3/30/2011
WASHINGTON – The U.S. Department of the Treasury announced that the Troubled Asset Relief Program’s (TARP) investment in banks has now turned a profit after three financial institutions repaid a total of $7.4 billion in TARP funds today to taxpayers.
“While our overriding objective with TARP was to break the back of the financial crisis and save American jobs, the fact that our investment in banks has also delivered a significant profit for taxpayers is a welcome development,” said Treasury Secretary Tim Geithner. “We still have more work to do repairing the damage caused by the crisis and strengthening the recovery, but today is an important milestone in our efforts to recover taxpayer dollars as we continue winding down TARP.”
With today’s proceeds, taxpayers have now recovered $251 billion from TARP’s bank programs through repayments, dividends, interest, and other income. That exceeds the original investment Treasury made through those programs ($245 billion) by nearly $6 billion. Treasury currently estimates that bank programs within TARP will ultimately provide a lifetime profit of approximately $20 billion to taxpayers.
Based on current market conditions, Treasury expects that TARP investment programs taken as a whole – including financial support for banks, AIG, and the domestic auto industry; as well as targeted initiatives to restart the credit markets – will result in little or no cost to taxpayers. The lifetime cost of TARP is likely to be limited to funds disbursed for Treasury’s foreclosure prevention programs, which were not intended to be recovered.
In the President’s FY2012 Budget, the Administration estimated that the lifetime cost of the overall TARP program will total approximately $48 billion. When also including AIG common stock Treasury holds outside of TARP – that projected cost drops to $28 billion.
TARP was one part of a comprehensive set of emergency programs that the government put in place to help stop a financial panic and prevent a second Great Depression. Necessary support for Fannie Mae and Freddie Mac, as well as the critical efforts of the Federal Reserve and FDIC, were also instrumental to saving American jobs and restarting economic growth. When evaluating the fiscal cost of the government’s financial stabilization efforts, it is important to include all of these programs.
A new analysis that the Treasury Department released today reviews the direct fiscal costs of the comprehensive set of measures put in place to stabilize the financial markets during the crisis – including TARP, Federal Reserve and Federal Deposit Insurance Corporation programs, necessary financial support for Fannie Mae and Freddie Mac, and other critical initiatives. Based on current market conditions, Treasury’s analysis forecasts that these emergency financial stabilization programs will produce a combined profit of approximately $24 billion for taxpayers.
Wednesday, March 30, 2011
Thursday, March 24, 2011
Freddie Mac Turns to YouTube to Dispel Common Foreclosure Myths
Freddie Mac is helping consumers separate foreclosure fact from fiction in a new video series launched on its YouTube Channel (http://www.youtube.com/FreddieMac ).
Each 90- to 120-second video dispels one of five common myths that could prevent people from keeping their homes if they face foreclosure. It is based on content from the Freddie Mac Get the Facts on Homeownership education and outreach materials.
News Facts
Myth 1: If my house is foreclosed, I can never buy a house again -- the foreclosure will stay on my record forever.
Truth 1: Foreclosure can have a devastating effect on your finances and you personally, but you can recover. Use the time after foreclosure to prepare yourself for successful homeownership the second time around by creating a spending and savings plan and rebuilding your credit.
Myth 2: I should stop paying my mortgage so I can get assistance with my mortgage payments.
Truth 2: Stopping payment on your mortgage only hurts your situation and can expose you to foreclosure and credit difficulties that could require years to rebuild.
Myth 3: If I'm late on my monthly payments, I'll lose my house.
Truth 3: If you have a financial hardship and fall behind, it's possible to keep your house and get back on track if you contact your lender as soon as possible to discuss your options. You can also contact a HUD-approved housing counselor by calling the Homeowner's HOPE Hotline at 888-995-HOPE (4673).
Myth 4: I am getting many offers for help from a variety of people. They are probably all scams.
Truth 4: Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their home. It's important to always open and respond to communications from your lender, particularly if you've already missed a mortgage payment. In addition, if you are in a financial crisis or facing foreclosure, make sure you work with your lender or a HUD-approved counseling agency to avoid common scams.
Myth 5: My lender is not responding to my inquiries, so I should just give up and face foreclosure.
Truth 5: Whatever you do, don't walk away, and don't give up. It may take several attempts to reach your lender because their call volume can be very high.
Source: Freddie Mac
Each 90- to 120-second video dispels one of five common myths that could prevent people from keeping their homes if they face foreclosure. It is based on content from the Freddie Mac Get the Facts on Homeownership education and outreach materials.
News Facts
Myth 1: If my house is foreclosed, I can never buy a house again -- the foreclosure will stay on my record forever.
Truth 1: Foreclosure can have a devastating effect on your finances and you personally, but you can recover. Use the time after foreclosure to prepare yourself for successful homeownership the second time around by creating a spending and savings plan and rebuilding your credit.
Myth 2: I should stop paying my mortgage so I can get assistance with my mortgage payments.
Truth 2: Stopping payment on your mortgage only hurts your situation and can expose you to foreclosure and credit difficulties that could require years to rebuild.
Myth 3: If I'm late on my monthly payments, I'll lose my house.
Truth 3: If you have a financial hardship and fall behind, it's possible to keep your house and get back on track if you contact your lender as soon as possible to discuss your options. You can also contact a HUD-approved housing counselor by calling the Homeowner's HOPE Hotline at 888-995-HOPE (4673).
Myth 4: I am getting many offers for help from a variety of people. They are probably all scams.
Truth 4: Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their home. It's important to always open and respond to communications from your lender, particularly if you've already missed a mortgage payment. In addition, if you are in a financial crisis or facing foreclosure, make sure you work with your lender or a HUD-approved counseling agency to avoid common scams.
Myth 5: My lender is not responding to my inquiries, so I should just give up and face foreclosure.
Truth 5: Whatever you do, don't walk away, and don't give up. It may take several attempts to reach your lender because their call volume can be very high.
Source: Freddie Mac
Friday, March 18, 2011
FDIC Sues 3 Former Bank Execs for Risky Lending
Federal bank regulators are suing three former top executives of Washington Mutual, accusing them of allowing risky mortgage lending.
In the civil lawsuit, the Federal Deposit Insurance Corp. accuses the three former executives of risky lending practices that caused the bank to make mortgages "with little or no regard for borrowers' ability to repay them.”
Washington Mutual, which was the largest U.S. bank ever to fail, collapsed in September 2008. It was later sold for $1.9 billion to JPMorgan Chase & Co. WaMu held $307 billion in assets at the time.
The bank officials named in the lawsuit are former WaMu CEO Kerry Killinger, ex-Chief Operating Officer Stephen Rotella, and David Schneider, who headed the bank's home loans division.
The former bank officials have released statements calling the lawsuit “baseless” and “political theater.”
The lawsuit marks the first high-profile legal action the FDIC has taken in attempting to recover losses from failed banks, the Associated Press reports. The FDIC has shut down 347 banks since January 2008, the height of the financial crisis.
Source: “FDIC Sues 3 Former Top Executives of Failed Washington Mutual, Biggest U.S. Bank Failure,” Associated Press (March 17, 2011)
In the civil lawsuit, the Federal Deposit Insurance Corp. accuses the three former executives of risky lending practices that caused the bank to make mortgages "with little or no regard for borrowers' ability to repay them.”
Washington Mutual, which was the largest U.S. bank ever to fail, collapsed in September 2008. It was later sold for $1.9 billion to JPMorgan Chase & Co. WaMu held $307 billion in assets at the time.
The bank officials named in the lawsuit are former WaMu CEO Kerry Killinger, ex-Chief Operating Officer Stephen Rotella, and David Schneider, who headed the bank's home loans division.
The former bank officials have released statements calling the lawsuit “baseless” and “political theater.”
The lawsuit marks the first high-profile legal action the FDIC has taken in attempting to recover losses from failed banks, the Associated Press reports. The FDIC has shut down 347 banks since January 2008, the height of the financial crisis.
Source: “FDIC Sues 3 Former Top Executives of Failed Washington Mutual, Biggest U.S. Bank Failure,” Associated Press (March 17, 2011)
Wednesday, March 16, 2011
Don’t be Scammed by Fake IRS Communications
IRS TAX TIP 2011-38, February 23, 2011
The IRS receives thousands of reports each year from taxpayers who receive suspicious emails, phone calls, faxes or notices claiming to be from the Internal Revenue Service. Many of these scams fraudulently use the Internal Revenue Service name or logo as a lure to make the communication more authentic and enticing. The goal of these scams – known as phishing – is to trick you into revealing personal and financial information. The scammers can then use that information – like your Social Security number, bank account or credit card numbers – to commit identity theft or steal your money.
Here are five things the IRS wants you to know about phishing scams:
The IRS doesn’t ask for detailed personal and financial information like PIN numbers, passwords or similar secret access information for credit card, bank or other financial accounts.
The IRS does not initiate taxpayer communications through e-mail and won’t send a message about your tax account. If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site:
• Do not reply to the message.
• Do not open any attachments. Attachments may contain malicious code that will infect your computer.
• Do not click on any links. If you clicked on links in a suspicious e-mail or phishing website and entered confidential information, visit the IRS website and enter the search term 'identity theft' for more information and resources to help.
The address of the official IRS website is http://www.irs.gov . Do not be confused or misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov. If you discover a website that claims to be the IRS but you suspect it is bogus, do not provide any personal information on the suspicious site and report it to the IRS.
If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 to determine if the IRS has a legitimate need to contact you. Report any bogus correspondence.
You can help shut down these schemes and prevent others from being victimized. Details on how to report specific types of scams and what to do if you’ve been victimized are available at http://www.irs.gov , keyword “phishing.”
The IRS receives thousands of reports each year from taxpayers who receive suspicious emails, phone calls, faxes or notices claiming to be from the Internal Revenue Service. Many of these scams fraudulently use the Internal Revenue Service name or logo as a lure to make the communication more authentic and enticing. The goal of these scams – known as phishing – is to trick you into revealing personal and financial information. The scammers can then use that information – like your Social Security number, bank account or credit card numbers – to commit identity theft or steal your money.
Here are five things the IRS wants you to know about phishing scams:
The IRS doesn’t ask for detailed personal and financial information like PIN numbers, passwords or similar secret access information for credit card, bank or other financial accounts.
The IRS does not initiate taxpayer communications through e-mail and won’t send a message about your tax account. If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site:
• Do not reply to the message.
• Do not open any attachments. Attachments may contain malicious code that will infect your computer.
• Do not click on any links. If you clicked on links in a suspicious e-mail or phishing website and entered confidential information, visit the IRS website and enter the search term 'identity theft' for more information and resources to help.
The address of the official IRS website is http://www.irs.gov . Do not be confused or misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov. If you discover a website that claims to be the IRS but you suspect it is bogus, do not provide any personal information on the suspicious site and report it to the IRS.
If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 to determine if the IRS has a legitimate need to contact you. Report any bogus correspondence.
You can help shut down these schemes and prevent others from being victimized. Details on how to report specific types of scams and what to do if you’ve been victimized are available at http://www.irs.gov , keyword “phishing.”
Thursday, March 10, 2011
Credit Score Quiz
I came across an interesting website that allows you to "test" your knowledge about credit scores. It's short (25 questions) and informative.
You will find the quiz at http://www.creditscorequiz.org/.
One note - at the end of the quiz, you may be offered the opportunity to get a "free" credit score. My advice is to not take the offer.
If you want to check your credit (and you should) go to http://www.annualcreditreport.com/
You will find the quiz at http://www.creditscorequiz.org/.
One note - at the end of the quiz, you may be offered the opportunity to get a "free" credit score. My advice is to not take the offer.
If you want to check your credit (and you should) go to http://www.annualcreditreport.com/
Wednesday, March 9, 2011
AARP Sues HUD Over Reverse Mortgage Policy
AARP, an organization representing seniors, has filed a lawsuit against the Department of Housing and Urban Development saying that HUD’s policy changes with reverse mortgages have pushed more older home owners into foreclosure. HUD regulates reverse mortgages, which pay older home owners a regular sum against the equity in their house.
The lawsuit centers on reverse mortgages where only one spouse signed the loan document. The AARP argues that HUD’s policy change in late 2008 has caused surviving spouses who are not named on the mortgage to be required to pay the full loan balance in order to stay in the home, even when the property is underwater.
Reverse mortgages were intended to be nonrecourse, so that even if a home’s value drops the borrower would only lose the house and would not be required to pay anything additional.
The lawsuit says HUD’s policy changes are unfair because they allow underwater homes with reverse mortgages to be sold to others for less than the full mortgage balance, while requiring spouses or heirs to the property to pay the full amount.
''HUD has illegally and without notice changed the rules in the middle of the game at the expense of vulnerable older people,'' says Jean Constantine-Davis, a senior lawyer at the AARP Foundation.
Source: “AARP Sues U.S. Over Effects of Reverse Mortgages,” The New York Times (March 9, 2011)
The lawsuit centers on reverse mortgages where only one spouse signed the loan document. The AARP argues that HUD’s policy change in late 2008 has caused surviving spouses who are not named on the mortgage to be required to pay the full loan balance in order to stay in the home, even when the property is underwater.
Reverse mortgages were intended to be nonrecourse, so that even if a home’s value drops the borrower would only lose the house and would not be required to pay anything additional.
The lawsuit says HUD’s policy changes are unfair because they allow underwater homes with reverse mortgages to be sold to others for less than the full mortgage balance, while requiring spouses or heirs to the property to pay the full amount.
''HUD has illegally and without notice changed the rules in the middle of the game at the expense of vulnerable older people,'' says Jean Constantine-Davis, a senior lawyer at the AARP Foundation.
Source: “AARP Sues U.S. Over Effects of Reverse Mortgages,” The New York Times (March 9, 2011)
Thursday, March 3, 2011
Ex-Bank Exec Pleads Guilty in Billion-Dollar Scheme
A former Colonial Bank executive pleaded guilty to her role in covering up a billion-dollar scheme, which is considered one of the largest cases of fraud from the nationwide mortgage crisis.
Catherine Kissick, who used to head the now-closed Colonial Bank’s mortgage lending division in Orlando, pleaded guilty to her role in covering up fraud that involved Colonial Bank and Taylor, Bean & Whitaker Mortgage Corp. She could face up to 30 years in prison.
Prosecutors accused Kissick of concealing Colonial’s purchase of hundreds of millions of dollars of fake or problem mortgages from Taylor, Bean & Whitaker. Colonial then listed the mortgages as assets when it applied for $550 million in federal bank bailout funds, prosecutors say.
The scheme was uncovered in August 2009. Kissick is the second person convicted in the case; Taylor, Bean & Whitaker's former treasurer, Desiree Brown, also pleaded guilty to conspiracy to commit fraud.
"This is just the tip of the iceberg; we're going to see many more cases like this and, unfortunately, a lot of them of them are going to be in Florida," says Kenneth H. Thomas, an author and banking consultant in Miami. "The failure of Colonial Bank was no small matter. It was a huge failure, and it cost taxpayers billions of dollars."
Source: “Former Mortgage Chief Pleads Guilty Ex-Colonial Bank Executive Could get 30 Years,” Orlando Sentinel (March 3, 2011)
Catherine Kissick, who used to head the now-closed Colonial Bank’s mortgage lending division in Orlando, pleaded guilty to her role in covering up fraud that involved Colonial Bank and Taylor, Bean & Whitaker Mortgage Corp. She could face up to 30 years in prison.
Prosecutors accused Kissick of concealing Colonial’s purchase of hundreds of millions of dollars of fake or problem mortgages from Taylor, Bean & Whitaker. Colonial then listed the mortgages as assets when it applied for $550 million in federal bank bailout funds, prosecutors say.
The scheme was uncovered in August 2009. Kissick is the second person convicted in the case; Taylor, Bean & Whitaker's former treasurer, Desiree Brown, also pleaded guilty to conspiracy to commit fraud.
"This is just the tip of the iceberg; we're going to see many more cases like this and, unfortunately, a lot of them of them are going to be in Florida," says Kenneth H. Thomas, an author and banking consultant in Miami. "The failure of Colonial Bank was no small matter. It was a huge failure, and it cost taxpayers billions of dollars."
Source: “Former Mortgage Chief Pleads Guilty Ex-Colonial Bank Executive Could get 30 Years,” Orlando Sentinel (March 3, 2011)
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