March 2013: Cumulative Rate of Oregon Hardest Hit Housing Fund TARP Draw Downs Is Double National Average.

A new SIGTARP report as of March 31st has been published HERE. 

In prior post HERE, I provided a Dec 2012 summary of Hardest Hit Housing Fund spending by state, including an Excel worksheet. That same worksheet is included in the updated Excel file HERE, and embedded below, but the initially visible worksheet is a new one focusing on draw downs as of March 31st. 

Some Observations on March 2013 Spending:

1. Oregon's cumulative drawn down rate of 58% was more than double the national average rate of 27%. 
2. Oregon drew down $20.5 million in the first quarter of 2013, vs a total draw down of $48 million in CY 2012.
3. While Oregon's cumulative draw down ranking slipped from 2nd to 3rd, the areas with higher drawn down rates (Rhode Island and DC) had substantially smaller amounts to spend. 

Originally created and posted on the Oregon Housing Blog.

New GAO Report on TARP Costs Says Costs Down, Big CBO/Treasury Differences Exist about Housing Costs.

GAO report is HERE.  From the report: 

 In 2009, the Congressional Budget Office (CBO) estimated that TARP could cost $356 billion. However, CBO’s most recent estimate, using November 2011 data, is approximately $34 billion.

Treasury’s fiscal year 2011 financial statement, audited by GAO, reported that TARP would cost around $70 billion as of September 30, 2011, a decrease from about $78 billion estimated as of September 2010.

…. program participation assumptions for TARP-funded housing programs explain the large difference between the CBO and Treasury cost estimates.

Treasury assumed that all of the $45.6 billion allocated to TARP housing programs would be utilized and, as a result, estimated that they would cost $45.6 billion.

Conversely, CBO expected lower participation rates for the housing programs, resulting in a cost estimate of $13 billion as of November 2011

If you do the math you will see that:

1. Housing program costs represent 38% of projected TARP costs according to CBO and 65% according to Treasury.  
2. Treasury's estimated TARP housing program cost is 251% higher than the estimated CBO TARP housing program costs.

Originally created and posted on the Oregon Housing Blog.

New CBO Report Puts TARP Costs at $19 Billion; Housing Programs at 68% of that Total.

New CBO report is HERE. CBO estimates: 

"... that the cost to the federal government of the TARP’s transactions (also referred to as the subsidy cost), including grants for mortgage programs that have not been made yet, will amount to $19 billion....Costs for mortgage programs were about $1.2 billion through the end of February, but CBO anticipates that the TARP ultimately will disburse a total of $13 billion for those programs. "

Hardest Hit Programs, 42% of TARP Costs?

While mortgage programs total of $13 billion is clear, CBO is not clear whether it expects subtotal of $8 billion allocated to states for Hardest Hit programs to be used; if it is it would represent 42% of all TARP costs.

Originally created and posted on the Oregon Housing Blog.

OHCS: Halfway into Application Cycle 4,300 Mortgage Payment Assistance Applications Completed, Another 3,400 in Process.

At about the halfway point in the application cycle, OHCS staff have advised me that 4,300 unemployed or under employed home owners have completed the online application for the Oregon Mortgage Payment Assistance Program, with another 3,400 applicants in some stage of completion. 

This $100 million program has a minimum of 5,000 slots available, with recipients to be chosen by individual county lotteries from amongst all applications received by January 14, 2011. (My prior table HERE had estimated chances of wining by area, using only counts of unemployed; ACTUAL chances of winning will be determined by number of accepted applications in each county vs. number of slots in that county).

The OHSI website, which includes an on line eligibility test for this program, is HERE. 

Originally created and posted on the Oregon Housing Blog.

FHA Short Refinance Program Continues to Under Perform.

Data for November shows applications for the FHA Short Refinance program funded with TARP money continue to under perform. In my earlier post (HERE) I indicated that there were a total of 35 applications for the FHA short refinance program through October. 

November saw 40 additional applications and the first actually endorsed loan, so in last 3 months the FHA short refinance total was 75 applications and one endorsement.  

The table below shows FY 2010 and latest 3 monthly counts for the FHA Short Refinance program and counts for FHA's earlier HOPE for Homeowners program:

	Applications		Endorsements
Period	H4H	Short Refinance	H4H	Short Refinance
FY 2010	340	14	107
Sep-10	29	14	11
Oct-10	66	21	22
Nov-10	88	40	27	1
3 Months	183	75	60	1

Originally created and posted on the Oregon Housing Blog.

HUD/FHA Now Projecting 96,875 Loans for Short Refinance Program; No Way Do I See That Happening.

HUD has filed a new information collection request related to the FHA Short Refinance program with the Office of Management and Budget HERE. 

Buried within an associated document HERE is some additional background on the paperwork requirements for lenders under that program. (File is in MS Word 2007/2010 format).

Notably this form indicates that:

1. HUD/FHA expects 96,875 loans applications annually , with several form types submitted for each loan.
2. HUD says that the program expires September 30, 2011.
3. HUD says that that debt to income ratios can be up to 38%/50% for Loan to Values less than 90%

If projected TARP subsidy for the FHA short refinance program is $8.1 Billion that would mean that per loan subsidy cost for these 96,875 loans would be $83,691, a highly unlikely per loan subsidy amount. (Subsidy amounts per loan would actually be higher since not every application results in an actual loan).

With volume during the first two months at 35 loans (my prior post HERE) it also seems likely that far FEWER than 96,800 FHA additional short refinance loans will be insured in the 11 months from November 2010 to September 2011.  

Actual Volume , Less than 1% of Prior Projection?

My prior Sept 2010 post HERE shows WSJ story had data projecting nearly 11 million underwater borrowers, so the actual likely production under this program will clearly have very little impact AND could be less than 1% (5,000-15,000 loans) of the "500,000 and 1.5 million " range projection previously made by administration officials.

With likely loan volume under the FHA short refinance falling far short of Administration projections it continues to appear that a significant portion of the projected $8.1 billion in TARP subsidy could be recaptured. (Wouldn't it make sense to use this money for the still unfunded Housing Trust fund for example)? 

Originally created and posted on the Oregon Housing Blog.

CBO Cost Estimate: TARP Costs Now Projected at $25 Billion, Far Below Frequently Cited $700 Billion.

In a prior post in early October HERE I reported that Treasury was projecting that TARP costs would be $51 billion, far less than the $700 billion frequently cited. (Housing costs were projected at $46 billion of that $51 billion).

The CBO has issued a NEW cost projection HERE saying that TARP will actually end up costing only $25 billion, with $12  billion of that for housing programs.

CBO says that their $12 billion in estimated TARP housing costs are significantly below the $46 billion projected by Treasury because: 

The difference between those two estimates stems primarily from disparate outlooks on the number of eligible households and the participation rate among those households.

Originally created and posted on the Oregon Housing Blog.

FHA Short Refinance Program: 35 Applications Through October, Setting Stage for Possible TARP Fund Recapture?

The FHA Short Refinance program for underwater borrowers was initially announced with some fanfare, and an allocation of up to $14 Billion in TARP funding, in March of this year. (The TARP allocation has been reduced to $10.8 Billion, according to accounting in the latest Special TARP IG Quarterly Report).  

(HUD announced the formal start of the program in early September with August HUD PR HERE; PR when the program was first announced in March is HERE).

FHA Outlook reports for September and October available HERE show a total of 35 applications for the FHA Short Refinance program had been received.

Recent policy guidance from Ginnie Mae HERE would allow FHA Short Refinance loans to be included in Ginnie Mae pools, but the program requirement for a investor principal reduction is the reason that I long ago said this program seemed likely to under perform.

If Congress and the Administration are looking at ways of reducing the budget deficit it would certainly appear that a significant portion of the TARP allocation for this program MAY be subject to recapture as it seems highly likely that this program will be under utilized.

Originally created and posted on the Oregon Housing Blog.

Analysis of TARP Financial Report for FY 2010: Less than 2% of $45.6 Billion Committed Had Been Spent as of October 1.

Treasury has release the annual financial report for TARP for FY 2010. 

Using data found on page 70 of the report (explanation of programs is on the preceding page), I have prepared a summary table HERE showing commitment amounts, payments and accrued payments for all 11 TARP housing programs for FY 2010 and FY 2009. 

Payments and accruals for these housing programs to date total $829 million and with total costs for these programs capped at $45.6 Billion this means that only 1.8% of total commitment authority has been paid out our accrued for payment as of October 2010.

Originally created and posted on the Oregon Housing Blog.

Treasury Says Housing Programs Represent 90% of Projected TARP Cost.

In advance of a regular monthly statutorily required report on TARP progress the US Treasury published a PR piece detailing their positive spin on TARP. That report is HERE.

Without drinking all of the Kool-Aid, I think it IS fair to say that total TARP costs WILL be far, far below the $700 Billion initial TARP authorization.

On PDF page 8 of their report the Administration says the total projected TARP cost is $51 billion. Treasury says that $46 billion of that cost will be for housing programs including MHA programs like HAMP; the HFA Hardest Hit fund; and the FHA Short Sales program.

That means that Treasury is currently projecting that housing programs will represent 90% of the TOTAL TARP COST, a projection that will come as a surprise to most. 

Note also that housing costs for HUD NSP, Emergency Assistance, Recovery Act housing programs, homeowners tax credits AND the GSE bailout are NOT included in the $46 billion projected TARP housing costs.

Originally created and posted on the Oregon Housing Blog.

OMB Clears Notice on $14 Billion FHA Refinancing of "Underwater" Borrowers.

The Administration had previously announced a program to be implemented by the fall that would allow FHA refinancing of some "underwater" borrowers. 

A March outline of this expected $14 Billion program is HERE.

The new FHA loan must have a balance less than the current value of the home, and total mortgage debt for the borrower after the refinancing, including both first and any other mortgages, cannot be greater than 115 percent of the current value of the home – giving homeowners a path to regain equity in their homes and an affordable monthly payment.

On July 14th it appears HERE that OMB cleared a Notice submitted by HUD to implement use of FHA loans to refinance (some) underwater borrowers.

I don't know if there is a required congressional notification period that plays out for Notices, but with the Fall beginning in less than 2 months it won't be long before this potential $14 Billion new HAMP/TARP program kicks in.

Originally created and posted on the Oregon Housing Blog.

Fannie and Freddie Projected Subsidy Costs: $370 Billion.

Since you own 'em thought you might want to know.

$312 billion of that projected subsidy cost is through FY 2010, so if 2011-2019 subsidy costs are greater than $58 billion, the $370 billion subsidy cost estimate will need to be increased.

Subsidyscope subsidy page for Fannie/Freddie, with details, is HERE.

Originally created and posted on the Oregon Housing Blog.

Congressional TARP Oversight Panel April Report On Foreclosure Prevention Progress-Not Good.

PR is HERE.

(Full Report and other links are in left pane of the PR)

Originally created and posted on the Oregon Housing Blog.

Fannie/ Freddie Bail Out Costs for FY 2009: $291 Billion, More than Twice TARP Costs.

Time's "Curious Capitalist" blog story HERE includes that figure, saying:

In the budget projections it released last week, the Congressional Budget Office tagged the Fannie/Freddie rescue as the single biggest cost item to come out of the financial crisis so far (at $291 billion in fiscal 2009, compared to $133 billion for TARP and $115 billion for the stimulus bill).

Story references another blog that says that it is POSSIBLE that Fannie and Freddie may be able to REPAY their debt to Uncle Sam from their future earnings over several years, IF Congress doesn't take action to limit their activities.

Originally created and posted on the Oregon Housing Blog.

House Financial Services Posts Congressional Oversight Panel Status Report on Foreclosure Crisis.

Dated March 6th, it's posted HERE. (198 pages).

This is Congressional mandated panel (includes Elizabeth Warren) required as part of TARP.

House Hearing: Priorities for TARP II.

The House Financial Services held a hearing on January 13th on this subject.

I created a PDF HERE with all of the witness testimony. (About 6.5MB's).

The Committee has also created a special TARP documents page HERE which I would suggest you bookmark; I have added link in right pane of my blog.

[Advice: 1. Don't print the entire document, its 150 pages. 2.You can find individual testimony by selecting bookmarks in left pane. If you click on blue underlined links in right pane on the first page, you will download a second copy of a document already in this PDF).