Charles Payne On TARP SIG’s Report: Home Mortgage Modifications

Neil Cavuto interviews Charles Payne on Obama’s $30 billion small bank bailout which he believe will do little as the banks that receive the money will just sit on it like the Big Boys did.

What’s more important about this interview is the Neil Barofsky report that has another interesting tidbit inside.

This is going to be another one of these programs that sounds great on the surface but doesn’t work, like this home mortgage program.  This thing is a disaster.  I don’t know if you if saw this Neil Barofsky report, but he’s saying $75 Billion to help 4 million, (Neil: This is the TARP guy), he’s the TARP inspector general.  This guy has been the straightest guy out of everybody out there, maybe that’s why we don’t hear about him too much.  $75 Billion dollars set aside to help 4 million homes.  He’s saying that it’s only helped 66,000 so far?

For those that would like to peruse the 224 page quarterly report to Congress issued 1/30/2010, go here.

From Page 96:

Homeowner Support Program

Making Home Affordable Program

The Making Home Affordable (“MHA”) program was introduced by the Administration on February 18, 2009, as a collection of three major initiatives: a loan modification program, a loan refinancing program, and additional support for reduced mortgage interest rates.  According to Treasury, the program was designed
to offer assistance to millions of homeowners making a good-faith effort to pay their mortgages and to protect families and communities from the destructive impact of the housing crisis.  Subsequently, Treasury has created a foreclosure alternative program as a part of MHA. TARP funds are primarily dedicated to one initiative within MHA, the Home Affordable Modification Program (“HAMP”).  According to Treasury, HAMP is a
$75 billion program that will lower monthly mortgage payments for homeowners by providing loan modification incentive payments to the servicers and loan holders (lenders or investors — referred to as investors in this section) and by protecting against further loss of collateral value.  In addition, the MHA program now includes foreclosure alternatives for those not able to complete a HAMP modification. Of the $75 billion reserved for HAMP, $50 billion will be funded through TARP and will be used to modify private-label mortgages.

Of the $50 billion in TARP funding, $10 billion has been allocated to encourage HAMP modification by protecting investors from potential home-price declines in their mortgage portfolio assets in regions where forestalling foreclosure may lead to significant losses. According to Treasury, the purpose of the Home Price Decline Protection (“HPDP”) program is to “encourage additional lender participation and HAMP modifications in areas with recent price declines by helping to offset any incremental collateral loss on modifications that do not succeed.”  In addition, Treasury estimates that another $4.6 billion of the TARP $50 billion allocation will be used for the Home Affordable Foreclosure Alternatives (“HAFA”) program, previously referred to as the Short-Sales/Deeds-In-Lieu of Foreclosure (“SS/DIL”) program, designed to provide alternatives to foreclosure.  Beyond the TARP support, the additional $25 billion in HAMP funding is provided under the Housing and Economic Recovery Act of 2008 (“HERA”) and will be used to modify mortgages that are owned or guaranteed by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), two of the Government-sponsored enterprises (“GSEs”).

Status of Funds As of December 31, 2009, Treasury had signed agreements with 102 loan servicers
allocating up to $35.5 billion under HAMP. Of that $35.5 billion, as of December 31, 2009, $15.4 million had been spent on incentives for 11,574 of the 66,465 permanent modifications.  The remaining permanent modifications will receive incentive payments in the next quarter. Of that $15.4 million, approximately $12.1 million represents incentive payments to servicers and $3.2 million represents payments to investors.  Borrower incentive payments begin only after one year of participation in the program.
To date, the largest allocation of incentive payments went to Countrywide Home Loans Servicing LP, now owned by Bank of America, which is eligible to receive up to $6.8 billion in TARP funds. The average allocation to each servicer through HAMP is $348.5 million.  The amount of funding allocated to a servicer does not represent the amount of incentives paid to the servicer; rather, the allocation is the maximum amount, or cap, of potential incentive payments that Treasury has approved for each servicer. Table 2.25 provides details regarding the five largest allocations made under HAMP as of December 31, 2009.

Bailouts Could Cost $23 TRILLION

Bailouts Could Cost $23 TRILLION

Say Goodbye To Your Money!

Say Goodbye To Your Money!

Are you ready for this boys and girls?  We knew this was coming…and we are already broke.

Neil Barofsky, is a special inspector general  testifying to the House oversight committee tomorrow, (Tuesday 7.21.09),  and the prospects are dim considering “they” always lowball the figures.

Bailouts could cost U.S. $23 trillion

A series of bailouts, bank rescues and other economic lifelines could end up costing the federal government as much as $23 trillion, the U.S. government’s watchdog over the effort says – a staggering amount that is nearly double the nation’s entire economic output for a year.

If the feds end up spending that amount, it could be more than the federal government has spent on any effort in American history.

For the government to be on the hook for the total amount, worst-case scenarios would have to come to pass in a variety of federal programs, which is unlikely, says Neil Barofsky, the special inspector general for the government’s financial bailout programs, in testimony prepared for delivery to the House oversight committee Tuesday.

The Treasury Department says less than $2 trillion has been spent so far.

If $2 Trillion has been spent so far, what about the $9 Trillion the Fed’s IG cannot account for?

Still, the enormity of the IG’s projection underscores the size of the economic disaster that hit the nation over the past year and the unprecedented sums mobilized by the federal government under Presidents George W. Bush and Barack Obama to confront it.

In fact, $23 trillion is more than the total cost of all the wars the United States has ever fought, put together. World War II, for example, cost $4.1 trillion in 2008 dollars, according to the Congressional Research Service.

Even the Moon landings and the New Deal didn’t come close to $23 trillion: the Moon shot in 1969 cost an estimated $237 billion in current dollars, and the entire Depression-era Roosevelt relief program came in at $500 billion, according to Jim Bianco of Bianco Research.

The annual gross domestic product of the United States is just over $14 trillion.

Treasury spokesman Andrew Williams downplayed the total amount could ever reach Barofsky’s number.

“The $23.7 trillion estimate generally includes programs at the hypothetical maximum size envisioned when they were established,” Williams said. “It was never likely that all these programs would be ‘maxed out’ at the same time.”

It was also not likely that Americans would lose $1.3 Trillion of their personal wealth in the first quarter of this year, but it happened.

So let’s say the bailouts “only” come to $12 Trillion; aren’t we still using red crayon math?

And then there is this from WSJ:

Treasury Is Criticized Over TARP

WASHINGTON — The special inspector general overseeing the $700 billion financial-sector bailout said the Treasury Department isn’t disclosing enough information about how taxpayer money is being spent.

In prepared testimony for a Tuesday hearing of the House Committee on Oversight and Government Reform, Special Inspector General Neil Barofsky said the Treasury has rejected several of his recommendations for more transparency on its part.

Mr. Barofsky also said the Treasury has declined to require bailout recipients to explain what they are doing with their government funds.

Mr. Barofsky is pushing for the Treasury to provide more frequent valuations of a portfolio of assets it has obtained in connection with the TARP. He said the department hasn’t committed to providing such reports more than the once a year required by law.”Treasury’s default position should always be to require more disclosure rather than less and to provide the investors in TARP — the American taxpayers — as much information about what is being done with their money as possible,” Mr. Barofsky will tell lawmakers.

The special inspector general’s office collected its information by surveying 364 institutions that had completed agreements to receive government aid as of Jan. 31. The office didn’t attempt to independently verify the information provided by the institutions, the report said.

The report provides a broad glimpse at how TARP recipients used federal capital. It shows 43% of the banks used the money to meet capital or reserve requirements set by regulators. Four percent used it to complete acquisitions, often in transactions facilitated by the Federal Deposit Insurance Corp. About a quarter reported investing in mortgage-backed securities affiliated with federal housing agencies, and 14% reported using the money to pay down other debt obligations.

The report cited 80% of respondents as using the money in ways that supported their ability to lend. More than 100 institutions said they used the funds to support residential mortgage loans. Sixty-one banks reported using the funds to support other forms of consumer lending.

If all of these institutions are “using the money in ways that supported their ability to lend”, then why is the credit market still frozen?  Why are Americans losing their jobs and homes?

And as my spousal unit has stated; Joe Biden saying that we will make $1.50 for every dollar we spend only happens when you are a coke dealer.

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