 30 servicers are facing lawsuits accusing them of charging illegal fees, engaging in illegal loan collection practices and prematurely foreclosing on houses.

More than 14 have been sued for misleading borrowers about HAMP, leading to more foreclosures. At least 3 of the servicers have settled predatory collection accusations and promised to stop any illegal practice, but they are still being sued for the same accusations.