TOPIC: Troubled Asset Relief Program (TARP)

Name that loan modification program: government must do more to market mortgage aid

Four years after the housing bubble burst, all levels of government are getting their bearings in addressing the foreclosure crisis. A mix of programs are either being started or revived that might actually address specific payment problems homeowners face.

Illinois announced on Friday that it will use $100 million in federal money to start a Mortgage Resolution Fund, where a public-private partnership will buy “underwater mortgages” — those where delinquent payments are worth more than the mortgage itself — from homeowners in the Chicago area. (more…)

The bailout that worked

Kate Linebaugh of the Wall Street Journal puts together a lot of evidence that the Michigan auto industry is revived. Auto makers have announced more plant expansions and new jobs in Michigan; GM, Chrysler and Ford are at 37 percent production capacity, compared with 30 percent a decade earlier. “In Sterling Heights, Mich.,” Linebaugh writes, “a Chrysler plant saved from closure last year is now churning out two midsize models with 2,300 workers.”

Incredibly, Linebaugh goes the entire piece without mentioning the $80 billion U.S. Treasury Dept. bailout that enabled this revival! The Journal did report three weeks earlier that taxpayers will ultimately be responsible for $14 billion of this $80 billion. But in return, the Obama administration claims that hundreds of thousands of jobs have been created.

Badger State banks still need this protective TARP

Most Wall Street banks that took out TARP loans in late 2008 have long ago paid back the Treasury Dept., with interest. But many smaller banks, including most Wisconsin community banks, which took out TARP loans have still not paid back the money, reports Paul Gores of the Milwaukee Journal Sentinel. The situation provides another sign of a still-unhealthy economy and the Obama administration’s dominant focus on big banks.

According to Gores, federal taxpayers have recovered $251 billion from a TARP program that gave banks $245 million. This is because banks getting the most TARP money, like Goldman Sachs and Bank of America, raised money by issuing stock and quickly repayed taxpayer money with the required interest.  For that quick return, Beltway cognoscenti have called TARP the “the most successful and least popular American economic policy in the past decade” and hailed Treasury Sec. Tim Geithner as an unsung hero.

But what is happening with TARP money around the country shows that while the program has been a success, the story is a bit more complicated. (more…)

Big banks continue to avoid helping out on foreclosures

Micah Maidenberg of Progress Illinois reports that the Illinois state government and city of Chicago have started to address the continued foreclosure crisis because the federal response “has not been commensurate with the foreclosure problem.” Particularly, the Home Affordable Modification Program (HAMP) failed to reach most homeowners who could avoid foreclosure. However, the state and city responses do little to push mortgage servicers — many of them “too big to fail” banks — towards more active support for troubled homeowners. (more…)

Michelle Bachmann might be right

Few politicians are as polarizing as Minnesota U.S. Rep. Michelle Bachmann. So it’s no surprise that Democrats are going after her vote to defund TARP’s Home Affordable Modification Program, reports Andy Birkey of the Minnesota Independent. But Bachmann is doing nothing different than her Republican colleagues who already voted to terminate a Federal Housing Administration foreclosure prevention measure and who have spoken in favor of eliminating all such Obama programs.

Another thing:  Bachmann has a point. Even progressives readily admit that HAMP is a failure that has yet to gain momentum. Democrats who support of foreclosure prevention programs should propose an alternative plan of action than defend the current menu of policies.

Meanwhile, foreclosures

In 2010, foreclosures increased in Chicago and they have recently increased across the country — yet the issue is on the back burner in Washington, D.C. The Chicago Sun-Times’ Lisa Donovan reports that there were at least 51,900 foreclosures filed in Cook County (there won’t be a final tally until mid-January) in 2010. This preliminary figure is not only greater than last year, it is 300 percent the number of filings that took place in 2006, the year before the subprime mortgage crisis hit. (more…)

Not breaking: ban on foreclosures causes decline in foreclosures

The Associated Press reports that foreclosure filings fell last month both in Illinois and nationwide — down 24 percent in Illinois from October, and down 21 percent in the state compared to November 2009. However, the AP buries the lede. (more…)

Principles lacking in a matter of principal

More than two years after the housing market began its epic collapse, plans to help homeowners left underwater by declining values and loans they can no longer afford are on the way . . . or are they?

Meant to bail out strapped homeowners, a federal-state program aimed at enticing bankers to forgive some of the principal owed on homes is proving a difficult sell to mortgage servicers. So far, only one major financial institution, Bank of America, has agreed in theory to participate in a key provision: reducing loan principal for mortgage holders. (more…)

Criminalizing HAMP

Trial and permanent home mortgage loan modifications run by TARP continue to drop in the Chicago region, writes Dory Rand, president of the Woodstock Institute, a Chicago research and advocacy group. The number of active mortgage loan modifications under TARP’s Home Affordable Modification Program, or HAMP, is down 1.4 percent, to 32,880 in the Chicago area. The major problem with this minor decrease is found in a separate Woodstock report: foreclosure filings are up 25 percent in the Chicago region from the first three quarters to 2009 to first three quarters of 2010. (more…)