Housing Update: It begins – BofA announces principal reduction program…

Update 3: Ahhh BofA was facing the MASS AG Suit when they found religion. This is limited to the worst products in the Countrywide portfolio:

…The bank’s program is limited to Countrywide borrowers whose loan balance is at least 120% of the estimated home value, who are at least 60 days overdue, and who can show that financial hardship makes them unable to meet current payments. The bank estimated that 45,000 customers will qualify for principal reductions averaging more than $60,000.

Only the riskiest loans will be eligible. They include subprime loans; “option adjustable-rate” mortgages entailing minimal payments now but big increases later; and certain loans that have a fixed rate for two years and then adjust annually.

The bank’s move is part of an agreement to settle claims over certain high-risk loans made by Countrywide Financial, which the bank acquired in mid-2008. The Massachusetts Attorney General’s office, which was negotiating with the bank, said it was prepared to file suit had the agreement not included principal reductions….

Update 2: Some details from Reuters by way of CalculatedRisk:

From Reuters: BofA to start reducing mortgage principal-sources

Bank of America will … announce plans to start forgiving mortgage loan principal for troubled homeowners who owe more than 120 percent of their home’s value or are battling ever-expanding “negative amortization” loans.

According to a summary of the program obtained by Reuters, Bank of America pledged to offer an “earned principal forgiveness” of up to 30 percent in two stages. The lender will first offer an interest-free forbearance of principal that the homeowner can turn into forgiven principal annually over five years, provided they stay current on their payments….

Update: In an amazing coinkydink the IG just issued a report ripping the Obama Housing Plan to shreds just as these ‘voluntary’ principal reduction programs are announced, heh:

A government watchdog agency criticized the Obama administration’s $50 billion campaign to avert foreclosures by reducing mortgage payments for millions of distressed borrowers.

A report by the inspector general of the federal Troubled Asset Relief Program, or TARP, said results of the loan-modification program so far have been disappointing. The report, released Tuesday evening, also said that the U.S. Treasury has failed to measure results properly for the Home Affordable Modification Program, known as HAMP, and that it may merely delay foreclosures in too many cases.

When President Obama launched HAMP in early 2009, the government said it would help as many as three million to four million homeowners avoid foreclosure. So far, however, about 169,000 households have successfully completed trial periods and been given long-term payment relief…

I know this is unpopular. However, if we had done what Hillary proposed in 2007 (HOLC like FDR did) or what MAC proposed in 2008 (every homeowner getting a reduction to market rates, not forgiven, but the principal being non interest bearing and tacked onto end of loan), then IMO the housing markewould have cleared already.

Instead President Credit Suisse-UBS has continued with the EPIC fails of HARP, HAMP, extend and pretend, and we STILL face 5-6 million foreclosures in the year ahead.

Now Bank of America is doing what Sheila Bair at FDIC has been proposing for two years, they are writing down principle on underwater loans. ThThey are approaching it in a manner which ties the homeowner to the home, it can be done. So you ‘earn’ the forgiveness over a 5 year period of payments. This way underwater homeowners stay and the cash flow is assured for 5 years. Good deal.

The key issue IMO is with continued UE we cannot sustain the underwater walkaways, resets in pick a pay horror products AND the natural loss of homes to UE. Something needs to be done to clear it out before it continuesto snowball. We have entered the double dip in housing already, see sidebar for HousingWire and CalculatedRisk pieces.

Also recall please that the ENTIRE BASIS OF TARP was HOUSING. The way it was sold by Paulson was that it was a vehicle to purchase MBS and CDS b and free the banks from the problem. Had they done this they could have done HOLC like FDR, bought the loans and written them down in one fell swoop (and anyone who thinks taxpayers arent already backing these collapsing loans hasnt been paying attention- FAN FRED which now have an UNCAPPED TAXPAYER GUARANTEE from treasury, are backing ALL the remaining loans being writtern today). See our piece this week on FAN FRED .

Diana Olick reported it on CNBC this morning, PS MiM are BofA shareholders) when the video comes up we will post!

forgive typos, on the go with the netpad EEEPC which is kewt but doesnt show the whole box I am typing in right now, arrgle!

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March 24, 2010. Tags: , , , , , , , , , , , . Economy, FDIC, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Taxes, Unemployment Statistics. Comments off.

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

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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:

CalculatedRisk:

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!

January 15, 2010. Tags: , , , , , , , , , , , , , , , , , , . Economy, FDIC, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Taxes, Unemployment Statistics, Wall St. Comments off.

Update: Market Roundup: House vote on Financial Regulatory Reform Bill today, GE gets an exemption, Geithner wants to exempt TARP 2 from restrictions and Geithner pushing BofA and CITI to payback TARP over objections of FDIC…

Update 2: It’s up on the newslinkys now:

Conyers/Turner/Lofgren/Marshall/Waters/Cohen/Miller (NC)/ Delahunt/Nadler/Fudge Amendment #201 (Defeated 241-188)Revised: Would allow bankruptcy courts to extend repayment periods, reduce excessive interest rates and fees, and adjust the principal balance of the mortgage to a home’s fair market value as necessary to prevent foreclosure and revised to allow the VA, FHA, and RHS to take steps to facilitate mortgage modifications.  The amendment is substantively identical to title I, subtitle A and sections 121-123 of subtitle B of H.R. 1106 Helping Families Save Their Homes Act of 2009), which passed the House on March 5, 2009. (See related story)

Update: 1:25 pm EST: The DEMOCRATICALLY CONTROLLED HOUSE has just rejected the Amendment to the Financial Regulatory Reform Bill that would have allowed bankruptcy judges to ‘cramdown’ mortgages. This after we learned yesterday that of a pool of 3 MILLION delinquent homeowners (which is now up to 4.8 million BTW), Treasury/HUD have managed to get the banks to permanently modify 31,000, yes that’s thousand.  After that EPIC FAIL I became a SUPPORTER of this Amendment. It is not the BANKS holding these loans anymore peeps!! It is FAN FRED FHA!!!!

That being the case as taxpayers we will take a hit when those loans go to short sale and some investor makes a profit, WE will be bailing out FAN FRED (again) and FHA. Why wouldn’t we just buy the damned bad loans oh yeah that was what Paulson SAID he was gonna do with TARP.

Now WE the taxpayer guaranteeing FAN FRED FHA OWN these loans ALREADY. Why the hell arent we writing them down and taking the hit ONCE. Instead the homeowners get kicked out, it gets sold for less then the mortgage and we STILL give FAN FRED FHA the bailout for the loss. And now some investor with FREE money from the FED has the house and will dump it on the market in another bubble like the one they made that started this mess.

And Tim wants TARP II. But no cramdown. And they think they are ‘progressive’, they say they are Democrats.  Obama’s Treasury didn;t want it, therefore it didnt happen, This is Unbelievable.

This despite that IDENTICAL legislation had already PASSED the House once before and died in the Senate. Could not be more clear they are leaving the homeowners out to dry.

And everyone who lives near or is family with or sells goods to those homeowners. We are ALL gonna pay when people keep walking on these loans and getting foreclosed on, we will have ENDLESS bailouts of FAN FRED FHA as those homes are sold and resold in new bubbles and everyone makes a bundle but the taxpers and families who lose their homes. Utterly disgusting.

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Should BofA and CITI be allowed to leave TARP? Will they be back like a bad penny?

Look for the cramdown/judicial mod amendment action also. Since Treasury and the banks managed only 31,000 mods out of 3 MILLION loans I now support it, frak ’em.

Politico:

FINAL RULE ON THE REFORM BILL, including a summary of all 36 amendments made in order by the Rules Committee. Some got votes Thursday night, others will come today. Final passage is expected sometime around noon.

BILL HAS LOOPHOLES, report WSJ’s Damian Paletta and David Enrich, “Buried in a 239-page amendment to the U.S. House of Representatives’ financial regulatory overhaul is a provision that appears to do just one thing: exempts financial-services company USAA from some of the bill’s tougher provisions. The carve-out is one of a number of exceptions that allow companies to avoid fresh scrutiny envisioned by the White House, which is aiming to overhaul the nation’s financial-regulatory apparatus. The beneficiaries run from corporations such as General Electric Co. and Pitney Bowes Inc. to USAA, which caters to members of the military and their families, to so-called fraternal benefit societies.”

Geithner has learned NOTHING from the disasterous capital infusions into the big banks in TARP ROUND ONE. Now in Son of TARP he wants to EXEMPT everyone from the Feinberg pay czar that they installed to curb populist anger that THEY stoked in the first place!!! Which I agree was a stupid stupid limitation but CONGRESS did it, they will do it AGAIN. He cannot protect them. Who believes Congress will not arbitrarily add requirements later?

AND still no word on what the hexx they plan to do about HOUSING which was the FIRST thing named in TARP legislation…purpose was to address foreclosures and stabilize markets.:

WAPO REPORTS POSSIBLE SMALL BIZ TARP — by David Cho, A1, 2 column lead: “The Obama administration plans to channel money from the government’s massive financial bailout program to small businesses as part of an effort to limit the political and economic damage of high unemployment. One plan under consideration involves spinning off a new entity from [TARP] that would give banks access to federal funds without restrictions, including limits on executive pay, as long as the money was used to support loans to small businesses. … As an alternative, officials are prepared to ask Congress to modify TARP itself, easing the pay limits and other restrictions that would be imposed on small-business lenders taking the money, the sources said … Since the summer, the administration has been facing an uncomfortable dynamic in the economy. The ranks of the jobless have been growing, while big financial firms that got taxpayer bailout money have been thriving. In response, officials have been trying to recast TARP as aid for Main Street rather than Wall Street.”

GEITHNER SAYS SMALL BANKS WORRY OF TARP TAINT, reports FT’s Tom Braithwaite: “Tim Geithner, US Treasury secretary, on Thursday advocated exempting small businesses from restrictions attached to the bank bail-out program that Goldman Sachs , Citigroup and other large banks have been anxious to escape. In testimony to the Congressional Oversight Panel, Mr. Geithner said small banks were worried about being ‘stigmatized’ for asking for money from [TARP] and that this was exacerbating a credit crunch for their small business customers. They don’t want to come to do business with the government. ‘They think it’s a sign of weakness, not strength.’”

Geithner also pushed BofA and is pushing CITI paybacks of TARP, IMO to justify TARP 2: The Revenge of TARP!!!, over the objections of the FDIC. As originally reported by Andrew Ross Sorkin in the NYT. In the TARP C.O.P. questioning yesterday Geithner did not deny this. This morning a guest on CNBC noted this is a serious problem. We will post the video. FD: We are BofA/Merrill shareholders and have discussed this ad nauseum here on the site.

December 11, 2009. Tags: , , , , , , , , , , , , , , , , . Economy, FDIC, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Unemployment Statistics, Wall St. Comments off.

Update: CNBC reports Lewis to step down by end of year; Cuomo/BofA Smackdown: It’s On! (again)

Update 09/30: Charlie Gasparino is reporting that Ken Lewis has been pushed out (the stmt says he stepped down but I call BS)!! This is HUGE! WOTS was he had TOTAL BACKING OF THE BOARD! Recall BofA is centred in Charlotte, NC far from the Wall St shenanigans but Lewis got sucked into the ‘eeeevil banker’ canard PLUS the added bonus of ‘hide the bonuses’ with Thain. I for one would never want Andy Cuomo on my trail if I had a blessed thing to hide!

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(Reminder FD- MiM are shareholders in both BofA and were MER shareholders as well pre merger)

CNBC:

Bank of America’s CEO Ken Lewis, the embattled head of the nation’s biggest bank, told the board he plans to step down by the end of the year.

Lewis wasn’t asked to step down and the decision was not the result of any regulatory action, sources told CNBC. No successor has been named yet….

Original post after the break:

(more…)

September 16, 2009. Tags: , , , , , , , , , , , , , , . Economy, Finance, Obama Administration, Politics, TARP, Wall St. Comments off.

Breaking: BofA to pay $33m penalty in settlement…SEC charges BofA with making material false stmts on Merrill deal…CIT Group shares halted for news pending….

Update 5: BofA Spokesman: Ken Lewis ABSOLUTELY has the full support of the Board…

Happier Days...

Happier Days...

Update 4: BofA to pay $33 million penalty as part of settlement. Gee as a shareholder can I get part of that? Suuuure, after all WE are the wronged parties.. AS IF!

BofA is settling the charges, “without admitting or denying guilt”. Well now TAXPAYERS will wind up SOL when shareholders sue…after all we will not allow their capital ratios to fall….Pfft.

Developing via CNBC

Breaking II: Now SEC is charging BofA with making materially false, misleading statements in connection with the Merrill merger….oh boy….

We are shareholders. We have covered this extensively see our posts on Thain/Lewis here and here and here and  here

This is NOT about the failure to use the Material Adverse Change clause to escape the merger, this is the bonus issue Cuomo was on top of…

From Mary Thompson CNBC:

SEC: BofA agreed to pay up to $5.8B in Merill bonuses, contrary to statements in the merger agreement…

Oh Andrew Cuomo must have gotten them in the depositions of Thain and Lewis, oh boy….

Hope to Good Lord it is news of a buyout or capital infusion of some magnitude and not a bankruptcy….

Our previous post on CIT Group here

Okay CIT Group just raised the purchase price on the tender offer.. no biggie.

August 3, 2009. Tags: , , , , , , , , . Economy, Finance, Politics, TARP. 1 comment.

Making Their Move against the Fed: Bernanke under fire on BofA/Merrill: Email trail…

Okay Ben is under attack, and like it or not, with him the independence of the Federal Reserve. These emails were  leaked to CNBC by Congressional Investigators.

Our previous posts on Thain/Lewis here and here and here

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Insight on the emails leading up to the Bank of America-Merrill deal, with CNBC’s Scott Cohn; Joe diGenova, diGenova & Toensing; and CNBC’s Rick Santelli, Charlie Gasparino & Larry Kudlow.

Team TOTUS would like nothing better than to get Larry Summers in there in 2010, and Congress is lending a helping hand, issuing subpoenas and scheduling hearings, taking testimony from Ken Lewis. AG Cuomo was all over this commensurate with his role as NY AG in training to be Governor…this is going nowhere good…

Happier Days

Happier Days

(more…)

June 10, 2009. Tags: , , , , , , , , , , , , , , , , , , , , , , . Economy, Finance, Obama Administration, Politics, TARP, Wall St. Comments off.

Market Mover Wednesday: BofA needs 34b but shares rise anyway…

M’kay….

As a shareholder I am all WTF?!?!?

Feds say we need to raise 34Billion and the shares are UP? WTH?

Where are we going to get 34 b? the markets? HA! HA!!

The government is going to convert to common equity and DILUTE US ALL TO HELL! WTH WOULD SHARES RISE ON THAT?

Makes no sense whatsoever…

CNBC:

Bank of America’s need to close a $34 billion capital gap wasn’t as bad a scenario as some on Wall Street privately feared, (Well WTH did they fear if 34B wasnt bad? I thought we needed like 15 or 20b!) sending shares sharply higher.

The company’s stock initially sank on fears that the capital needs would be dilutive to shareholders.

But traders instead focused on the importance of getting clarity to the numbers and a pervading sense that BofA could use other means to raise capital that wouldn’t necessarily be dilutive to shareholders, market sources said. Shares gained more than 10 percent before the opening bell.

They should just say, “but traders who are in deep frakkin denial are glad it wasnt a trillion” for all the sense this market action makes….this while Judge Garcia orders the Chrysler debtholders names released by noon EST today despite death threats..hang in there baby fight for the free market system, for all of us…..

Like Frida said baby I know there’s something going on and it aint good

May 6, 2009. Tags: , , , , , , , , , , , , , . Big 3, Finance, Music, Obama Administration, Politics, Popular Culture, TARP, Taxes, Uncategorized, Wall St. 1 comment.

Update: BofA refutes FT report, says not raising capital: Market Mover Monday: red-headed stepchildren of Stress Tests try to raise capital and save themselves from Government….goin’ down…

Update: 8:57am EST: CNBC Becky Quick live now talking to Buffett reporting BofA issued statement denying FT report that they are raising 10b in capital…..the fact that the banks are fighting it out with Team TOTUS bean-counters IN THE MEDIA is frightening..yeah I sold in May baby and I would go away could I afford a vacation in this economy, HA!!!

_____________________________________________________________________________________

Here they come, walking down the street, they get the funniest looks from the Treasury agents they meet..

Hey Hey they’re the Zombies, people say their capital’s down…

yada yada…they managed to get everyone but JPMC under their thumb here, they nabbed Wells Fargo and PNC too….

CNBC:

Bank of America is working on plans to raise more than $10 billion in fresh capital, even as it and Citigroup launch last-ditch attempts to convince the U.S. government they do not need to bolster their balance sheets, the Financial Times reported.

Citing people close to the situation, the paper said that Citi, Bank of America and at least two other lenders will on Monday attempt to convince the U.S. Treasury and Federal Reserve that the findings of “stress tests” into their financial health were too pessimistic.

Bank of America, which has had $45 billion in government aid, was found to need well in excess of $10 billion, the Financial Times reported on its website on Sunday, citing sources.

Regional lenders Wells Fargo and PNC Financial were also among the banks that would need to raise more capital unless they could persuade the authorities their findings were wrong, the paper reported, citing people close to the situation.

*Monkees courtesy of OrangeTabbyCat3

May 4, 2009. Tags: , , , , , , , , , , , , . CITI, citigroup, Economy, FDIC, Finance, Music, Obama Administration, Politics, Popular Culture, TARP, Uncategorized, Wall St. 1 comment.

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