Bloomberg - Obama Requires TARP Recipients To Participate In Home Affordability Plans

[Median Democrat]

I know a lot of folks see things in black and white, but here is a little shade of grey. Originally, only Fannie Mae and Freddie Mac were offering Obama's mortgage refinancing plan for homeowners who were underwater, whose mortgages were about to adjust to a higher rate. Now, lower fixed rate mortgages must also be offered by Bank TARP recipients such as Bank of America.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLshgpdLNkLs&refer=home

/snip

Banks receiving federal aid through the U.S. Troubled Asset Relief Program must also take part in the government’s mortgage modification initiatives, Housing and Urban Development Secretary Shaun Donovan said.

The U.S. is “going to require as a condition of participation in TARP going forward that banks do participate in” the Obama administration’s Making Home Affordable plan, Donovan said in an interview on Bloomberg television today. The requirements would apply only to banks taking new TARP money in the future, not those that have previously taken aid, Melanie Roussell, a HUD spokeswoman, said in an interview.

As of last month, only government-seized mortgage-finance companies Fannie Mae and Freddie Mac were participating in President Barack Obama’s Making Home Affordable program, Pat Lawler, the chief economist of the Federal Housing Finance Agency, told a House committee on March 19. Donovan said today “every indication” is that private banks will participate.

The modifications, which target 3 million to 4 million homeowners facing foreclosure, would require lenders to cut interest rates, extend repayment terms and forbear or forgive principal payments as necessary to reduce homeowners’ monthly payments to a more affordable level. Since Obama announced his plan in February, refinancings have risen 88 percent and mortgage rates have dropped to record lows, Donovan said.

/snip

[empyreanisles]

1. Good move. (eom)

[PBS Poll-435]

2. I don't see this as having any impact at all.

Since it only applies to new TARP relief.

[Median Democrat]

4. Apparently, It Is Already Having An Impact...

I generally assume that if Obama is going through the trouble to push a program, he is not doing so with the intent of failing of looking stupid. That's the other guy who now lives in Texas.

Now is Obama's MHA program a panacea? Of course not. Does it help? Yes, it does help.

http://www.philly.com/inquirer/business/20090319_Survey__Mortgage_servicers_back_Obama_plan.html

/snip

Mortgage servicers who handle more than three-fourths of the nation's home loans intend to participate in the Obama administration's mortgage-modification program, according to a survey by the nonprofit group Acorn.

Many of the largest servicers, including Bank of America Corp. and Wells Fargo & Co., said they had already begun implementing the program, even before the Treasury Department issues contracts that will govern its details, according to the survey.

/snip

[PBS Poll-435]

5. The point is that the new rules are only apply to new TARP assistance

If BoA, Wells Fargo and other large servicers are implementing the program voluntarily, then more power to them.

Bank of America and Wells Fargo have not requested new assistance since the original Treasury Capital Purchase Program last year.

[Median Democrat]

7. Yes, Some Banks May Be Participating Voluntarily. Yes, People Still Benefit

I personally don't really see the downside of voluntary participation so long as homeowners who have onerous adjustable rate loans have an opportunity to refinance their loans. Before the $75 billion was limited to Fannie Mae and Freddie Mac, but now other major banks are participating, which is a good thing in my mind.

If a bank wants to voluntarily participate, I don't see that as a sign that Obama's program is ineffective and lacks impact. Rather, I think it proves the opposite.

[PBS Poll-435]

8. The program is fine. Again, it is the new "mandatory" participation rules

That only exist for future TARP assistance.

[vaberella]

10. Nothing much can be done about the past.

We see that in many instances. As I said in an earlier post, O wasn't in charge...so he's just doing damage control now. I'm actually glad that he's doing this. He can't clean up EVERY mess made, so he's doing what he can in the present hence that I find your argument a bit moot. Why are we talking about past TARP money that had it's own rules and has already been distributed...when O can't change much of those.

[PBS Poll-435]

13. But Treasury has already changed the rules regarding past "TARP" TCPP distributions.

Executives at the strong banks (that didn't even WANT nor NEED TCPP funds) have had their compensation contracts altered beyond recognition.

[vaberella]

9. Uh...Who was President last year?

You talk like this is O's fault and he's been around for years. Bush never had that on the agenda and you and I and most every one with a brain knows he NEVER would have added this provision. So now that O is in presidency any other funding for banks will face these conditions. So I do see it as having an impact and extremely important and I think it was a good move.

Whatever happened last year, was not his fault since he wasn't in office and he can't change what was done from last year...he could just make moves and changes in the present and future to mitigate the Bush damage that was inflicted upon the American people.

[PBS Poll-435]

12. No. Not at all

Rule after rule has been added to the companies that were forced to take TARP (aka TCPP) $$$.

Strong banks like Wells Fargo, US Bank and others have seen craziness forced down their throats.

Now, when Treasury can actually impact "toxic" assets by forcing refinances, we see a weak rule in place that only affects banks that take "TARP" in the future.

[Phx_Dem]

16. Exactly. That's why WF's chairman has been complaining.

This was forced on them and now the Fed keeps changing the rules and shoving new ones down their throat. All the while, not allowing them to repay the TARP money.

How would we like it if the bank that holds our mortgage forced us to accept a $50,000 home equity line of credit, under threats of foreclosure, and then proceeded to act like a homeowners association telling us what kinds of repairs or rennovations we could make on our house, what color we could paint it, and that we could no longer have pets in the house. Would that be fair? Would we be entitled to complain? Hell yes.

We need to separate the healthy banks from the struggling banks. They are not all alike.

Your posts about the bank TARP funds are always spot on.

[Phx_Dem]

15. Actually, I think BofA may have received additional funds.

BofA's problems came about AFTER they bought Merrill Lynch and realized Merrill's balance sheet was much worse off than previously anticipated. It looks like they were requesting more money, but I'm not sure if they actually received any. If they did, Ken Lewis should probably shut his piehole now. He's been one of the biggest complainers. When you're drowning and begging someone to rescue you, you can't bitch at them after they pull your sorry ass into the boat.

Wells Fargo's chairman, Dick Kovacevich, has also been pretty outspoken, but WF neither asked for nor needed government funds so that's a little different.

The Treasury Department is moving to provide Bank of America billions of dollars in additional aid as the bank struggles with mounting losses at Merrill Lynch, which it recently acquired, a person briefed on the talks said Wednesday, The New York Times’s Julie Creswell reports.

It would be the second bank after Citigroup to receive an additional lifeline from the government.

http://www.huffingtonpost.com/2009/01/14/bank-of-america-to-get-bi_n_158034.html

[Pirate Smile]

3. Good.

[Zodiak]

6. This is a good move

A good step towards actually regulating these behemoths.

[Kurt_and_Hunter]

11. Bloomberg - Obama Requires free vaccination Recipients To undergo criminal background checks

The Fanny/Freddie affordability program is a fine thing and it is good to seek private participation.

But the TARP tie-in is a rather cheap stunt.

TARP is supposed to benefit the US financial system, not be a gift-bag for banks.

If it does benefit the entire system--in the way vaccinations benefit everyone including the unvaccinated--then why pin more requirements to it?

If we want to maximize TARP participation this is silly political nonsense.

If we do not want to minimize TARP participation then let's cancel TARP. If it is a favor to the banks, what good is it? If it is supposed to help everyone then why cut off our nose to spite our face?

Considering that the TARP program is almost broke and has been replaced with the legacy assets program and that this applies to new TARP participants, which there probably won't be any of since the current participants are more than able to chew through the remaining 100 billion in the fund, this is a cynical bit of posturing over nothing...

We are getting tough with non-existent parties in largely defunct programs!

[Median Democrat]

14. I See It As Killing Two Birds With One Stone

It is a way of getting banks to lend more AND to start addressing the mortgage issues, which are related. Why give TARP money to banks if they are just going to sit on the funds zombie style? Yes, the bank is kept alive, but society gets no benefit aside from avoiding a complete collapse of the financial system. However, by require TARP banks going forward to participate in the mortgage refinancing programs, it should help both the bank and homeowners. This is why some banks are doing so voluntarily, because it CAN be profitable. So, I think the TARP type is an excellent leverage several programs together to address the related issues of a freeze in credit markets and the mortgage issues.

[ProSense]

18. Exactly!

Why give TARP money to banks if they are just going to sit on the funds zombie style?

Complaining about TARP is one thing, criticizing the government for expecting them to participate in lending programs after they have TARP money is ludicrous.

[girl gone mad]

17. You hit the nail on the head.

And it needs to be said that re-fis are too often NOT the best solution. In many case it is moving borrowers from non-recourse loans to into recourse loans. People need to do what is in their own best financial interest, not take broad advice from the President.

[ProSense]

19. Bloomberg -- Obama doesn't require TARP recipients to do a damn thing.

Idiotic.

[truedelphi]

20. Will people posting about certain ramifications of the

Various proposals ever become aware of the fact that now, with the Bailouts, TARPS, Stims, Toxic Asset Purchases etc reaching a grand total of Twelve Trillion dollars, every single mortgage holder in the entire country might have paid off their mortgage!!

[Political Heretic]

21. Good damage control move on the TARP he inherited.

thumbs up.

[Fire1]

22. As I understand it, the 'modification' aspect has yet to kick in. n/t