Yesterday I summarized new Finreg rules requiring banks to retain at least 5% of loans they sell into secondary markets, and outlined which Qualified Residential Mortgage (QRM) loans will be exempt from this rule. The exemption debate rages, and here’s the Mortgage Bankers Association’s “profound concerns” on the matter. The QRM proposals are now open to public comment.
So let’s look at a successful government mandated program, like the Home Affordable Modification Program (HAMP). Oh, wait a minute. HAMP is floundering. Tens of billions of dollars remain unspent and hundreds of thousands of homeowners have been rejected for loan modifications. Tuesday the Republican-controlled House voted to kill the foreclosure relief program. But the Senate, which the Democrats control, will probably pursue a rescue. But, the program is grappling with, as American Banker points out, “weak oversight, conflicts of interest, mind-numbing complexity and poor performance by many participating banks.”
But by one measure, the troubled Asset Relief Program (TARP) appears to have worked. TARP received some good news yesterday when three banks (SunTrust, KeyCorp, and Financial Institutions) repaid $7.4 billion in TARP funds. Including these three, taxpayers have now recouped $251 billion from the TARP program in the form of repayments, dividends, interest and other income. “That exceeds the original investment Treasury made through those programs ($245 billion) by nearly $6 billion,” the federal agency said. “Treasury currently estimates that bank programs within TARP will ultimately provide a lifetime profit of approximately $20 billion to taxpayers.”