Financial Crisis News Center

Treasury Department Extending TARP to October 2010

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Treasury Secretary Timothy Geithner, in a letter to Congressional leadership, said the administration plans to extend the Troubled Asset Relief Program (TARP) to Oct. 3, 2010, in order to continue to implement programs to address housing markets and small business needs, and to be able to respond to unforeseen threats.

“The recovery of our financial system remains incomplete…near-term shocks to that system could undermine the economic recovery we have seen to date,” the secretary wrote.

Administration Kicks off Mortgage Modification Conversion Drive

This story appeared in Bank Digest.

The Treasury Department and Department of Housing and Urban Development (HUD) kicked off a nationwide campaign to help borrowers who are currently in the trial phase of their modified mortgages under the Obama Administration's Home Affordable Modification Program (HAMP) convert to permanent modifications. The modification program, which has helped over 650,000 borrowers, is part of the Administration's broader commitment to stabilize housing markets and to provide relief to struggling homeowners and is a primary focus of financial stability efforts moving forward. Roughly 375,000 of the borrowers who have begun trial modifications since the start of the program are scheduled to convert to permanent modifications by the end of the year.

“We are encouraged by the pace at which trial modifications are now being made to provide immediate savings to struggling homeowners,” said the new Chief of Treasury's Homeownership Preservation Office (HPO), Phyllis Caldwell. “We now must refocus our efforts on the conversion phase to ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones.”

Mortgage Servicers Chided for Slow Pace of Permanent Modifications

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Mortgage servicers have not done enough to help homeowners permanently modify their loans, and will “suffer consequences” if they fail to meet their obligations under the Home Affordable Modification Program (HAMP), Treasury Department Assistant Secretary Michael Barr said November 30.

In a conference call with reporters Barr said the Treasury plans to meet with top mortgage servicers in Washington D.C. next week to “reinforce the message.”

GSE Loan Modifications Continue to Grow

This story appeared in Bank Digest.

FHFA Acting Director Edward J. DeMarco has released the monthly Foreclosure Prevention Report, which provides comprehensive monthly data on the loss mitigation efforts of Fannie Mae and Freddie Mac as well as information on delinquencies, foreclosures initiated and foreclosures completed. Fannie Mae and Freddie Mac completed nearly 32,000 home retention actions in August 2009, a 32 percent increase from July. Also, trial mortgage loan modifications under the Administration's Home Affordable Modification Program increased nearly 30 percent from September to October 2009.

Administration Urges Congress to Approve Housing Measures

This story appeared in Bank Digest.

Treasury Secretary Tim Geithner and Housing and Urban Development Secretary Shaun Donovan have called on Congress to approve three measures to improve housing and the housing market for Americans: extension of the First Time Homebuyers Tax Credit for a limited period; extension of higher loan limits for home mortgages; and secure funding for the Housing Trust Fund. The administration supports a limited extension of the First Time Homebuyers Tax Credit, which currently is set to expire on Dec. 1, 2009; a one-year extension of the current loan limits for the Federal Housing Administration, Fannie Mae, and Freddie Mac; and $1 billion in funding for the Housing Trust Fund. House Financial Services Committee Chairman Barney Frank, D-Mass., has supported the White House call to action, calling the Trust Fund socially and economically necessary and saying that higher GSE loan limits are needed to address market differences.

GSE Loan Modifications Increase More Than 40 Percent

This story appeared in Bank Digest.

According the Federal Housing Finance Agency’s latest Foreclosure Prevention Report, Fannie Mae and Freddie Mac's trial mortgage loan modifications under the Administration's Home Affordable Modification Program (HAMP) were up more than 40 percent in September 2009 from the previous month. Completed loan modifications are also expected to increase when borrowers successfully complete the three-month trial period and provide required documentation.

Housing Finance Agencies Gain Help under Administration Initiative

This story appeared in Bank Digest.

As part of its plan to stabilize the U.S. housing market, the Obama Administration announced a new initiative for state and local housing finance agencies (HFAs) intended to help support low mortgage rates and expand resources for low and middle income borrowers to purchase or rent homes that are affordable over the long term. “This initiative is critical to helping working families maintain access to affordable rental housing and homeownership in tough economic times,” said Treasury Secretary Tim Geithner.

The initiative has two parts—a new bond purchase program to support new lending by HFAs and a temporary credit and liquidity program to improve the access of HFAs to liquidity for outstanding HFA bonds. The initiative is expected to provide hundreds of thousands of affordable mortgages for working families and enable the development and rehabilitation of tens of thousands of affordable rental properties.

Monthly Servicer Performance Report Issued

This story appeared in Bank Digest.

The Treasury Department has released the latest Making Home Affordable Program Servicer Performance Report, which provides a transparent and public accounting of individual servicer performance. The report provides: the number of trial modification offers extended; the number of trial modifications underway; the number of official modifications offered; and the long-term success of modifications. The agency noted that the program had reached a milestone of 500,000 modifications nearly one month ahead of schedule.

TG-315 at http://www.ustreas.gov/press/releases/tg315.htm

Making Home Affordable Program Report http://www.treas.gov/press/releases/docs/MHA%20Public%20100809%20Final.pdf

GSEs Implement HAMP During Second Quarter

This story appeared in Bank Digest.

The Federal Housing Finance Agency has released its second quarter “Foreclosure Prevention Report,” which shows that trial loan modifications under the Obama Administration's Home Affordable Modification Program (HAMP) announced in March 2009 are rising steadily. The FHFA report details the actions Fannie Mae and Freddie Mac have taken to prevent foreclosures and keep people in their homes. For the first time the report includes trial modification volumes from the HAMP. The data were released by FHFA Acting Director Edward DeMarco as part of the report for the second quarter of 2009, which now includes cumulative data from HAMP.

FDIC Alerts Banks to Tenant Protection Act

This story appeared in Bank Digest.

The FDIC has published highlights of the “Protecting Tenants at Foreclosure Act of 2009,” which became effective on May 20, 2009. The law is intended to protect tenants from immediate eviction by persons or entities that become owners of residential property through foreclosure and extends additional protections for tenants with U.S. Department of Housing and Urban Development Section 8 vouchers. It establishes a minimum time period that a tenant can remain in a foreclosed property before being evicted. Tenants must be given at least 90 days notice; tenants with leases must be permitted to remain until the end of the lease, except that a lease can be terminated with 90 days notice by a purchaser who intends to occupy the property.