Eye on the Bailout

The State of the Bailout

OUTFLOWS: $500.7 billion This includes money that has actually been spent, invested, or loaned.

INFLOWS: $187.1 billion Money returned and paid to Treasury as interest, dividends, fees or to repurchase their stock warrants.

Chase Denied Loan Mods for Now Forbidden Reason—Homeowners in Limbo

by Paul Kiel, ProPublica - February 4, 2010 11:57 am EST

Protesters organized by the Neighborhood Assistance Corporation of America display a sign from inside the lobby of the One Chase Manhattan Plaza building on Dec. 14, 2009, in New York City. (Chris Hondros/Getty Images)On the Saturday before Thanksgiving, Lesa Herron of Santa Rosa, Calif., opened a letter from Chase Home Finance (PDF). She’d been denied a permanent modification under the federal government’s loan-mod program, Chase said, because “Your hardship is not of a permanent nature.” No other reason was given.

For Herron, that was hard to understand. She was working two jobs and her mortgage payment still amounted to more than half of her income. She’d fallen two payments behind. If her money troubles were only temporary, it was news to her.

We at ProPublica reported last month that mortgage servicers are often not following the Treasury Department’s rules for the program and provided three examples. One involved another homeowner who, like Herron, had been denied a modification because his hardship was not “permanent.”

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Logjam Continues for Loan Mods; Big Banks Fare Poorly, Data Show

by Paul Kiel, ProPublica - January 19, 2010 8:59 am EST

Check out our handy interactive breakdown by servicerThe Treasury unveiled (PDF) new data last Friday showing the progress of its major foreclosure prevention program. Treasury officials touted the new data as evidence that pressure on mortgage servicers to improve performance was working, but the numbers continue to show real problems. And though there is a wide disparity in performance among the participating servicers, the four largest all continue to lag.

First, a look at the overall numbers: 66,465 homeowners had received permanent modifications as of Dec. 31. That’s up from 31,382 reported last month. On a conference call with reporters Friday, Treasury official Phyllis Caldwell called that a “significant acceleration of the rate at which borrowers are being approved.” That may be, but it’s still well below where it should be if the program were working properly.

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Homeowners Say Banks Not Following Rules for Loan Modifications

by Paul Kiel, ProPublica - January 14, 2010 10:00 am EST

(Ethan Miller/Getty Images)

Nathan Reynolds is something of an expert on the government’s foreclosure prevention program. A mortgage broker who’s worked in the Chicago area since 1998, he’s seen both his business and his home’s value plummet in the past few years. After receiving his own trial loan modification from JPMorgan Chase, he’s helped others apply for modifications through the program on his own time.

But in November, after Reynolds had made trial loan payments for seven months, Chase told him his mortgage would not be permanently modified. Chase had determined that his personal financial troubles were only temporary — because Reynolds had expressed optimism that the administration’s policies might rescue the housing market, boosting his income.

That’s not a legitimate reason for a loan servicer to deny someone’s modification, according to the Treasury Department’s guidelines for the program. And Reynolds’ experience — along with the cases of two other homeowners examined by ProPublica, shows how servicers have created unnecessary hurdles that, in some instances, violate the loan program’s rules.

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With Bank Money Returning, Bailout Burden Shifts Toward Housing

by Paul Kiel, ProPublica - January 7, 2010 12:42 pm EST

 The year ended with three of the biggest bailout recipients – Bank of America, Wells Fargo and Citigroup – together returning more than $90 billion to the Treasury Department. But it also ended with a Christmas Eve announcement from the Treasury that it could spend a virtually unlimited amount of money bailing out Fannie Mae and Freddie Mac. So while the Treasury is winding down its programs to support the nation’s banks, it will continue to spend big to prop up the housing market.

As of the end of December, the bailout total outstanding fell to $337.5 billion, a decrease of $84 billion since our last monthly update. We continue to track the totals on our frequently updated bailout database*, which tracks both the TARP and the bailout of Fannie Mae and Freddie Mac.

Meanwhile, the losses booked from the bailouts did not grow in December, staying around $9 billion. Treasury did, however, release its updated estimate for ultimate losses from the TARP: $61.1 billion. We’ll continue to track the losses as they’re realized.

And revenue continued to grow, reaching $20.6 billion. More about that below.

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Loan Mod Program Delays Even Worse for Those Struggling Not to Fall Behind

by Paul Kiel, ProPublica - December 21, 2009 10:44 am EST

Jim Banford from Real Estate Asset Disposition Corp. walks through one of the foreclosed properties his company is trying to resell in Jupiter, Fla. (Joe Raedle/Getty Images/April 2008)
Since last spring, when President Barack Obama announced his administration’s plan to prevent foreclosures, there’s been a crush of homeowners seeking help from mortgage servicers. Confusion and delays have plagued the entire program, but the problems have been particularly acute for homeowners seeking a modification before they begin falling behind on their mortgage payments.

Some homeowners, like Regan Sciesinski of Florida, have been waiting as long as nine months with no relief. The Sciesinskis seem to be a prime candidate for a modification through the program. His wife, Stacy, was found to have breast cancer in late 2007, and in the past year, a combination of medical costs and reduced income have made their mortgage payments unaffordable for the couple, who have three children. Their home, in a suburb of Tampa, has also dropped about 25 percent in value since they bought it in 2006. Like millions of other homeowners, they’re underwater, stuck with mortgages worth more than the property.

Sciesinski says he first submitted his information to his servicer, Chase Home Finance, in March. He’s still waiting. Sciesinski says he and his wife have drained their retirement savings and accepted help from other family members to stay current. “We take our obligation seriously,” he says, but now they’re facing default and need the modification “because having to move would completely devastate us.”

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Bank Failure Friday: 7 Banks Go Down, 3 with No Buyer

by Paul Kiel, ProPublica - December 19, 2009 1:12 pm EST

It was another busy Friday for regulators, as they closed seven banks, bringing this year’s total to 140. As always, we’ve updated our complete list of failed banks.

The failures figure to continue in 2010. FDIC Chair Sheila Bair said last month failures will “peak” next year. The FDIC’s recently announced budget for 2010 reflects that: In order the handle bank closings, the agency plans to add 1,600 temporary employees to its staff of about seven thousand. The FDIC said last month that its list of “problem” banks has risen to 552.

All told, Friday’s failures cost the FDIC about $1.8 billion. The agency earlier this year dealt with its deficit by arranging for insured banks to prepay three years of assessments in advance, which is expected to raise $45 billion.

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Not Everybody Loses on Bank Failure Friday

by Jake Bernstein, ProPublica - December 12, 2009 11:31 am EST

Three more banks failed on Friday, bringing the year’s total to 133. The FDIC estimates Friday’s failures will cost its insurance fund a combined $252.1 million. While the failures represent another hit to the FDIC’s depleted fund, they are a boon to three companies that acquired the assets and deposits of the closed institutions.

The first to go for the day was Republic Federal Bank of Miami, Florida. The bank had total assets of approximately $433 million and deposits of approximately $352.7 million. 1st United Bank of Boca Raton assumed all the deposits of the failed bank, paying the FDIC a premium of 1.2 percent for them. It also purchased $267.1 million of the failed bank’s assets including loans, cash and marketable investment securities.

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Bailout Breakdown: Losses Likely to Be Larger Than Treasury Estimates

by Paul Kiel, ProPublica - December 11, 2009 12:48 pm EST

 This week, the administration has been trumpeting the news that the $700 billion TARP is likely to ultimately cost much less than early estimates. That’s true, but far from the whole story.

The government’s best estimate, released Wednesday, is that the bailouts of AIG and the auto companies will ultimately cost taxpayers about $61 billion. It also forecast that other parts of the TARP will end up making taxpayers money. Put it all together, and the final estimated loss from the bailout’s first full year (thru September 2009) is about $41.6 billion.

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Latest Bailouts

$629 billion of taxpayer money has been allocated or promised to 771 companies and 11 programs.

Jan 29, 2010 iServe Residential Lending, LLC
Incentive Payments for Home Loan Modification
$960 thousand
Jan 29, 2010 United Bank
Incentive Payments for Home Loan Modification
$540 thousand
Jan 15, 2010 Digital Federal Credit Union
Incentive Payments for Home Loan Modification
$3.1 million
Jan 13, 2010 Fresno County Federal Credit Union
Incentive Payments for Home Loan Modification
$260 thousand
Jan 13, 2010 Roebling Bank
Incentive Payments for Home Loan Modification
$240 thousand
Jan 13, 2010 First National Bank of Grant Park
Incentive Payments for Home Loan Modification
$140 thousand
Jan 13, 2010 Specialized Loan Servicing, LLC
Incentive Payments for Home Loan Modification
$64.2 million
Jan 13, 2010 Greater Nevada Mortgage Services
Incentive Payments for Home Loan Modification
$770 thousand

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ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest. We strive to foster change through exposing exploitation of the weak by the strong and the failures of those with power to vindicate the trust placed in them.

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