Fannie’s turn: loses *another* $13b in Q1 asks for *another* $8.5b from Treasury, has now lost $136.8B and taken $75b in aid…
Update: here is that quote, it is courtesy of Calculated Risk:
…Greg Morcroft at MarketWatch reports:
Fannie sees no profits for the “indefinite future” … financial sustainability uncertain….
They aren’t even TRYING to make it look good anymore…one highlight in the WSJ said they do not see any chance of being profitable in the near term, pfft, Should’ve done the damn HOLC.
…the mortgage-finance company operating under federal conservatorship, said it will seek $8.4 billion in aid from the U.S. Treasury Department after reporting its 11th-straight quarterly loss.
The company said it had an $11.5 billion first-quarter loss in a filing today with the Securities and Exchange Commission. Washington-based Fannie Mae had posted $136.8 billion in losses over the previous 10 quarters and taken more than $75 billion in U.S. aid since April 2009….
The aimless squandering of money in the Obama Housing ‘Plan’ continues apace. 17,000 people will get help from $154.5 million in federal funds. There has to be a better way. This throwing money at the wall is bleeding us dry.
…More than 17,000 Michigan households will share in $154.5 million in federal funds targeted at keeping unemployed and underwater borrowers in their homes, according to a plan announced Wednesday.
Michigan housing officials filed their plan for the federal funds two days before the deadline set by the U.S. Department of Treasury. Once the Treasury Department approves the plan, funds would be available to struggling homeowners in the summer. Homeowners would have to go through their servicer to apply, officials said.
Michigan’s plan offers three options for homeowners:
• Mortgage payment assistance for homeowners now receiving unemployment compensation. The state would provide half of the monthly payment up to $750 a month for a maximum of 12 months.
• Rescue funds for homeowners who have fallen behind on their mortgage payments because of a temporary layoff or medical emergency and have overcome this obstacle. The state is to provide up to $5,000 to families in this situation.
• Federal matching funds for principal reductions for homeowners who can no longer afford their mortgage payments as a result of reduced income. This will allow up to a $10,000 principal reduction from the state and matched by the lender….
HOUSING UPDATE – Financial Services Cmte asking for your experiences with JPMorgan Chase ahead of hearing tomorrow…
Update: There is another hearing tomorrow, see today’s hearing here:
April 13th from prepared testimony reads more like a PR show by the banks.
April 14th will be the regulators the National Law Center and those pro HAMP vs The Bankers Assoc and others
Both will be broadcast live
Barriers to Principal Reduction
April 13: House Financial Services Committee
The Recently Announced Revisions to HAMP
April 14: House Financial Services Committee
RE: Congressional Hearing in Washington DC, Tuesday 4/13/10, 10am with the Financial Committee.
Okay peeps, if you have a HAMP experience you would like to relate to the House Fin Svcs Cmte ahead of the hearing tomorrow on HAMP and servicers please contact as follows with your experience:
Just had a phone call from Brendan Woodbury – who is also handling tomorrow’s House Financial Services Committee hearing
He said for me to asap FAX over all I have – I asked him if it would be ok to have others do the same – he said by all means.
FAX ASAP what you have gone through to
Congressman Barney Frank
MARK URGENT – PERTAINS TO FINANCIAL MEETING 4/13/10
FAX to (202) 225-0182
The head of mortgage lending for JP Morgan Chase David Lowman entered testimony suggesting a Quick turn around and assistance for any homeowner trying to stay in their home.
More info here including David Lowman’s prepared testimony (click on the link to his name).
House Financial Services Committee
Any HAMP applicant, after either introducing you to their friend..RALPH!, or laughing deliriously in response, will happily hand over evidence of, in most cases, 15+ months of fruitless attempts to work with the servicers on HAMP.
HAMP is all voluntary. HAMP to date, is extend and pretend to keep homes off the market until the deluded banks think prices will come back. Forecasts suggest 15 YEARS before prices are back in sand states.
In written testimony prepared for a hearing in Washington Tuesday of the House Financial Services Committee, some of the nation’s top mortgage lenders warned of the risks of relying heavily on forgiving principal as a means of averting foreclosures and argued for concentrating mainly on other methods, such as reducing interest rates….
These banks forget TARP, its entire purpose as written was to buy bad home loans and relieve the foreclosure crisis that led to the financial collapse. Instead they got a free ride, FED continues to give them free money, they have rates so low savers are punished, they continue to devalue our dollar so we have less purchasing power, and they won’t fix the damn housing issue which is back with a vengeance.
If they will not work out the loans to resolve the issue, then the House needs to go ahead and do the cram down bill instead, which we have been opposed to until now. The banks need to share the economic pain they brought upon us all.
If we had LET THEM FAIL, they would’ve done write downs themselves to keep afloat. Our interference with TARP let them avoid the principal writedowns to begin with.
One more time – FAN FRED FHA back all these loans anyway, the TAXPAYERS are ALREADY on the hook. Not working through mods quickly with writedowns means walkaways continue apace. They are accelerating and the recent FAN home attitudes survey showed fully 15% of those surveyed agreed it was ok to walk away if facing financial difficulty making payments.
…When asked if financial distress makes stopping payments on an underwater mortgage acceptable, 15 percent of respondents said yes in Fannie Mae’s National Housing Survey, a remarkable level of public acceptance for homeowners who walk away from their mortgages in light of the growing number of defaults in Fannie Mae’s portfolio.
Both delinquent mortgage borrowers and those current on their mortgage payments are more than twice as likely to have seriously considered stopping their payments if they know someone who has already defaulted, according to the survey released today.
Underwater borrowers were more than twice as likely to be behind on their mortgage payments and were more than twice as likely to believe stopping payments was acceptable than borrowers who were not underwater. Only 33 percent of respondents cited their moral qualms as a factor motivating them to pay their mortgage…
Even conservatives are FINALLY accepting HOLC (HomeOwnersLoanCorporation like in Depression)- CATO INSTITUTE!
…The omission of recourse has been a major flaw of the Obama loan modification plans. If the taxpayer is putting something on the table, then borrowers should be expected to do the same. During the Great Depression, FDR recognized as much.
The primary New Deal vehicle for addressing foreclosures was the Home Owners Loan Corporation. The HOLC required recourse and practiced it. In fact, approximately a third of HOLC revenues were from deficiency judgments against delinquent borrowers, including wage garnishment. Perhaps there are some parallels to today, as the HOLC found the second most common reason for foreclosure to be “obstinate refusal to pay.”
FDR recognized that many delinquent borrowers could afford neither their mortgage nor a deficiency judgment; we must recognize the same today. Recourse is not a cure to stop every foreclosure. It is, however, a proven method for reducing some foreclosures…
and now admit it would have been better in 08. Gee who said that? Hillary that’s wh0.
…First, we must address the skyrocketing rates of mortgage defaults and foreclosures that have buffeted the economy and ignited the credit crisis. Two million homeowners carry mortgages worth more than their homes. They hold $3 trillion in mortgage debt. Nearly three million adjustable-rate mortgages are scheduled for a rate increase in the next two years. Another wave of foreclosures looms.I’ve proposed a new Home Owners’ Loan Corporation (HOLC), to launch a national effort to help homeowners refinance their mortgages. The original HOLC, launched in 1933, bought mortgages from failed banks and modified the terms so families could make affordable payments while keeping their homes. The original HOLC returned a profit to the Treasury and saved one million homes. We can save roughly three times that many today. We should also put in place a temporary moratorium on foreclosures and freeze rate hikes in adjustable-rate mortgages. We’ve got to stem the tide of failing mortgages and give the markets time to recover.
Jeebus it took long enough! I remember when my Congress Critter’s staff LAUGHED at me when I suggested just this: that in the 4 states underwater the most they propose a program to help us here (I even used the 20% figure, it is also all over this blog in posts for the past year). And here is just such a program…finally. Let’s hope it can help some people and doesnt get gobbled up by any ACORN like entities..
Millions of homeowners are hanging by a moment like Lifehouse says…
President Barack Obama is expected to announce plans Friday to provide an additional $1.5 billion to a state-assistance program for homeowners worst hit by the downturn in U.S. housing values.
The program, which Mr. Obama will announce in Las Vegas, is for states where the average home value for all homeowners in the state has dropped more than 20% from its value at the height of the housing bubble. Under the formula, five states have home-price declines steep enough to qualify them: Nevada; California; Arizona; Michigan; and Florida…
...The money would be distributed by state and local housing finance agencies, or HFAs, in each state. The $1.5 billion would be allocated according to a formula based on home-price declines and unemployment.
HFAs could use the money in a variety of ways, including unemployed homeowner assistance, mortgage workouts or new home purchase assistance. But the Treasury Department, which would bankroll the program with unused money from the Troubled Asset Relief Program, must approve a state’s plans.
More from Politico:
…The program Obama will announce is intended to help address “urgent problems,” with the specific goal of helping people who are sitting in houses that are worth less than is owed on them, the first senior administration official said.
The five states that are eligible for the funds have all seen a more than 20 percent decline in housing prices, the official said. The official also said the money will not be divided equally among the states but rather allocated based on the state’s price decline and unemployment rate.
And unlike $23 billion that the Federal Reserve recently provided to state housing authorities, states receiving this money are not expected to pay it back, the official said.
Investors ‘walk away’ from $5.4 B Stuyvesant Town purchase, leave taxpayers on the hook (FAN FRED CALPERS)
Yep. Don’t want those pesky regular working class Americans to ‘walk away, jingle mail’ on their underwater homes, but it is fine for Tishman Speyer Properties and BlackRock Realty to walk away leaving taxpayers on the hook. Because this kind of decision is made every day in business, Americans are waking up to the fact that they are the only people attempting to stay while underwater when their contracts allow them to walk away as these investors are doing.
Just like many underwater homeowners, these investors had almost no skin in the game, all free money, our money, FAN FRED and public pension funds who invested with them will be on the hook and you know what that means, taxpayer funded rescue to follow.
The investors bought this property which was originally designed for returning vets to have low cost housing, planning to increase the rents to market rates. The courts put the kaibosh on that and since they cannot make a profit and are now underwater they are walking away.
A group led by Tishman Speyer Properties has decided to give up the sprawling Peter Cooper Village and Stuyvesant Town apartment complex in Manhattan to its creditors in the collapse of one of the most high-profile deals of the real-estate boom.
The decision comes after the venture between Tishman and BlackRock Inc. defaulted on the $4.4 billion debt used to help finance the deal. The venture acquired the 56-building, 11,000-unit property for $5.4 billion in 2006—the most ever paid for a single residential property in the U.S. The venture had been struggling for months to restructure the debt but capitulated facing a massive debt load and a weak New York City economy that has undercut rents and demand for high-priced apartments.
The property’s owners signaled they would be unable to reach a deal with lenders and instead decided to allow creditors to proceed with what amounts to an orderly deed-in-lieu of foreclosure, which means a borrower voluntarily gives the property back to lenders to avoid a foreclosure proceeding.
Meredith Whitney & Jamie Dimon on principal forbearance in the JPMorgan Chase earnings call PLUS Are JPMC, BofA, Citi taking kickbacks for second liens on short sales?! & HAMP/MHA assisted a whopping 7% of those eligible last year..
Update: Short Sale Kickback video added
In other great news, Diana Olick is breaking a HUGE story now on CNBC that the big servicers, JPMorgan Chase, Bank of America and Citi have demanded off-HUD, off ClosingStmt payments to release second liens they hold in short sales (against RESPA law).
Treasury told Diana they were unaware of this and will look into it. Good grief. and they wonder why the servicers dont want to do mods? THEY ARE GETTING KICKBACKS ON SHORT SALES! Plus they get an INCENTIVE PAYMENT to do short sales from Treasury (we the taxpayers) now. My Lord this is unreal.
Again this is the fault of the WH and Treasury. Treasury actually RAISED the cap on the ‘incentive fees’ the servicers can earn by doing their damn job as servicers today to 35 billion. Banks will do exactly what they can and no more. Sheila Bair at FDIC is the only one moving on principal forbearance, as usual she is ahead of the curve.
Plus the AP isn’t buying the BS spin anymore in its reporting of the much vaunted numbers Treasury is spinning today on their newly permanent mods (which they told the servicers to waive documentation for to achieve, the only thing the trial mods can be disqualified for now is ‘property’ disqualification, nice eh?):
The Obama administration’s mortgage relief plan provided help to only 7 percent of borrowers who signed up last year, another black mark for the struggling program.
Ouch that’ll leave a mark.
About 900,000 borrowers have enrolled in the $75 billion program since it launched in March, the Treasury Department said Friday. But as of last month, only about 66,500 homeowners had received permanent relief. Another 46,000 have been approved and should be finalized soon.The plan aims to make borrowers’ mortgages more affordable by reducing the mortgage interest rate to as low as 2 percent. They receive temporary modifications, which are supposed to become permanent after borrowers make three payments on time and complete necessary paperwork, including proof of income and a letter explaining the reason for their financial hardship.
The Treasury Department is pressing the 102 mortgage companies that are participating in the program to do a better job….
This is a great back and forth. I think we can confirm Treasury is doing exactly JACK SHXT about meaningful mods after hearing this discussion, so much for Obama being tough on those fat cats:
Here is an exchange between Meredith Whitney and Jamie Dimon on the JPMorgan conference call this morning (ht Brian):
Whitney: [W]e’re reaching a critical point in terms of all of the loan modification efforts and this is an industry question but then how it specifically affects your Company, given the fact that the industry feedback and statistics on the loan modification efforts are not good, so you question what’s the next initiative and the issue of principal forbearance. How much momentum do you think that has, can you comment on what stage we are in terms of obviously the extension ends [soon] with the last slug is over in February, so where do you think we are in terms of the government’s efforts to influence banks to do certain things?
Dimon: Well remember we do modifications of our own and we do the government modifications and I do think they’re kind of new, it was complex, and I think people will get better at it over time, Meredith. We have not thought of a better way to do it than loan by loan, which is does the person want to live there, can they afford to live there, and we really think that the payment, how much you’re paying is more important than principal. Even if you are going to do something on principal, to do it right you have to do it loan by loan and it effectively comes a similar kind of thing. The difficulty is the loan by loan part and we’ve asked the government and I think they tried to streamline a little bit to have programs because there’s too much paperwork involved in it so a lot of the reasons we’re not getting to final modifications half the time we don’t finish the paperwork, so they need the lower payments but they weren’t finishing the paperwork so we’re trying to get better at it, honestly, we rack our brains to figure out if there’s a better way to do it and you can do it more macro than loan by loan but once you start talking about macro, you’re going to get involved in a lot of issues about whether the people live there, whether they have the ability to pay, whether they were honest when they first told people how much their incomes were, so we’re working through it.
Whitney: Okay, do you get a sense that there’s something right behind HAMP, that there’s another solution for the government or is it more your efforts?
Dimon: We’re trying to do this, look, we’re trying to have ideas and they are trying to have ideas but if we had a brilliant one we would be very supportive of doing it. We want to do the right thing for the people.
Whitney: Okay, so a point of clarification on your answer, issue of principal forbearance is not something that people should be overly concerned about with respect to reserves and capital for the bank?
Dimon: No, I think if there’s a macro government force on something like that you could have a fairly significant effect on loan loss reserves and losses, etc.
Whitney: But is that a real, any momentum?
Dimon: Honestly Meredith you probably know as well as we do.
Whitney: I don’t know. I can’t help myself on that one.
Neither can we!
Housing: FINALLY! Some data on the trial mods! Treasury reports more than 27% of homeowners in trial modification are delinquent…
They were forced to answer the inquiry on status of the 600,000+ trial mods finally, and it ain’t good. Not good at all. What IS good is that we are getting some data. Just last week HUD Treasury was claiming no one was late on these payments. On tv in fact, in an interview with Diana Olick which we posted here.
The real shxtstorm is gonna hit us when FANNIE and FHA run out of money. Their book is over 3 TRILLION at FAN alone now and their delinquency rate is EXPLODING. A month after saying they Absolutely Positively did not need a bailout, the FHA is raising it’s premiums, cuz guess what? They need a frakkin bailout…
When will these fools stop trying everything BUT the damned HOLC!!!?!? AARRRGLE! This Admin is so frakking enamored of everything ELSE FDR did why not this? Oh yeah HRC suggested it in 2007 and 2008, thus Obama won’t do it. Frakkers. Their next ingenius plan will be the HEMAP model so taxpayers can LOAN homeowners their mortgage payments. Again padding servicers pockets and not addressing the underlying issue. Via FAN FRED we OWN THE DAMNED HOUSES ALREADY!! Why not buy them outright under HOLC and cut a deal with the homeowners directly with the government. It would be less ongoing intervention and cost less dammit. This is yet ANOTHER example of an actual CRISIS that Team Obama has FAILED to address successfully, while they focus all their attention on health care, housing is falling off a cliff and it WILL drag the entire economy down with it…again.
More than one-quarter of homeowners receiving help under a U.S. government foreclosure prevention plan are behind on their new mortgage payments, a Treasury Department survey has found. Some 650,000 borrowers are participating in the trial phase of the Obama administration’s Home Affordable Modification Program, a $75 billion taxpayer-financed program launched this year….
…A Treasury Department survey of large mortgage servicers found “over 73 percent of borrowers are current in their trial plan payments,” Assistant Treasury Secretary Herbert Allison told a congressional oversight panel.
That leaves about 27 percent who are delinquent on the payments.
Allison provided written answers to questions raised at an October hearing before the Congressional Oversight Panel, which monitors the government’s foreclosure prevention plan and other financial rescue efforts.
Allison said that “while not all eligible borrowers will convert to permanent modifications, it is too early to estimate a failure rate, diagnose causes and predict future success rates.”
Let me give them a hand. The diagnosis of the underlying cause is UNEMPLOYMENT. The failure rate is TOO LARGE. The future success rate will FALL as UE rises. DO THE DAMNED HOLC! (Read HRC WSJ OPED on the HOLC from September 24, 2008 at link)
Experts say the conversion rate to permanent loans is the key to determining the program’s ultimate success or failure.
The Treasury has not published figures on how many trial loan modifications have been made permanent, but it said it will start doing so this month.
The next monthly report on the program will be released next week, Treasury Department spokeswoman Meg Reilly said.
This week Treasury officials threatened to fine mortgage lenders unless they speed efforts to give hard-pressed homeowners a permanent break on monthly payments….
Update: Whoomp there it is, regular Karnak we are. WSJ has it:
Fannie and Freddie together have required capital injections from the Treasury of $112 billion since the government took them over through conservatorship last year. Their need for government support would have been greater without collecting on claims from mortgage-insurance companies. Fannie and Freddie have received payouts of $2.3 billion and $658 million, respectively, from mortgage insurers through September this year.
But as conditions for mortgage insurers deteriorate, Fannie and Freddie have warned that their claims against the insurers may not be paid in full. Fannie set aside $1 billion in loss reserves to cover the possibility that mortgage-insurance companies won’t be able to pay full claims, the company said in a Securities and Exchange Commission filing.
Freddie hasn’t set aside reserves but warned in an SEC filing that “several” of its insurers are “at risk of falling out of compliance with regulatory capital requirements, which may result in regulatory actions that could threaten our ability to receive future claims payments, and negatively impact our access to mortgage insurance for high [loan-to-value] loans.”
Ever since the mortgage crisis erupted two years ago, there have been concerns about the ability of mortgage-insurance companies to pay claims on all policies. In recent weeks, the concerns have taken on added significance as mortgage defaults continue to accelerate far beyond the subprime market into the broader prime market….