On January 28, Treasury issued Supplemental Directive 10-01, which provides updated guidance for servicers participating in HAMP and revises documentation requirements in an effort to expedite the conversions of trial modifications to permanent modifications. Under the new procedures, a set of standard documents (including proof of income) must be obtained from the borrower upfront before the borrower can be evaluated for and receive a trial modification. This process will be required for all new HAMP modifications with effective dates on or after June 1, although servicers may elect to implement it sooner. Treasury Release. Supplemental Directive 10-01.
Treasury
Treasury and HUD HAMP Update
On January 19, Treasury and HUD released an update on the progress of the Administration’s campaign to help borrowers convert from the trial phase of a mortgage modification to a permanent modification under HAMP. The Administration has implemented a temporary review period, through January 31, to ensure that borrowers are fairly evaluated for the program. Treasury Release. Treasury Report.
Treasury Update on GSEs and Housing Programs
On December 24, Treasury announced that it amended the Preferred Stock Purchase Agreements (PSPAs) with Fannie Mae and Freddie Mac, allowing the cap on Treasury’s funding commitment to increase and providing more flexibility for Fannie and Freddie to meet the requirement that they reduce the size of their retained mortgage portfolios. Treasury also announced that several programs established under the Housing and Economic Recovery Act of 2008 would be terminated by the end of 2009. Treasury Press Release. Fannie Mae PSPA Amendment. Freddie Mac PSPA Amendment.
Additional Initial PPIF Closing
On December 22, Treasury announced that Oaktree Capital Management L.P. completed an initial closing of a Public-Private Investment Fund under the Legacy Securities Public-Private Investment Program. Treasury Release.
Additional Initial PPIF Closing
On November 30, Treasury announced that Marathon Asset Management, L.P. completed an initial closing of a Public-Private Investment Fund under the Legacy Securities Public-Private Investment Program. To date, PPIFs have completed closings on approximately $5.07 billion of private sector equity capital, which, with Treasury’s equity and debt commitments, represents $20.26 billion of purchasing power. Treasury Release.
Treasury Sale of CPP Warrants
On November 19, Treasury announced its intention to dispose of the warrants in JP Morgan Chase, Capital One Financial Corporation, and TCF Financial that Treasury received as part of the Capital Purchase Program. The sales will be made through registered public offerings using a modified Dutch auction procedure. Treasury Release.
HAMP Developments
On November 30, Treasury and HUD announced a campaign to increase the number of mortgages that are converted to permanent modifications from those currently in the trial phase of the Home Affordable Modification Program. The initiatives include: (i) increased servicer accountability for modifications, (ii) additional tools for borrowers, and (iii) the engagement of state and local stakeholders to increase awareness of the program and expand resources to borrowers. Treasury Release.
Also on November 30, Treasury published Supplemental Directive 09-09 which provides guidance on and terms of the Home Affordable Foreclosure Alternatives Program. This program offers financial incentives to servicers and borrowers who utilize a short sale or deed-in-lieu to avoid foreclosure on a HAMP-eligible loan. HAMP Release. Supplemental Directive.
Capital Assistance Program Closes
On November 9, Treasury announced that the Capital Assistance Program, created to provide additional taxpayer support to financial institutions subject to stress tests under the Supervisory Capital Assessment Program, closed with no investments having been made. Treasury Release. Fed Release.
TARP Reports
On December 5, Treasury released its initial TARP progress report to Congress. On December 2, Treasury presented its third Tranche Report and the GAO published its first TARP report recommending that more steps be taken to ensure accountability and transparency with respect to TARP. First Report to Congress. Tranche Report. GAO Transparency Report.
On December 4, the GAO presented a separate report on TARP to a Senate subcommittee on financial services and general government which focused on TARP’s efforts to address home mortgage defaults and foreclosures. The GAO noted that default and foreclosure rates for home mortgages rose sharply from the second quarter of 2005 through the second quarter of 2008 and indicated that more extensive use of loan modification programs would be necessary to restore stability to the mortgage market and preserve home ownership. In related news, on
On December 8, at the Office of Thrift Supervision’s National Housing Forum Comptroller of the Currency John C. Dugan stated that more than half of the loans modified in the first quarter of 2008 fell delinquent within six months after modification. GAO Home Mortgage Report. OCC Press Release.
On December 10, the Congressional Oversight Panel for TARP issued its initial report, as mandated by the Emergency Economic Stabilization Act of 2008, urging Treasury to provide more information on its current progress and future plans, and questioning whether Treasury’s efforts are having a positive effect on stabilizing markets and reducing foreclosures. Congressional Oversight Panel Report.
Treasury and FDIC Developments
On November 21, the FDIC released its final rule for the Temporary Liquidity Guarantee Program which, among other changes, explicitly provides that the guarantee is backed by the full faith and credit of the United States government. Orrick Client Alert. FDIC Final Rule.
On November 24, Treasury, the Fed, and the FDIC announced an agreement to provide Citigroup with a package of up to $306 billion of guarantees, liquidity access and $20 billion of capital. Joint Statement by Treasury, the Fed, and the FDIC on Citigroup.
On November 25, Treasury and the New York Fed announced the creation of the $200 billion Term Asset Backed Securities Loan Facility to spur investment in the consumer asset-backed securities market. Fed Release.
On November 25, the Fed announced that it will purchase up to $100 billion in direct obligations of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks and up to $500 billion in mortgage-backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae. Orrick Client Alert. Fed Release.
On November 24, Treasury announced an extension of the Temporary Guarantee Program for Money Market Funds until April 30, 2009 to support ongoing stability in that market. On December 2, the Fed announced an extension through April 9, 2009 of the Primary Dealer Credit Facility, the ABCP Money Market Fund Liquidity Facility and the Term Securities Lending Facility, which were originally set to expire on January 30, 2009. Treasury Press Release. Fed Press Release. Orrick Client Alert.