Financial and Housing Market Stabilization Plans Library

• The Federal Reserve released a final liquidity coverage ratio (LCR) rule.
• GAO released a report on the complex U.S. financial regulatory framework.
• OCC released a quarterly Mortgage Metrics report.

Foreclosure Prevention Report for 2015's 4th quarter

Roadmap Update (03-20-16)

Treasury deobligated $2 billion of MHA funds.

Roadmap Update (03-06-16)

Federal Bank of New York authors released an article, Whither Mortgages? exploring why household mortgage debt has been essentially flat since 2012, in spite of a substantial rise in housing prices over that period.  The paper states, “It isn’t foreclosures.”  It explains that principal paydown has grown substantially.

• The GSEs reported quarterly income of over $2 billion each. 
• FHFA released a Refinance Report.
• Treasury will obligate up to $2 billion in TARP funds to the Hardest Hit Fund.

The European Commissioner for Financial Stability, Financial Services and Capital Markets Union and the CFTC announced a common approach regarding requirements for central clearing counterparties.

The FDIC released stress test scenarios.

The Federal Reserve released a report on progress made in its initiative to enhance payment system speed, efficiency, and security.

• On January 19, 2016, Treasury requested public comment on the evolving structure of the U.S. Treasury market.
• NCUA and Treasury announced an agreement to streamline the application process for low-income credit unions to become certified as Community Development Financial Institutions (CDFIs).

Roadmap Update (01-17-16)

• After an annual review, FSOC declined to rescind its designation of Prudential Financial, Inc. for enhanced prudential standards and supervision by the Federal Reserve. 
• FHFA released its 2016 scorecard for the GSEs and the Common Securitization Solutions. 
• FHFA released its Foreclosure Prevention Report for the third quarter of 2015.
• The OCC released its Semiannual Risk Perspective for fall 2015.
• The OCC released its Mortgage Metrics report for the third quarter of 2015.

The Federal Reserve approved a final rule specifying its procedures for emergency lending under section 13(3) of the Federal Reserve Act.  The Dodd-Frank Act  limited the emergency lending to programs and facilities with “broad-based eligibility” that are approved by the Federal Reserve and Treasury, and prohibits lending to insolvent entities.  The final rule defines broad-based to mean a program or facility that is not designed for the purpose of aiding any number of failing firms and in which at least five entities would be eligible to participate.  The final rule defines insolvency to cover borrowers who fail to pay undisputed debts as they become due during the 90 days prior to borrowing or who are determined by the Board or lending Reserve Bank to be insolvent.  The final rule requires that the interest rate for section 13(3) credit be premium to the market rate in normal circumstances, and the rate must afford liquidity in unusual and exigent circumstances, encourage repayment, and discourage use of the program as circumstances normalize.

• The Federal Reserve Board proposed a rule requiring large banking organizations to publicly disclose several measures of their liquidity profile.  Under the Liquidity Coverage Ratio (LCR) rule adopted by the federal banking agencies last September, large banking organizations (with assets over $50 billion) and certain depository institution subsidiaries are required to hold a minimum amount of high-quality liquid assets (HQLA) that can be easily and quickly converted into cash.  The amount of HQLA held by each large banking organization must be equal to or greater than its projected net cash outflow during a hypothetical stress scenario lasting for 30 days.  The ratio of the firm's HQLA to its net cash outflow is its LCR.  Under the proposed rule, large banking organizations would be required to disclose their consolidated LCRs each quarter based on averages over the prior quarter.  Firms would also be required to disclose their consolidated HQLA amounts, broken down by HQLA category.  Additionally, firms would be required to disclose their projected net cash outflow amounts, including retail inflows and outflows, derivatives inflows and outflows, and several other measures.
• The Federal Reserve Board approved a final rule to modify its capital plan and stress testing rules. The changes would take effect for the 2016 capital plan and stress testing cycle.  The final rule is largely similar to the proposed rule and would modify the timing for several regulatory requirements that have yet to be integrated into the capital plan and stress-testing framework.  Firms subject to the supplementary leverage ratio would begin to incorporate it into their capital plan and stress testing for the 2017 cycle.  For stress-testing exercises, all firms would continue to use the generally applicable risk-based capital framework, but use of the advanced approaches risk-based capital framework would be delayed indefinitely.  However, those firms would continue to be subject to the advanced approaches framework for their regulatory capital ratios.  The common equity tier 1 capital requirement in the  revised regulatory capital rules will be fully phased in over the nine-quarter planning horizon of the 2016 capital plan and stress testing cycles. Generally, this ratio will require firms to hold more regulatory capital than the tier 1 common ratio, which was used before the introduction of the Board's revised regulatory capital rules. The final rule would remove the requirement for firms to calculate a tier 1 common ratio.
• The Federal Reserve Board announced that it is implementing several recommendations to enhance the supervision of large and complex banking organizations.  The recommendations were developed after an extensive review of Reserve Bank procedures.  The Operating Committee of the Large Institution Supervision Coordinating Committee will oversee the establishment of minimum operating and documentation standards for all supervisory activities.  The Federal Reserve System is also developing a curriculum specifically tailored to the supervision of large financial institutions for its examiner commissioning and training program.
• FHFA released a Refinance Report for the third quarter, showing that 25,824 HARP refinances were completed in the quarter, down from 31,561 in the previous quarter.  More than 3.3 million borrowers have refinanced their homes through HARP since the program began in 2009, and FHFA estimates that, as of June, more than 429,000 borrowers nationwide still have a financial incentive to refinance through the program.

• The Federal Reserve announced a plan to redistribute unclaimed funds under the Independent Foreclosure Review Payment Agreement to eligible borrowers who have cashed or deposited checks.  Borrowers of servicers regulated by the Federal Reserve have cashed or deposited checks with a value of $798 million, which is approximately 91 percent of the total payments issued to these borrowers.
• FHFA released its 2015 Performance and Accountability Report.  It discusses the agency’s success under a number of goals as met, partially met, or unmet.  All but two were met.  Goals not met include providing examination reports within 90 days of completing examination work, and publishing a proposed duty to serve rule.

FHFA announced an expansion of the Neighborhood Stabilization Initiative to 18 additional metropolitan areas.  Effective December 1, community organizations will be given the opportunity to review and purchase foreclosed properties owned by Fannie Mae or Freddie Mac in these 18 additional metropolitan areas before the properties are made publicly available for purchase.  Fannie Mae and Freddie Mac will focus on disposition of real estate owned (REO) properties in ways that place a priority on stabilizing neighborhoods.  The metropolitan areas are:

• Akron, OH;
• Atlanta-Sandy Springs-Roswell, GA;
• Baltimore-Columbia-Towson, MD;
• Chicago-Naperville-Elgin, IL;
• Cincinnati, OH-KY-IN;
• Cleveland-Elyria, OH;
• Columbus, OH;
• Dayton, OH;
• Detroit-Warren-Dearborn, MI;
• Jacksonville, FL;
• Miami-Fort Lauderdale-West Palm Beach, FL;
• New York-Newark-Jersey City, NY-NJ-PA;
• Orlando-Kissimmee-Sanford, FL;
• Philadelphia-Camden-Wilmington, PA-NJ-DE;
• Pittsburgh, PA;
• St. Louis, MO;
• Tampa-St. Petersburg-Clearwater, FL, and
• Toledo, OH

These markets are Metropolitan Statistical Areas in which Fannie Mae and Freddie Mac each had at least 100 REO properties valued at less than $75,000. 

• Fannie Mae announced results for the third quarter of 2015, showing net income of $2 billion.  The GSE reported a net worth of $4.0 billion as of September 30, resulting in a dividend obligation to Treasury of $2.2 billion, expected to be paid in December 2015.  With this dividend payment, the GSE will have paid $144.8 billion in dividends to Treasury, compared to draws of $117.1 billion.
• Freddie Mac announced results for the third quarter of 2015, showing a net loss of $475 million.  The GSE reported a net worth of $1.3 billion as of September 30, resulting in no dividend obligation to Treasury for the quarter.  Freddie Mac has paid $92.6 billion to Treasury and drawn $72.3 billion to date.
• In an annual review, the federal banking agencies reported that credit risk in the shared national credit (SNC) portfolio remained at a high level.  An SNC is a loan or formal loan commitment, and asset such as real estate, stocks, notes, bonds, and debentures taken as debts previously contracted, extended to borrowers by a federally supervised institution, its subsidiaries, and affiliates that aggregates to $20 million or more and is shared by three or more unaffiliated supervised institutions.  The review found that leveraged transactions originated within the past year continued to exhibit structures that were cited as weak by examiners.  The review also noted an increase in weakness among credits related to oil and gas exploration, production, and energy services following the decline in energy prices since mid-2014.  The review shows that total SNC commitments increased by $518.3 billion to $3.9 trillion, a 15.3 percent gain from 2014.  Classified commitments as well as credits rated special mention (for potential weakness) remained elevated at 9.5 percent of total commitments.  Classified and special mention commitments increased $31.9 billion from 2014, or 9.4 percent, from $340.6 billion to $372.6 billion. Substandard dollar volume increased 18.5 percent from 2014, primarily because of deterioration in oil and gas commitments, and represented 5.8 percent of the SNC portfolio.  This  review examined $1.04 trillion in credit commitments covering 26.5 percent of the $3.9 trillion SNC portfolio.  The sample was weighted toward noninvestment grade, special mention, and classified credits.  Results are based on analyses prepared in the second quarter of 2015, using data as of December 31, 2014, and March 31, 2015.
• GAO reported on the status of TARP’s CPP and CDCI programs.
  • CPP: Treasury’s total investment for this program was about $205 billion; by December 2009, Treasury had disbursed all funds to 707 financial institutions nationwide.  As of August 31, 2015, Treasury had received about $227 billion in repayments and income from its CPP investments and sales of original CPP investments, exceeding the amount originally disbursed by about $22 billion. Its outstanding investment balance stood at about $0.27 billion, and 20 institutions remained in the program.
  • CDCI: Treasury’s total investment for this program was approximately $0.57 billion for 84 institutions.  By September 2010, Treasury had disbursed $0.21 billion and approximately $0.36 billion represented exchanges by banks of investments under CPP into CDCI.  As of August 31, 2015, Treasury had received approximately $0.16 billion in repayments and income from CDCI participants.  The outstanding investment balance was $0.46 billion, and 63 institutions remained in the program.
• Treasury announced myRA, a Roth IRA savings option for those who do not have a retirement savings plan at work.  The funds go into Treasury savings bonds, and are subject to Roth income limits ($30,500 for singles and $61,000 for married couples). 

• The Federal Reserve proposed a rule to require global systemically important banks (GSIBs) to hold sufficient amounts of long-term debt that is convertable to equity during a bank’s resolution, to provide private capital to support the firms' critical operations during resolution.  The proposal would also require the banks to meet a total loss-absorbing capacity (TLAC) that can be met with both regulatory capital and long-term debt. 
• SIGTARP released a quarterly report to Congress.
• The European Parliament adopted a regulation to increase transparency of securities financing transactions.  It will require transactions (except with a central bank) to be reported to a central database; detailed reporting; and prior consent for a collateral taker’s pre-default reuse of collateral.

The European Commission announced that the European Program for Employment and Social Innovation and six microfinance institutions are signing guarantee agreements.  The European Commission will contribute €17 million to the guarantees, which is expected to result in microloans worth €237 million through 2020.

This is a September 21, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released an Update on the Common Securitization Platform.  

o   From 2012 through mid-2015, the GSEs invested $146 million in CSS.  The company currently relies on GSE resources, including employees.  CSS plans to convert the employees to CSS employees and to stand up its own corporate functions, in the first half of 2016.  CSS will continue to purchase certain services from the GSEs.

• The CSP has five modules:
  • Module 1:  Data Acceptance.  Upon receipt of a securitization request, the Data Acceptance module will endeavor to validate it.  The GSE will have an opportunity to correct any errors.
  • Module 2:  Issuance Support.  After validation, the Issuance Support module will send data on the security to the NY Fed or DTCC, who will register the security in its system and broadcast summary information to market participants, typically two days before the security will be issued.
  • Module 3:  Master Servicing Operations.  Completion of Module 3 and decisions on its use have been deferred until after the GSEs begin issuing Single Securities.  The GSEs will continue to validate all loan-level data submitted by servicers, and sending validated loan-level data to CSS for the use of the Bond Administration module.  Deferring the implementation of the Master Servicing Operations module reduces the scope of the CSP initiative in the near term so that CSS and the GSEs can focus on preparing for the issuance of Single Securities.  The GSEs and FHFA will later determine if and when the module will be used.
  • Module 4:  Bond Administration.  This module will calculate pool factors for first-level securities and bond factors for second- and third-level securities and release the factors to the market.  For third-level securities, the module will use industry-standard software to track and forecast multi-class payments.  Each quarter and each year the module will perform appropriate tax reporting to investors and the IRS.
  • Module 5:  Disclosure.  The Disclosure Module will produce loan- and security-level disclosures before the issuance of a security, and monthly throughout the life of the security.  Data files will be released for use by data vendors.
• FHFA anticipates a 2016 announcement of initial use of Release 1, by which Freddie Mac will use the Data Acceptance, Issuance Support, and Bond Administration modules to perform activities related to its current single-class, fixed-rate PCs and Giant PCs.  Release 1 will require the CSP to support data processing for approximately nine million mortgage loans, 500,000 pools, and 250,000 securities.  Release 2 will allow both GSEs to use those same modules to perform activities related their current fixed-rate securities, both single- and multi-class; to issue Single Securities, including commingled re-securitizations; and to perform activities related to the underlying loans.  Release 2 will also allow Fannie Mae to use the CSP to issue and administer mortgage securities backed by ARM loans.
• Today, neither GSE can issue second- or third- level mortgage securities backed by commingled first-, second-, or third-level securities issued by both GSEs.  That capability is critical to achieving the Single Security initiative’s objective of enhancing the liquidity of the secondary mortgage market.  A first-level mortgage security is collateralized by a single pool of mortgage loans with one class of investors.  A second-level security is collateralized by previously issued first- or second-class securities, with one class of investors.  A third-level mortgage security is a multi-class security collateralized by a group of previously issued first-, second-, or third-level securities.
• The software design principles include:
  • Open architecture, so the GSEs and CSP users will be able to integrate their IT platforms and exchange data with the CSP using MISMO and other industry data standards.  
  • Functional modularity, so that modules can be modified, configured, or replaced, or that new functionality can be added to a module, with reduced impact on any of the other modules or on the CSP as a whole.
  • Scalability, so the CSP will be capable of performing well at steadily increasing volumes.
  • Data transparency to allow changes in the data on individual loans and securities to be traced throughout the securitization lifecycle.
  • Event automation and straight-through processing, by which defined events trigger further data processing by a separate part of the software that can be called upon when needed.

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• 83% of HAMP Tier 1 homeowners will experience an interest rate increase after five years.
• The first interest rate increase went into effect in Q3 2014 for the earliest group of HAMP modifications, who will begin to experience their second interest rate step-ups beginning in Q3 2015.
• Through June 2015, approximately 200,000 homeowners have experienced an interest rate step-up.  Based on early results, the rate increase does not appear to have an impact on the performance of these modifications.  The percentage of modifications disqualifying in the month following the reset remains consistent with the months leading up to the reset, at less than or equal to 1%.
• The majority of HAMP homeowners will experience two to three interest rate increases.
• Homeowners who received a modification in 2009-2011 are more likely to experience three to four increases than homeowners who received a modification in 2012-2013, most of whom will experience two increases.
• The median amount of the first monthly payment increase is $94, and the median monthly payment increase after the final interest rate increase is $210.

Roadmap Update (10-15-09)

This is the October 11, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The Small Business Lending Fund released its October 2015 quarterly report showing that as of June 30, 2015, participants had increased their small business lending by $14.8 billion over a $30.0 billion baseline, a $625 million decrease over the prior quarter, largely due to participants leaving the program.

This is the October 4, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• On September 29, 2015, Treasury, the Education Department, and the CFPB announced joint student loan servicing principles.  They call for: 
  • Consistent requirements for timely service, payment processing, servicing transfers, information requests, error resolution, and disclosure of borrower repayment options and benefits.
  • Information servicers provide should be accurate and actionable.

o   Servicers should be accountable.

o   Private and federal loan servicing information should be public regarding loan origination, loan terms and conditions, borrower characteristics, portfolio composition, delinquency and default, payment plan enrollment, utilization of forbearance and deferment, the administration of borrower benefits and protections, and the handling borrower complaints. 

• OCC released its Mortgage Metrics report for the second quarter of 2015, showing:
  • 93.8% of mortgages included in the report were current and performing at the end of the quarter, compared with 92.9% a year earlier. The percentage of mortgages that were 30 to 59 days past due was 2.2% of the portfolio, a 7.9% decrease from a year earlier. Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—made up 2.6% of the portfolio—a 16.0% decrease from a year earlier.  Mortgage performance declined slightly from the previous quarter, consistent with observed seasonal trends.
  • Foreclosure activity among the reporting servicers also declined from a year ago.  The number of mortgages in the process of foreclosure at the end of the second quarter of 2015 was 299,500, a decrease of 23.5% from a year earlier. The percentage of mortgages within this portfolio that were in the process of foreclosure at the end of the second quarter of 2015 was 1.4%.  Servicers initiated 70,728 new foreclosures during the quarter, a decrease of 11.3% from a year earlier.  The number of completed foreclosures decreased 23.4% from a year earlier to 37,275.  Improved economic conditions and foreclosure prevention assistance contributed to the decline in foreclosure activity.
  • Servicers implemented 179,382 home retention actions during the quarter—including modifications, trial-period plans, and shorter-term payment plans.  More than 86% of modifications made during the second quarter of 2015 reduced monthly principal and interest payments; 52.0% of modifications reduced payments by 20% or more.  Modifications reduced payments by $245 per month on average.
  • Servicers implemented 3,747,455 modifications from January 1, 2008, through March 31, 2015.  Of these modifications, 52% were active at the end of the second quarter of 2015, and 48% had exited the portfolio through payment in full, involuntary liquidation, or transfer to a non-reporting servicer.  Of the 1,943,467 active modifications at the end of the second quarter of 2015, 71.7% were current and performing, 22.8% were delinquent, and 5.4% were in the process of foreclosure.
  •  
• FHFA released its Foreclosure Prevention report for the second quarter of 2015, showing:
  • The GSEs helped 3.541 million troubled homeowners helped during the GSE conservatorships.
  • The REO inventory of Fannie Mae and Freddie Mac declined 14% during the second quarter to 86,515, marking the first time REO inventory has been below 100,000 since 2009.
  • The number of 60+ day delinquent loans declined another 6% during the quarter.
  • Approximately 31% of all permanent loan modifications in the second quarter helped to reduce homeowners’ monthly payments by over 30%.
  • The serious delinquency rate of Fannie Mae and Freddie Mac loans fell to 1.6% at the end of the second quarter.

• The SSBCI released a report for the quarter ending June 30, 2015. Congress enacted this program in 2010. The report shows:
  • Through June 30, 2015, states drew $1,175,906,190.  Of this total, $1,081,082,235 was from original SSBCI allocations and $94,823,955 was from recycled SSBCI funds.  Recycled funds are funds from program income, interest earned, or principal repayments.
  • As of June 30, 2015, $1,261,421,194 out of $1,456,685,731 or 87% of total allocated funds was disbursed to the states.
  • SSBCI will sunset in 2017.  The President’s 2016 budget proposes to extend the program with $1.5 billion in funding.

• On September 30, 2015, the European Commission proposed securitization legislation to require 5% risk retention, institutional investor due diligence, and originator disclosure requirements.

This is the September 27, 2015 update to the Roadmap to Financial and Housing Market Stabilization Plans:

• On September 23, 2015, U.S. and European financial regulators met to exchange information on regulatory developments.  They discussed bank structural measures, recent developments in bank resolution, central counterparty resolution, derivatives reforms, securitization within the context of the Capital Markets Union, money market funds, alternative investment fund managers, benchmarks, information sharing for supervisory and enforcement purposes, cooperation on audit oversight, and cybersecurity.

EU participants discussed their efforts to facilitate access to market-based finance through the creation of a capital markets union.  EU participants and the CFTC and SEC reported they continue bilateral discussions of central counterparties.  They discussed the Federal Reserve’s proposed capital surcharges and leverage requirements for the largest U.S. banks, while EU participants provided an update on their legislative developments on bank structural reform. EU participants reiterated their concerns about the effect of the Volcker Rule on foreign funds.  Participants noted their continued progress on cross-border resolutions.  Participants emphasized the importance of clear, credible, and well-designed recovery and resolution frameworks for central counterparties.  The EU participants noted that EU legislators strive to create a framework which would allow well-governed benchmarks with solid checks on data inputs to be eligible for use in the EU. U.S. participants noted their hope that EU efforts to establish a framework for regulating benchmarks would continue to allow U.S. benchmarks to be used in the EU.  EC participants and FIO reiterated their commitment to engage all stakeholders and to commence insurance negotiations by the end of 2015.  The PCAOB and EC participants commended the establishment of a stable framework for transatlantic cooperation among audit regulators.  Finally, all participants stressed the need to develop policy responses to cybersecurity risks.

Attached please find the September 21, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• FHFA released an Update on the Common Securitization Platform.  

o   From 2012 through mid-2015, the GSEs invested $146 million in CSS.  The company currently relies on GSE resources, including employees.  CSS plans to convert the employees to CSS employees and to stand up its own corporate functions, in the first half of 2016.  CSS will continue to purchase certain services from the GSEs.

• The CSP has five modules:
  • Module 1:  Data Acceptance.  Upon receipt of a securitization request, the Data Acceptance module will endeavor to validate it.  The GSE will have an opportunity to correct any errors.
  • Module 2:  Issuance Support.  After validation, the Issuance Support module will send data on the security to the NY Fed or DTCC, who will register the security in its system and broadcast summary information to market participants, typically two days before the security will be issued.
  • Module 3:  Master Servicing Operations.  Completion of Module 3 and decisions on its use have been deferred until after the GSEs begin issuing Single Securities.  The GSEs will continue to validate all loan-level data submitted by servicers, and sending validated loan-level data to CSS for the use of the Bond Administration module.  Deferring the implementation of the Master Servicing Operations module reduces the scope of the CSP initiative in the near term so that CSS and the GSEs can focus on preparing for the issuance of Single Securities.  The GSEs and FHFA will later determine if and when the module will be used.
  • Module 4:  Bond Administration.  This module will calculate pool factors for first-level securities and bond factors for second- and third-level securities and release the factors to the market.  For third-level securities, the module will use industry-standard software to track and forecast multi-class payments.  Each quarter and each year the module will perform appropriate tax reporting to investors and the IRS.
  • Module 5:  Disclosure.  The Disclosure Module will produce loan- and security-level disclosures before the issuance of a security, and monthly throughout the life of the security.  Data files will be released for use by data vendors.
• FHFA anticipates a 2016 announcement of initial use of Release 1, by which Freddie Mac will use the Data Acceptance, Issuance Support, and Bond Administration modules to perform activities related to its current single-class, fixed-rate PCs and Giant PCs.  Release 1 will require the CSP to support data processing for approximately nine million mortgage loans, 500,000 pools, and 250,000 securities.  Release 2 will allow both GSEs to use those same modules to perform activities related their current fixed-rate securities, both single- and multi-class; to issue Single Securities, including commingled re-securitizations; and to perform activities related to the underlying loans.  Release 2 will also allow Fannie Mae to use the CSP to issue and administer mortgage securities backed by ARM loans.
• Today, neither GSE can issue second- or third- level mortgage securities backed by commingled first-, second-, or third-level securities issued by both GSEs.  That capability is critical to achieving the Single Security initiative’s objective of enhancing the liquidity of the secondary mortgage market.  A first-level mortgage security is collateralized by a single pool of mortgage loans with one class of investors.  A second-level security is collateralized by previously issued first- or second-class securities, with one class of investors.  A third-level mortgage security is a multi-class security collateralized by a group of previously issued first-, second-, or third-level securities.
• The software design principles include:
  • Open architecture, so the GSEs and CSP users will be able to integrate their IT platforms and exchange data with the CSP using MISMO and other industry data standards.  
  • Functional modularity, so that modules can be modified, configured, or replaced, or that new functionality can be added to a module, with reduced impact on any of the other modules or on the CSP as a whole.
  • Scalability, so the CSP will be capable of performing well at steadily increasing volumes.
  • Data transparency to allow changes in the data on individual loans and securities to be traced throughout the securitization lifecycle.
  • Event automation and straight-through processing, by which defined events trigger further data processing by a separate part of the software that can be called upon when needed.
• In a second quarter MHA Report, Treasury projects step increases for HAMP modifications:
  • 83% of HAMP Tier 1 homeowners will experience an interest rate increase after five years.
  • The first interest rate increase went into effect in Q3 2014 for the earliest group of HAMP modifications, who will begin to experience their second interest rate step-ups beginning in Q3 2015.
  • Through June 2015, approximately 200,000 homeowners have experienced an interest rate step-up.  Based on early results, the rate increase does not appear to have an impact on the performance of these modifications.  The percentage of modifications disqualifying in the month following the reset remains consistent with the months leading up to the reset, at less than or equal to 1%.
  • The majority of HAMP homeowners will experience two to three interest rate increases.
  • Homeowners who received a modification in 2009-2011 are more likely to experience three to four increases than homeowners who received a modification in 2012-2013, most of whom will experience two increases.
  • The median amount of the first monthly payment increase is $94, and the median monthly payment increase after the final interest rate increase is $210.

Regards, 

Canfield Press

This is the September 13, 2015 update to the Roadmap to Financial and Housing Market Stabilization Plans:

• GAO released a report entitled, Lender-Placed Insurance – More Robust Data Could Improve Oversight.  Lender-placed insurance (LPI) providers often perform services such as tracking properties to help servicers identify those without insurance and confirming coverage.  LPI premium rates are higher than rates for borrower-purchased insurance, and stakeholders disagreed about whether the difference is justified.  The report states that a lack of comprehensive data limits effective oversight of the LPI industry.  For example, GAO said, regulators lack reliable data that would allow them to evaluate the cost of LPI or the appropriateness of its use.  Some state and federal regulators have taken action to improve oversight of LPI, according to the report.  GAO states that NAIC and FHFA have coordinated to collect policy- and servicer-level data on LPI, but LPI insurers and their servicers did not provide all of the requested data.  GAO recommends that NAIC work with state insurance regulators to collect sufficient, reliable data, and work with state insurance regulators to develop and implement more robust policies and procedures for LPI data.
• The Federal Reserve appointed Federal Reserve Bank of Chicago Senior Vice President Todd Aadland as its Payments Security Strategy Leader.  In this role, Aadland will lead the System’s activities to address fraud risk and advance the safety, security and resiliency of the payment system.  His responsibilities will include chairing the Secure Payments Task Force, comprised of more than 170 payments stakeholders.

This is the September 6, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• GAO released a report on Treasury implementation of GAO’s TARP recommendations. The report states that Treasury has implemented most of the recommendations, but needs to take more action on four partially implemented recommendations related to the Making Home Affordable (MHA) program. The recommendations call for Treasury to issue guidance and monitor servicer compliance on working with borrowers with limited English proficiency.  Treasury issued applicable guidance and obtained the policies of the larger MHA servicers, but has not assessed the implementation of those policies at the servicers.  Treasury has not taken steps to implement three recommendations, including one directed at CPP and two at MHA.  For example, in July 2015, GAO recommended that Treasury establish a standard process to better ensure that changes to TARP-funded MHA programs are based on comprehensive benefit-cost analyses.  Treasury told GAO they would consider these recommendations at the time the recommendations were made.

• The Federal Reserve and OCC announced their approval for Bank of America to begin using the advanced approaches capital framework starting in the fourth quarter of 2015.  Approval requires a bank to conduct a satisfactory trial run of the framework and comply for at least four consecutive quarters.  Banking organization who use the advanced approaches framework must meet the minimum risk-based capital ratios under both the advanced approaches and the generally applicable risk-based capital frameworks.

This is the August 30, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• FHFA released a HARP Refinance Report for the second quarter, showing:
  • There were 31,561 HARP refinances in the second quarter, down slightly from 31,648 in the first quarter.
  • More than 3.3 million borrowers have refinanced their homes through HARP since the program began in 2009, and FHFA estimates that, as of March, more than 578,000 borrowers nationwide still have a financial incentive to refinance through the program.  
  • The top five states with the highest numbers of “in-the-money” borrowers that remain eligible for a HARP refinance are Florida, Ohio, Illinois, Michigan, and Georgia.
  • Through the first half of 2015, 29 percent of all HARP refinances for underwater borrowers (LTV greater than 105 percent) resulted in 15- and 20-year mortgages.
  • The top five states with the highest number of total HARP refinances completed thus far in 2015 are Florida, California, Illinois, Michigan, and Georgia.  The two states with the highest level of HARP refinances as a percentage of total refinances in 2015 are Florida and Georgia.

This is the August 23, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The European Commission announced it has signed a memorandum of understanding with Greece for a new stability support program involving up to €86 billion in loans to Greece over three years, in exchange for the Greek government’s implementation of reforms.

This is the August 9, 2015 update to the Roadmap to Financial and Housing Market Stabilization Plans:

• The New York Federal Reserve Bank released a staff report entitled, How Sensitive is Housing Demand to Down Payment Requirements and Mortgage Rates?  It reports that a change in down payment requirements tends to have a large effect on housing demand, especially for current renters, whereas the effects of a change in the interest rate are modest.
• Fannie Mae announced results for the second quarter of 2015, showing net income of $4.6 billion.  The GSE reported a net worth of $6.2 billion as of June 30, resulting in a dividend obligation to Treasury of $4.4 billion, expected to be paid in September 2015.  With this dividend payment, the GSE will have paid $142.6 billion in dividends to Treasury, compared to draws of $117.1 billion.
• Freddie Mac announced results for the second quarter of 2015, showing net income of $4.2 billion.  The GSE reported a net worth of $5.7 billion as of June 30, resulting in a dividend obligation to Treasury of $1.8 billion, expected to be paid in June 2015.  With this dividend payment, the GSE will have paid $96.5 billion in dividends to Treasury, compared to draws of $72.3 billion.
• The European Commission adopted rules requiring certain over-the-counter interest rate derivatives to be cleared through central counterparties.  The rules cover interest rate swaps denominated in euro, pounds sterling, Japanese yen or U.S. dollars that have specific features, including the index used as a reference for the derivative, its maturity, and the notional type.  These contracts are fixed-to-float rate swaps; float-to-float swaps; forward rate agreements; and overnight index swaps.  Effective dates are staggered.

Attached please find the August 2, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• SIGTARP released a quarterly report to Congress stating:
  • SIGTARP has made 79 recommendations concerning TARP’s housing programs, including nine recommendations concerning TARP’s HHF blight elimination program, but Treasury has not implemented 73 of those recommendations.
  • Treasury can do more to inform struggling homeowners in 10 underserved states about HAMP.
  • Treasury should work with state housing finance agencies to prevent fraud, waste, and abuse in Treasury’s new HHF down payment program.
  • SIGTARP noted that at HAMP’s outset, Treasury said it would provide 3 to 4 million loan modifications, but according to Treasury’s HAMP database, of the 5.7 million homeowners who applied for HAMP between December 2009 and April 2015, servicers turned down 4 million.  The most common reason was incomplete applications (25%), followed by ineligible DTI pre- or post-modification (22%), homeowner rejection of offer (13%), ineligible loan (13%), no default or imminent default (8%), property not owner-occupied (5%), nonparticipating investor (4%), negative NPV (3%), and other (7%).
  • SIGTARP recommended that Treasury “understand the real causes of homeowner denials and act to ensure servicers are treating homeowners who apply for HAMP fairly.”
  • TARP housing programs have $21 billion available to be spent.
  • Treasury holds principal investments in 25 CPP banks, holds warrants in another 11, and there are 64 banks and credit unions in the Community Development Capital Initiative. 

• The Federal Reserve Board and the FDIC announced they provided guidance to 119 firms that in December will be filing updated resolution plans.  One hundred and fifteen U.S. bank holding companies with less than $100 billion in total nonbank assets and foreign-based firms with less than $100 billion in U.S. nonbank assets were required to file their second resolution plans with the agencies in December 2014, and four foreign-based firms were required to file their initial resolution plan.  Following review of the resolution plans, the agencies are providing each firm with guidance, clarification, and direction for their upcoming resolution plans.  Twenty-nine of the more complex firms are required to file either full or tailored resolution plans.  Ninety firms with limited U.S. operations may file plans that focus on material changes to their 2014 resolution plans, actions taken to strengthen the effectiveness of those plans, and, where applicable, actions to ensure any subsidiary insured depository institution is adequately protected from the risk arising from the activities of nonbank affiliates of the firm.  They also announced they provided guidance to AIG, Prudential Financial, and General Electric Capital Corporation.

• Comptroller Curry, in remarks before the New England Council, stated, “The impact of new and, in some respects, tougher regulations fall into two categories. First, there is the risk that banks run afoul of the new regulations, possibly damaging their reputations and subjecting themselves to regulatory penalties. And secondly, there is the fact that time and money devoted to regulatory compliance are resources that cannot be used to accomplish the bank’s mission of serving customers and their communities.  This is particularly challenging for community banks, where the “compliance officer” is likely to have multiple responsibilities.”  He also noted that cyber threats are a significant risk.

Regards, 

Canfield Press

This is the July 26, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The Federal Reserve issued a final order that establishes enhanced prudential standards for General Electric Capital Corporation.  Effective January 1, 2016, the company must comply with risk-based and leverage capital requirements, the liquidity coverage ratio rule, and related reporting requirements.  If the company is still designated by the FSOC on January 1, 2018, it would be required to comply with liquidity risk-management, general risk-management, capital-planning, governance, and stress-testing requirements, as well as restrictions on intercompany transactions.  The Federal Reserve may add to or amend the requirements in the future.
• The Federal Reserve approved a final rule requiring the eight largest U.S. bank holding companies to increase their capital levels, with surcharges from 1.0 to 4.5 percent of each firm’s total risk-weighted assets.  The requirement will phase in between 2016 and 2019.  The rule requires the companies to calculate capital surcharges under two methods and hold the higher of the two surcharges.  The first method is based on the framework agreed to by the Basel Committee on Banking Supervision and considers a firm’s size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity.  The second uses similar inputs, but is calibrated to result in significantly higher surcharges.  The Federal Reserve released a white paper describing how it calibrated the surcharges.
• The European Commission announced the approval of a package of measures to ensure that the European Fund for Strategic Investments (EFSI) is operational by early autumn 2015.  The EFSI is designed to unlock public and private investments of at least €315 billion from the autumn of 2015 through 2017.  The fund will focus its financing on investments in infrastructure and innovation, as well as finance for small- and medium- size businesses.  The EU will provide initial funding through a €16 billion guarantee and €5 from the European Investment Bank.  England announced it will contribute €8.5 billion to projects benefiting from the fund.  France, Italy, Germany, and Poland will contribute €8 billion each to the investment plan; Spain €1.5 billion; Luxembourg €80 million; Slovakia €400 million; and Bulgaria €100 million.

This is the July 19, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• Treasury solicited input on a study of the various business models and products offered by online marketplace lenders, the potential for online marketplace lending to expand access to credit to historically underserved borrowers, and how the financial regulatory framework should evolve to support the safe growth of this industry.

• Several agencies issued a joint report analyzing the significant volatility in the U.S. Treasury market on October 15, 2014.  The joint report makes clear that a number of developments help explain the conditions that likely contributed to the volatility.  Specifically, the report finds that in addition to other factors, changes in global risk sentiment and investor positions, a decline in order book depth, and changes in order flow and liquidity provision together provide important insight into the developments that day.  The report also underscores the changing structure of the U.S. Treasury market.  The report recommends continued analysis of U.S. Treasury market structure and functioning, focusing on trading and risk management practices, the availability of public data, and continued efforts to strengthen monitoring and inter-agency coordination related to trading across the U.S. Treasury cash and futures markets.

• The Federal Reserve proposed to modify the timing for several stress testing requirements that have yet to be integrated into the stress testing framework.  Banking organizations subject to the supplementary leverage ratio would begin to incorporate that ratio into their stress testing in the 2017 cycle.  The use of advanced approaches risk-weighted assets in stress testing would be delayed indefinitely, and all banking organizations would continue to use standardized risk-weighted assets.  The proposal would remove the requirement that banking organizations calculate a tier 1 common ratio, which has been supplanted.  

This is the July 12, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• GAO released a TARP report entitled, Treasury Could More Consistently Analyze Potential Benefits and Costs of Housing Program Changes.  GAO found that from February 2009 to May 2015, Treasury disbursed $16.3 billion of the $37.5 billion in TARP funds allocated to support housing programs.  The number of new HAMP permanent modifications began to decline in late 2013 but has stabilized at between 9,000 and 15,000 additions per month.  Since October 2014, Treasury has expanded incentives in order to draw new entrants into the programs and further assist existing participants.  In making program changes, Treasury took steps to assess their benefits and costs but did not fully meet all of the key elements of federal benefit-cost analysis guidance.  For example, it is unclear whether the recent changes, such as extending performance incentives to borrowers in the sixth year of their HAMP modification (estimated to cost $4-6 billion), will reduce redefaults.  Treasury officials told GAO that borrower surveys confirmed that borrowers responded to performance incentives, but GAO found that Treasury does not have the estimates needed to fully assess the effectiveness of this or other recent changes. Treasury officials said that program benefits and costs depended on unknown factors and macroeconomic trends and that program benefits were difficult to quantify.  OMB guidance and GAO’s past work stress that analyzing benefits and costs can help decision makers choose among alternatives.  Without full and comprehensive analyses, Treasury will be challenged to determine whether program changes are actually achieving desired goals and are an efficient use of taxpayer dollars.  GAO recommends that Treasury develop and implement policies and procedures that establish a standard process to better ensure that TARP-funded housing program changes are based on benefit-cost analyses that meet key elements.
• The Federal Reserve and FDIC announced that they posted the public portions of annual resolution plans for 12 large financial firms.  The twelve firms are:  Bank of America Corporation, Bank of New York Mellon Corporation, Barclays PLC, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group, JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, UBS AG, and Wells Fargo & Company.
• The Small Business Lending Fund released its July 2015 quarterly report showing that as of March 31, 2015, participants had increased their small business lending by $15.4 billion over a $31.3 billion baseline, an increase of $280 million over the prior quarter. 
• Treasury released an annual report on the State Small Business Credit Initiative (“SSBCI”), stating that from 2011 through 2014, states  had expended $864 million in SSBCI funds that supported private sector loans or investments to small businesses totaling $6.4 billion, with $1.9 billion in private sector loans in 2014.  The 2010 Small Business Jobs Act created the SSBCI and funded it with $1.5 billion.  States could apply for federal funds for programs to extend credit to small businesses, and must demonstrate a minimum of $10 in new private lending for every $1 in federal funding.  Applications were due by June 2011.

This is the July 5, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• FHFA released its annual g-fee report.  The report tracks adjustments from 2009 through 2014 and shows that guarantee fees have increased over this period.  Overall, the average level of g-fees has increased since 2009.  The g-fees are currently two-and-a-half times their previous level; from 2009 to 2014, average fees increased from 22 basis points to 58 basis points.  From 2013 to 2014, average fees increased from 51 basis points to 58 basis points.  In 2014, primarily because of changes in the models the GSEs use to estimate the capital necessary to support their mortgage guarantee business, gaps on 30-year fixed rate loans were more negative and gaps on 15-year loans were more positive than in 2013.  A gap is the difference between actual g-fees charged and the expected cost of providing the guarantee.  While the gap on 30-year fixed rate loans was negative relative to targeted return on capital, the returns on capital were positive.  The percentage of loans that the GSEs purchased from small lenders grew substantially in 2014, while pricing differences between small sellers and large sellers remained small.

• The FFIEC released a cybersecurity assessment tool to help institutions identify their risks and assess their cybersecurity preparedness.  There are two parts to the assessment: an inherent risk profile and cybersecurity maturity.  The inherent risk profile identifies the amount of risk posed to an institution by the types, volume, and complexity of the institution’s technologies and connections, delivery channels, products and services, organizational characteristics, and external threats, notwithstanding risk-mitigating controls.  The cybersecurity maturity includes domains, assessment factors, components, and individual declarative statements across five maturity levels to identify specific controls and practices that are in place.  While management can determine the institution’s maturity level in each domain, the assessment is not designed to identify an overall cybersecurity maturity level.

• GAO released a cybersecurity report entitled, Bank and Other Depository Regulators Need Better Data Analytics and Depository Institutions Want More Usable Threat Information.  The report states:

o The largest institutions were generally examined by IT experts, while medium and smaller institutions were sometimes reviewed by examiners with little or no IT training.  Each regulator had efforts under way to increase the number of their staff with IT expertise.
o Regulators generally focused on IT systems at individual institutions but most lacked readily available information on deficiencies across the banking system.  Regulators were not routinely collecting IT security incident reports and examination deficiencies and classifying them by category of deficiency.  Bank regulators directly address the risks posed to their regulated institutions from third-party technology service providers, but the NCUA lacks this authority.  Bank regulators routinely conduct examinations of service providers’ information security.
o Depository institutions obtain cyber threat information from multiple sources, including federal entities such as the Treasury.  Representatives from more than 50 financial institutions told GAO that obtaining adequate information on cyber threats from federal sources was challenging.  Treasury has various efforts under way to obtain and confidentially share information with other institutions.
o GAO recommends that Congress consider granting NCUA authority to examine third-party technology service providers, and that regulators explore ways to better collect and analyze data on trends in IT examination findings across institutions.

• The Federal Reserve announced its first determination of the aggregate consolidated liabilities of all financial companies.  Section 622 of the Dodd-Frank Act prohibits any financial company combination if the resulting company's liabilities exceed 10 percent of this amount.  As of December 31, 2014, the amount was $21,632,232,035,000.

This is the June 28, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The European Central bank announced today that it will hold its emergency liquidity assistance to Greek banks at the level of June 26, 2015.  The central bank said it will work closely with Bank of Greece to maintain financial stability.
• FHFA released its Foreclosure Prevention Report for the first quarter of 2015, showing:
  • The GSEs completed 65,960 foreclosure prevention actions in the quarter of 2015, bringing the total to nearly 3.5 million since the start of the conservatorships.  These measures have helped nearly 2.9 million borrowers stay in their homes, including 1.8 million who received permanent loan modifications.  
  • Approximately 31% of all permanent loan modifications in the quarter helped to reduce homeowners’ monthly payments by over 30%.
  • The number of 60+ day delinquent loans declined 9% during the quarter.
  • The serious delinquency rate of GSE loans fell to 1.8% at the end of the quarter.
  • The GSEs’ REO inventory declined 10% during the quarter to 100,279.
• The OCC released its Mortgage Metrics Report for the first quarter of 2015, showing:
  • 94.2% of mortgages in the report were current and performing at the end of the quarter, compared with 93.1% a year earlier. 
  • The percentage of mortgages that were 30 to 59 days past due was 1.9% of the portfolio, a 7.0% decrease from a year earlier. 
  • Seriously delinquent mortgages made up 2.6% of the portfolio, a 16.4% decrease from a year earlier.
  • The number of mortgages in the process of foreclosure at the end of the quarter fell to 299,424, or 1.3%, a decrease of 30.8% from a year earlier. 
  • Servicers initiated 83,058 new foreclosures during the quarter, a decrease of 8.6% from a year earlier. 
  • Completed foreclosures decreased 31.5% from a year earlier to 38,509. 
  • Servicers implemented 188,816 home retention actions during the quarter, compared with 47,430 home forfeiture and non-retention actions. 
  • The number of home retention actions decreased 20.6% from a year earlier.
  • More than 89.2% of modifications in the quarter reduced monthly principal and interest payments; 55.6% reduced payments by 20% or more.  Modifications reduced payments by $271 per month on average.
  • Servicers implemented 3,696,929 modifications from January 1, 2008, through December 31, 2014.  Of these, approximately 53% were active at the end of the quarter, and 47% had exited the portfolio through payment in full, involuntary liquidation, or transfer to a non-reporting servicer. 
  • Of the 1,969,431 active modifications at the end of the quarter, 72.2% were current and performing, 22.4% were delinquent, and 5.5% were in the process of foreclosure.
• GAO released a report entitled, Bank Regulation – Lessons Learned and a Framework for Monitoring Emerging Risks and Regulatory Response.  GAO reports that it has incorporated the regulatory lessons learned into a two-part framework for monitoring regulators’ efforts to identify and respond to emerging risks to the banking system.  First, the framework incorporates quantitative information in the form of financial indicators that can help users of the framework track and analyze emerging risks and qualitative sources of information on emerging risks—such as regulatory reports and industry and academic studies.  Second, the framework monitors regulatory responses to emerging risks, such as agency guidance, with the goal of flagging issues for further review when questions arise about the effectiveness of these responses.  Users—oversight bodies such as inspectors general—can analyze regulatory actions taken to address emerging risks and gain insights into regulators’ ability to take forceful actions to address problematic behavior at banks.  Such ongoing monitoring can provide a starting point for identifying opportunities for more targeted and frequent assessments of these efforts.  GAO plans to implement this framework in its future work.

This is the June 21, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• FHFA released its annual report to Congress showing:  
  • The GSE conservatorships have three goals:
    • Maintain, in a safe and sound manner, foreclosure prevention activities and credit availability for new and refinanced mortgages to foster liquid, efficient, competitive, and resilient national housing finance markets;
    • Reduce taxpayer risk through increasing the role of private capital in the mortgage market; and
    • Build a new single-family securitization infrastructure for use by the GSEs and adaptable for use by other participants in the secondary market in the future.
  • FHFA and the GSEs have made progress on the representation and warranty framework.  To obtain representation and warranty relief, no more than two delinquent payments are allowed within the first 36 months after loan acquisition.  Additionally, the GSEs eliminated automatic repurchases following rescission of mortgage insurance coverage.  FHFA also started efforts in 2014 to develop an independent dispute resolution program.
  • FHFA and the GSEs revised their foreclosure timeline methodology, which increased timelines in a majority of states and gave servicers a set of tools to help them manage compensatory fees more effectively.  The GSEs provided servicers with enhanced loss mitigation and foreclosure prevention alternatives for severely delinquent loans subject to compensatory fees.
  • The GSEs will permit creditworthy borrowers to have 3% down payments.
  • In the first quarter of 2014 the GSEs issued lender guidance clarifying a number of property and appraisal requirements for small towns and rural areas.
  • FHFA and the GSEs enhanced requirements related to foreclosure alternatives, unemployment forbearance, and rate-reset notifications.
  • FHFA has worked with the GSEs to develop additional guidelines for ongoing sales of nonperforming loans, with a focus on avoiding foreclosure wherever possible, and that require post-sale reporting to track borrower outcomes.
  • The 2014 Conservatorship Scorecard tripled the required amount of risk transfer transactions on single-family loans,
  • As of December 31, Fannie Mae’s retained portfolio was $413 billion and Freddie Mac’s was $408 billion, below the cap of $470 billion required for 2014.
  • FHFA and the GSEs finalized new standards for mortgage insurer master policies that were approved by all state regulators, and took effect in October.
  • To develop a common securitization platform (CSP), FHFA and the GSEs have been developing the technology and operational infrastructure; establishing a software development and testing environment that is independent of the GSEs; and developing the CSP’s security issuance, registration, and settlement capabilities. 
  • FHFA has solicited and reported on input on a single security to be issued by both GSEs.  
• The OCC announced that it anticipates that approximately $280 million from the independent foreclosure review of OCC-supervised institutions will remain unclaimed at the end of the year after considerable efforts to locate eligible borrowers have been exhausted, and will escheat to the states.  The OCC also terminated foreclosure-related consent orders against three national bank mortgage servicers that have met the consent order requirements.  They are Bank of America, Citibank, and PNC Bank.  The OCC imposed business restrictions on six national banks that have not completed the required corrective actions.  They are EverBank; HSBC Bank USA, JPMorgan Chase Bank, Santander Bank, U.S. Bank, and Wells Fargo Bank.
• The federal banking agencies finalized revisions to the regulatory capital rules adopted in July 2013.  The final rule applies to large, internationally active banking organizations that determine their regulatory capital ratios under the advanced approaches rule – generally those with at least $250 billion in total consolidated assets or at least $10 billion in total on-balance sheet foreign exposures.  The agencies published changes to the rules affecting these organizations on December 18, 2014, and the final rule adopts these changes substantially as proposed.
• Treasury announced results of its auction of its preferred shares in five institutions.  
  • Citizens Bank & Trust Company, (Covington, LA), for $1,638,328; Treasury paid $2,400,000;
  • CSRA Bank Corp. (Wrens, GA), for $3,079,816; Treasury paid $2,400,000;
  • Metropolitan Capital Bancorp, Inc. (Chicago, IL), for $3,079,816; Treasury paid $4,388,000;
  • Prairie Star Bancshares, Inc. (Olathe, KS), for $3,514,326; Treasury paid $2,800,000; and
  • SouthFirst Bancshares, Inc. (Sylacauga, AL), for $2,887,668; Treasury paid $2,760,000.

This is the June 14, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• Treasury announced that it intends to auction all its preferred shares in the following:
  • Citizens Bank & Trust Company, (Covington, LA);
  • CSRA Bank Corp. (Wrens, GA);
  • Metropolitan Capital Bancorp, Inc. (Chicago, IL);
  • Prairie Star Bancshares, Inc. (Olathe, KS); and
  • SouthFirst Bancshares, Inc. (Sylacauga, AL).

This is the June 7, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The federal banking agencies reiterated the disclosure requirements for the annual stress tests conducted by financial institutions with assets between $10 billion and $50 billion.  These companies are required to conduct annual stress tests, with the results disclosed to the public for the first time this year.  The firms are required to disclose the types of risks included in the stress test; a summary description of the test methodologies; estimates of losses, revenue, and net income; post-stress capital ratios; and an explanation of the most significant causes for the changes in regulatory capital ratios.  The companies must disclose stress test results between June 15 and June 30. 
• The European Commission announced that it extended the exemption for pension funds from central clearing requirements for their over-the-counter (OTC) derivative transactions.  The extension is two years, through August 16, 2017.  The extension is designed to provide time to develop technical solutions for the transfer of non-cash collateral to meet collateral calls.  
• The European Commission announced a six-month extension in implementing capital requirements for EU banking groups’ exposures to central counterparties (CCPs).  The capital requirement depends on whether a CCP is ‘qualifying’ or ‘non-qualifying.’  To be qualifying, a CCP has to be authorized (for those established in the EU) or recognized (for those established outside the EU).  The process of authorization and recognition takes time, and the processes are not be fully completed, the European Commission has adopted an implementing act that will now extend the transitional phase to December 15, 2015.  The extension also applies to third country CCPs seeking recognition in the EU.  Only CCPs established in a third country that the Commission has determined have equivalent CCP requirements can be recognized in the EU.  The Commission recently adopted decisions of equivalence for Hong Kong, Japan, Singapore, and Australia, but other jurisdictions do not have equivalent status yet.  Equivalence assessments are time-consuming.  This extension will allow time for that work to continue. 

This is the May 24, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The Federal Reserve proposed adding certain general obligation state and municipal bonds to the range of assets a large banking organization may use to satisfy liquidity requirements.  The proposal would allow investment grade, general obligation U.S. state and municipal bonds to qualify, up to certain levels, if they meet the same liquidity criteria that currently apply to corporate debt securities.  This would apply to:
  • Bank holding companies, certain thrift holding companies, and state member banks with $250 billion or more in assets or $10 billion in on-balance sheet foreign exposure;
  • State member banks with $10 billion in assets that are subsidiaries of the above entities; and
  • Bank holding companies and certain thrift holding companies with $50 billion in assets, to which a less stringent liquidity standard applies.
• FHFA and the GSEs announced minimum financial eligibility requirements for seller/servicers.  They did not substantively change from the proposed requirements announced in January 2015.
  • Net worth of $2.5 million plus 25 basis points of UPB for single-family loans serviced.
  • Minimum capital ratio (nondepositories only) of Tangible Net Worth/Total Assets ≥ 6%.  Depositories must comply with their regulatory standard.
  • Liquidity (nondepositories only) (depositories must comply with their regulatory standard):
    • 3.5 basis points of total Agency servicing (GSEs and Ginnie Mae) UPB plus
    • Incremental 200 basis points of total non-performing Agency servicing UPB in excess of 6% of the total Agency servicing UPB.  Depositories must comply with their regulatory standard.

The standards are effective December 31, 2015.

• Treasury announced that it completed an auction to sell its warrant positions in nine financial institutions in private transactions for $50.9 million.
  • BBCN Bancorp, Inc., Los Angeles, California for $1,150,000; 
  • City Holding Company, Cross Lanes, West Virginia for $900,500;
  • CommunityOne Bancorp (FNB United Corp.), Charlotte, North Carolina for $10,677;
  • F.N.B. Corporation, Pittsburgh, Pennsylvania for $10,063,121;
  • Fidelity Southern Corporation, Atlanta, Georgia for $32,401,354;
  • First United Corporation, Oakland, Maryland for $120,786;
  • HMN Financial, Inc., Rochester, Minnesota for $5,700,600;
  • The First Bancorp, Inc., Damariscotta, Maine for $401,111; and
  • Valley National Bancorp, Wayne, New Jersey for $103,677.

Treasury did not sell its warrant positions in M&T Bank Corporation, Synovus Financial Corp., or a second warrant position in BBCN Bancorp, Inc. because it did not receive bids above the minimum price.

This is the May 17, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• FHFA released an update on its single security initiative.  
  • A single security would have underlying fixed-rate mortgage loans that were purchased either 100 percent by Fannie Mae or 100 percent by Freddie Mac.  Re-securitizations could have underlying legacy securities or single securities issued only by Fannie Mae, only by Freddie Mac, or a combination of single securities issued by both GSEs.  Lenders may pool either seasoned or current loans into a single-lender security but loans that are aged more than 12 months may not be included in multi-lender securities.
  • The key features of the single security will be the same as those of the current Fannie Mae MBS, including an investor remittance delay of 55 days.
  • Each GSE will issue second-level single securities (re-securitizations) backed by first- or second-level securities issued by either GSE.  For a legacy Freddie Mac PC to be re-securitized, the investor would have to first exchange the PC for a single security issued by Freddie Mac, so that the payment date of all of the securities in the collateral pool backing the re-securitization would be the same.
  • Freddie Mac will offer investors the option to exchange legacy PCs for comparable single securities backed by the same loans, and will compensate investors for the cost of the change in the payment delay.  Fannie Mae will not offer an exchange option for legacy MBS because FHFA expects investors to treat them as fungible (interchangeable) with single securities.
  • Maintaining the current high degree of similarity between the prepayment speeds of the GSEs’ securities is an important objective for FHFA.  FHFA will not require standardization of the legal documents that support GSE securitization of single-family mortgage loans.  Doing so would be a large undertaking and is unnecessary to ensure similar prepayment speeds.

This is the May 3, 2015 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• FHFA announced stress test results for the GSEs. The combined remaining funding commitment under the PSPAs as of September 30, 2014 was $258.1 billion.  Under the severely adverse scenario, incremental Treasury draws range between $68.6 billion and $157.3 billion, depending on the treatment of deferred tax assets.  The remaining funding commitment under the PSPAs ranges between $189.4 billion and $100.8 billion.  The test horizon is September 30, 2014 through December 31, 2016.  The test assumes a deep and protracted recession, with the unemployment rate increasing by 4 percentage points to 10 percent in the middle of 2016.  By the end of 2015, real GDP declines by 4.5 percent and begins to recover in 2016.  Short-term interest rates remain near zero.  The 10-year Treasury falls to 1 percent in the fourth quarter of 2014, and long-term rates then increase slowly.  Spreads on domestic investment-grade bonds widen from 170 basis points to 500 basis points.  Equity prices fall by roughly 60 percent and equity market volatility increases substantially.  Home prices decline by 25 percent over the forecast horizon.  Option-adjusted spreads on MBS widen significantly, and each GSE’s largest counterparty is assumed to fail. 

This is the April 26, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The FDIC released an ANPR seeking comment on whether banks and thrifts with a large number of deposit accounts, such as more that 2 million, should be required to enhance their recordkeeping to ensure access to the deposits in the event of bank failure.  
• FHFA reaffirmed that it has not consented, and will not consent in the future, to the foreclosure or other extinguishment of any Fannie Mae or Freddie Mac lien or other property interest in connection with homeowners association foreclosures of super-priority liens.  Under the law governing the GSE conservatorships, FHFA’s consent is required for such a foreclosure to be effective.

This is the April 19, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following: 

•        FHFA and the GSEs announced revised eligibility requirements for PMI companies, effective at year-end for existing approved companies.  PMI companies will be required to use capital stress tests that use macroeconomic assumptions consistent with the Federal Reserve’s Comprehensive Capital Analysis and Review severely adverse scenario, and have contingencies for raising additional capital in anticipation of any projected shortfall.  Approved insurers must have a documented risk diversification policy, must maintain lender and servicer guidelines on their websites, must determine loan eligibility and borrower creditworthiness before insuring a loan, appraisal review procedures, lender review procedures, and limit captive reinsurance contracts. 
•        FHFA announced that, after reviewing the GSEs’ g-fees, the GSEs will eliminate the adverse market charge put in place in March 2008 and replace its revenue with targeted increases in g-fees to address various risk-based and access-to-credit considerations.  The result is a set of modest changes to upfront g-fees that are roughly revenue neutral and will result in either little or no change for most borrowers, effective September 1, 2015.
•        The Federal Reserve Board released information about the Large Institution Supervision Coordinating Committee, formed in 2010 to coordinate supervision of domestic bank holding companies and foreign banking organizations that pose elevated risk to U.S. financial stability and other nonbank financial institutions designated as systemically important by FSOC.  

o   The LISCC Operating Committee (OC), in consultation with the LISCC, is responsible for setting priorities for and overseeing the execution of the LISCC supervisory program. 

o   The Supervision Program Management Committee (SPMC) coordinates supervisory program management for the LISCC firms.  

o   The Vetting Committee is a forum to discuss the results of key components of the supervisory program, and to provide feedback and guidance to the dedicated supervisory or LISCC horizontal teams.  

o   The Risk Secretariat identifies risks to LISCC firms’ operations and reviews and evaluates risk management practices across the LISCC portfolio, prioritizes risks for supervisory action, and supports supervisory activities aimed at mitigating key risks.  The Risk Secretariat also makes recommendations to the OC regarding proposed supervisory ratings related to specific risk types or risk management functions. 

o   The Capital and Performance Secretariat (CaPS) supports the identification of emerging risks.

o   The LISCC Data Team is chartered by the OC to support its data needs, to provide transparency into data collections, and to identify gaps in data needs.  

o   The OC oversees the committees that are charged with the execution of three annual horizontal exercises for LISCC firms:  the Comprehensive Capital Analysis and Review (CCAR) for LISCC firms, the Comprehensive Liquidity Analysis and Review (CLAR), and the Supervisory Assessment of Recovery and Resolution Preparedness (SRP).  

o   The LISCC supervisory program also includes the Quantitative Surveillance (QS) group, which uses quantitative methods to monitor the financial system , and the Systemic Risk Integration Forum, which ensures that potential risks to financial stability consistently reflect the insights coming from supervisory activities and analysis.

This is the April 12, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The Federal Reserve issued a final rule to expand the applicability of its Small Bank Holding Company Policy Statement and to apply it to certain savings and loan holding companies.  This facilitates the transfer of ownership of small community banks and thrifts by allowing their holding companies to operate with higher levels of debt than would normally be permitted.  While holding companies that qualify for the policy statement are excluded from consolidated capital requirements, their depository institution subsidiaries continue to be subject to minimum capital requirements.  The final rule raises the asset threshold of the policy statement from $500 million to $1 billion.  All firms must still meet certain qualitative requirements, including those pertaining to nonbanking activities, off-balance sheet activities, and publicly-registered debt and equity.  This rulemaking implements Public Law 113-250, which amended Dodd-Frank § 171(b)(5) to add to the exemptions from leverage and risk-based capital requirements.

This is the April 5, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• Comptroller Curry gave a speech before the Depositors Insurance Fund of Massachusetts advocating legislation that would modify the current requirement that every savings association devote a fixed percentage of its balance sheet to home mortgages to enable federal thrifts to diversify their loan portfolio while maintaining their federal charter, and exempting community banks from the Volcker Rule. 

This is the March 29, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The OCC released its Mortgage Metrics report for the fourth quarter of 2014, showing:
  • At year-end, 93.2% of mortgages included in the report were current, compared with 93.0% at the end of the previous quarter and 91.8% a year earlier. 
  • The percentage of loans 30 to 59 days past due was 2.4%, a 9.4% decrease from a year earlier. 
  • Seriously delinquent mortgages were 3.1% of the portfolio, a 12.2% decrease from a year earlier.
  • Loans in foreclosure at the end of the fourth quarter of 2014 fell to 315,922 or 1.4%, a decrease of 39.7% from a year earlier. 
  • Servicers initiated 75,395 new foreclosures during the quarter, a decrease of 39.4% from a year earlier. 
  • The number of completed foreclosures decreased 35.3% from a year earlier to 39,331. 
  • Servicers implemented 195,577 home retention actions during the quarter compared with 49,749 home forfeiture actions. The number of home retention actions decreased 19.5% from a year earlier. 
  • More than 88% of modifications in the quarter reduced monthly principal and interest payments; 52.2% of modifications reduced payments by 20% or more. 
  • Modifications reduced payments by $243 per month on average, while HAMP modifications reduced monthly payments by an average of $274.
  • Servicers implemented 3,649,010 modifications from January 1, 2008, through September 30, 2014. Of these modifications, more than 55% were active at the end of the fourth quarter of 2014 and 45% had exited the portfolio through payment in full, involuntary liquidation, or transfer to a non-reporting servicer. 
  • Of the 2,012,632 active modifications at the end of the fourth quarter, 68.8% were current, 25.8% were delinquent, and 5.4% were in the process of foreclosure.​

• FHFA released its Foreclosure Prevention Report for the fourth quarter of 2014, showing:
  • The GSEs completed nearly 65,900 foreclosure prevention actions in the quarter, bringing the total foreclosure prevention actions to more than 3.4 million since the start of the conservatorships.
  • The share of modifications with principal forbearance fell to 20%, while modifications with extend-term only increased to 46% due to improving house prices and declining HAMP eligible population.
  • As of December 31, 2014, approximately 17% of loans modified in the fourth quarter of 2013 had missed two or more payments, one year after modification.
  • Approximately 33% of all permanent loan modifications helped to reduce homeowners' monthly payments by over 30% in the fourth quarter;
  • There were 10,800 short sales and deeds-in-lieu in the fourth quarter, bringing the total to approximately 605,000 since the start of the conservatorships. 
  • The number of 60+ day delinquent loans declined another 3% during the quarter to the lowest level since the start of conservatorships.
  • The serious delinquency rate fell to 1.9 percent at the end of the quarter compared with 6.0% for FHA loans, 3.4% for VA loans, and 4.5% percent for all loans (industry average).
  • Third-party sales and foreclosure sales fell 7% to nearly 36,200 while foreclosure starts decreased slightly to approximately 74,000 in the fourth quarter.
  • REO inventory declined 8% during the quarter to approximately 111,000.

• The Federal Reserve and FDIC announced that they requested amendments by year-end to the living wills of BNP Paribas, HSBC Holdings, and The Royal Bank of Scotland Group.  The agencies said the plans had shortcomings, including:  unrealistic or inadequately supported assumptions about the likely behavior of customers, counterparties, investors, central clearing facilities, and regulators; and inadequate analysis regarding interconnections within the firms.

• The Federal Reserve and FDIC announced they adjusted the annual resolution plan filing deadline for AIG, GE Capital, MetLife, and Prudential Financial, from July 1 to December 31 beginning in 2016.

This is the March 22, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• FHFA released a progress report on the initiatives outlined in the 2014 Strategic Plan for the Conservatorships and the 2014 Conservatorship Scorecard.  The report notes important progress in advancing access to credit, continuing and enhancing loss mitigation and foreclosure prevention efforts, increasing the role of private capital in the mortgage market, and furthering the development of the Common Securitization Platform (CSP) and a single security.  

• FHFA’s IG released a white paper titled, The Continued Profitability of Fannie Mae and Freddie Mac Is Not Assured. The report states that the GSEs profitability in 2013 and 2014 was significantly generated by non-recurring sources.  The paper states, “At present, it appears that Congressional action will be needed to define what role, if any, the Enterprises play in the housing finance system.”

• The Federal Reserve announced 2015 annual CCAR results.  The Board objected to the capital plans of Deutsche Bank Trust Corporation and Santander Holdings USA, Inc. due to widespread and substantial weaknesses across their capital planning processes, and it issued a conditional non-objection to Bank of America Corporation and is requiring the BHC to correct weaknesses in some elements of its capital planning process and to resubmit a capital plan. 

• Treasury released its MHA (HAMP and HARP) servicers report for the fourth quarter of 2014, showing that two servicers need minor improvement while five need moderate improvement, the same numbers as from the prior quarter.

This is the March 15, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The European Parliament voted to cap interchange fees, resulting in an estimated €6 billion reduction annually.  Generally, the regulation will cap the fees at 0.2% of the transaction value for consumer debit cards and at 0.3% for consumer credit cards.  For consumer debit cards, it also gives flexibility to Member States to define lower percentage caps and to impose maximum fee amounts.

This is the March 8, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• FHFA announced enhanced requirements for GSE sales of non-performing loans (NPLs), to transfer risk to the private sector. reduce GSE losses, and improve borrower and neighborhood outcomes by providing alternatives to foreclosure wherever possible.  Sales are generally expected to include loans that are severely delinquent, such as more than a year past due.  Future GSE NPL sales will include the following:

o Bidder qualifications:  Bidders will be required to identify their servicing partners at the time of qualification and must complete a servicing questionnaire to demonstrate a record of successful resolution of loans through alternatives to foreclosure;
o Modification requirements:  The new servicer will be required to evaluate all pre-2009 borrowers (other than those whose foreclosure sale date is imminent or whose property is vacant) for the Making Home Affordable programs, including HAMP.  All post-January 1, 2009 borrowers (other than those with an imminent foreclosure sale date or vacant property) must be evaluated for a proprietary modification, without an upfront fee or prepayment of any mortgage debt, and must provide a benefit to the borrower with the potential for a sustainable modification;
o Loss mitigation waterfall requirements:  Servicers must apply a waterfall that includes evaluating borrower eligibility for a HAMP or proprietary modification, a short sale, and a deed-in-lieu of foreclosure.  Foreclosure must be the last option in the waterfall.  The waterfall may consider NPV to the investor;
o REO sale requirements:  Servicers are encouraged to sell REO properties to individuals who will occupy the property as their primary residence or to non-profits.  For the first 20 days after any NPL that becomes an REO property is marketed, the property may be sold only to buyers who intend to occupy the property as their primary residence or to non-profits;
o Subsequent servicer requirements:  Subsequent servicers must assume the responsibilities of the initial servicer;
o Bidding transparency:  To facilitate transparency of the NPL sales program and encourage robust participation by all interested participants,
o Each GSE will develop a process for announcing upcoming NPL sale offerings.  This will include an NPL webpage on the GSE’s website, email distribution to small, non-profit and minority- and women-owned business investors, and proactive outreach to potential bidders.  Additionally, each GSE will host training sessions for interested non-profit and minority- and women-owned investors.  The GSEs will also offer small pools of NPLs where feasible;
o Reporting requirements:  NPL buyers and servicers, including subsequent servicers, must report loan resolution results and borrower outcomes to the GSEs for four years after the NPL sale.  These reports will help inform whether to make future changes to NPL sales requirements and determine whether an NPL buyer and NPL servicer continue to be eligible for future sales based on pool level borrower outcomes, adjusted for subsequent market events.  Consistent with applicable law, FHFA and/or the GSEs will provide public reports on aggregate borrower outcomes at the pool level.

• The Federal Reserve announced stress test results for the 31 largest U.S.-based bank holding companies.  The results project that in the most severe scenario, loan losses at the 31 participating bank holding companies would total $340 billion during the nine quarters tested.  This scenario features a deep recession with the unemployment rate peaking at 10%, a 25% decline in home prices, a stock market drop of nearly 60%, and a notable rise in market volatility.  The 31 firms’ aggregate tier 1 common capital ratio would fall from an actual 11.9% in the third quarter of 2014 to a minimum of 8.2%.  This hypothetical post-stress minimum is significantly higher than the 31 firms’ aggregate tier 1 common capital ratio of 5.5% measured in the beginning of 2009.
• The Office of Financial Research released a working paper entitled, Are the Federal Reserve’s Stress Test Results Predictable?  It found that projected losses by bank and loan category are fairly predictable and are becoming increasingly so.  It suggests three ways to reduce predictability. 

o The adverse and severely adverse scenarios required by Dodd-Frank stress tests could bring more diversity to the testing. 
o The number of scenarios could be expanded.
o The testing could be expanded to include knock-on and feedback effects between institutions, and interactions between solvency and liquidity.

• GAO released a report on TARP’s CPP program, showing CPP returns have surpassed original investments.  As of December 31, 2014, Treasury had received $226.4 billion in repayments, sales, dividends, and interest, exceeding the amount originally disbursed by $21.5 billion.  As of the same date, the program was largely wound down, with only 34 of the original 707 institutions remaining.  Over the past 5 years, repayments and auctions were the primary means by which institutions exited CPP.  However, Treasury officials indicated that more of the remaining institutions may use restructurings as an exit strategy.  The 34 remaining CPP institutions showed some improvements in their financial condition, as measured by key metrics of financial condition, but many continued to miss payments and maintain low capital levels.

This is the February 22, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• Freddie Mac announced results for 2014, showing net income of $7.7 billion for the year and of $227 million for the fourth quarter of 2014.  The GSE reported a net worth of $2.7 billion as of December 31, 2014, resulting in a dividend obligation to Treasury of $0.9 billion, expected to be paid in March 2015.  With the March 2015 dividend payment, the GSE will have paid $91.8 billion in dividends to Treasury.

• Fannie Mae announced results for 2014, showing net income of $14.2 billion for the year and of $1.3 billion for the fourth quarter of 2014.  The GSE reported a net worth of $3.7 billion as of December 31, 2014, resulting in a dividend obligation to Treasury of $1.9 billion expected to be paid in March 2015.  With the March 2015 dividend payment, the GSE will have paid $136.4 billion in dividends to Treasury.  

• The Federal Reserve and FDIC announced that they are extending the resolution plan, or living will, submission deadline for American International Group, Inc., General Electric Capital Corporation, Inc., and Prudential Financial, Inc., consistent with similar extensions provided to other firms in previous years.  The three organizations will be required to submit their second annual plans by Dec. 31, 2015, instead of July 1, 2015.

• FHFA released its Refinance Report for the fourth quarter of 2014, showing:
  • In the fourth quarter of 2014, there were 37,397 HARP refinances, bringing the total from the inception of HARP to 3,270,451.
  • Borrowers who refinanced through HARP had a lower delinquency rate compared to borrowers eligible for HARP who did not refinance through the program.
  • More than 25 percent of all 2014 HARP refinances for underwater borrowers (those with a loan-to-value ratio greater than 105 percent) resulted in 15- and 20-year mortgages.

FHFA is continuing its efforts to reach HARP-eligible borrowers, with a March 4 event in Newark, NJ. 

This is the February 15, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The Office of Financial Research released a working paper entitled, Process Systems Engineering as a Modeling Paradigm for Analyzing Systemic Risk in Financial Networks, proposing that a modeling methodology called signed directed graphs (SDG) is a useful framework to address systemic risk.  The SDG framework can represent and reveal information missed by more traditional network models of financial system.  This framework adds crucial information to a network model about the direction of influence and control between nodes, providing a tool for analyzing the potential hazards and instabilities in the system. The paper also discusses how the SDG framework can facilitate the automation of the identification and monitoring of potential vulnerabilities, illustrated with an example of a bank/dealer case study.
• The banking agencies released an optional tool to simplify calculations of risk-based capital requirements for securitization exposures. The agencies are making this tool available for all banks that use the simplified supervisory formula approach to help calculate associated capital requirements.  Banks may opt to use the simplified supervisory formula approach under the standardized approach.  The revised capital rule replaced the existing generally applicable risk-based capital standards with a standardized approach.  Banks subject to the advanced approaches risk-based capital rule must use the standardized approach to determine their risk-based capital floor, and all other banks must use the standardized approach to determine their overall minimum risk-based capital requirements.

This is the February 8, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• FSOC announced revised procedures and updated FAQs regarding its process for reviewing nonbank financial companies for potential designation.  The changes are designed to provide:  earlier engagement with companies under consideration; transparency, through making information public; and engagement with designated companies during FSOC’s annual reevaluations of designations. 

• On February 3, 2015, the European Commission published a report that recommends granting pension funds a two-year exemption from central clearing requirements for their over-the-counter derivatives due to the cost of holding cash for variation margin requirements.

This is the February 1, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• SIGTARP released a quarterly report to Congress, showing: 
  • Regarding CPP:
    • Treasury’s treatment of smaller CPP banks differs from its treatment of large CPP banks.  Treasury took a public and active role with the largest CPP banks, and became more like a passive investor in the smaller CPP banks.  SIGTARP suggests that Treasury could have assisted small CPP banks repay their TARP funds by restructuring or exchanging the shares.  
    • Some private investors have bought out Treasury’s CPP stakes at discounts from 1% to 90%.  In some instances, the private investors buy and flip CPP shares at a profit, often in a matter of weeks or months.
    • As of December 31, 2014, 68 institutions remained in CPP.  In 34 of them, Treasury holds only warrants to purchase stock.  
    • As of December 31, 2014, taxpayers were still owed $5.5 billion related to CPP.  According to Treasury, it had write-offs and realized losses of $5 billion in the program, and $197.2 billion of the CPP principal (or 96%) had been recovered.
    • As of December 31, 2014, of the 34 CPP banks with remaining principal investments, 26 had missed at least five dividend payments, and Treasury had assigned observers to 12 current CPP recipients, while 12 declined consent to Treasury observers. 
  • Treasury and SIGTARP disagree about whether Treasury is doing enough to ensure timely processing of HAMP applications.  The report states:

“While Treasury requires that servicers review a completed HAMP application within 30 days, Treasury allows servicers to extend the review time indefinitely if the application is incomplete, even though the homeowner may not be at fault. . . . Treasury must do more to ensure that servicers help homeowners complete their application faster than the current rates.”  [CFPB regulations usually prohibit servicers from acting on incomplete loss mitigation applications.]

• Beginning in mid-2013, Treasury approved a HHF program for blight elimination.  Through December 2014, Treasury has approved blight elimination programs in six states, Alabama, Illinois, Indiana, Michigan, Ohio, and South Carolina.  Treasury did not authorize new funds for these states, but instead reallocated funds from the states’ other HHF programs.  

• HUD released an interim final regulation that will govern the Housing Trust Fund.  HERA created the Housing Trust Fund and the Capital Magnet Fund and required the GSEs co contribute to them, but FHFA suspended the contributions a few months later when the GSEs were out into conservatorship.  FHFA revoked the suspension in December 2014.  Treasury, which administers the Capital Magnet Fund, issued regulations for it in 2010, at 12 C.F.R. Part 1810.

• The Federal Reserve released a report, Strategies for Improving the U.S. Payment System, on a plan for collaborating with payment system stakeholders to enhance the speed, safety and efficiency of the U.S. payment system.  It is the result of 18 months of research to identify key gaps and opportunities, gaining industry and end-user perspectives on needs and priorities and defining ways to achieve payment improvements.  The paper outlines the Federal Reserve's intent to establish a task force to identify approaches for implementing safe, ubiquitous, faster payment capabilities.  The paper calls for a task force to advise the Federal Reserve on reducing payment fraud and advancing the safety, security and resiliency of the payment system.  Additionally, the Federal Reserve will pursue efforts to enhance payment system efficiency through work on standards, directories, and business-to-business payment improvements, alongside efforts to enhance Fed-provided services for same-day ACH, risk management, and settlement.

Regards, 

Canfield Press

This is the January 25, 2015 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The European Central Bank announced an expanded program of purchasing sovereign bonds to address the risks of prolonged low inflation.  Combined monthly purchases will amount to €60 billion.  They are intended to be carried out until at least September 2016 and in any case until the Governing Council sees a sustained adjustment in the path of inflation that is consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term.  The ECB will buy bonds issued by euro area central governments, agencies, and European institutions in the secondary market against central bank money, which the institutions that sold the securities can use to buy other assets and extend credit to the real economy.  Purchases of securities of European institutions (which will be 12% of the additional asset purchases, and which will be purchased by NCBs) will be subject to loss sharing.  The rest of the NCBs’ additional asset purchases will not be subject to loss sharing.  The ECB will hold 8% of the additional asset purchases.  This implies that 20% of the additional asset purchases will be subject to risk sharing.

This is the January 18, 2015 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• MetLife challenged FSOC’s designation that the company is a nonbank systemically important financial institution, on a number of bases, including that the designation was based on “numerous critical errors that fatally undermined the reasoning[,]” and on a fundamental misunderstanding of state insurance regulation.  The complaint asserts that FSOC repeatedly denied MetLife access to data and materials FSOC used.  MetLife states that procedural shortcomings severely impaired its ability to respond to FSOC.  “These deficiencies were exacerbated by the extraordinary design in the Dodd-Frank Act of FSOC itself, which identifies individual companies for designation, establishes the standards that govern the designation decision, and then sits in judgment of its own recommendations, relying each step of the way on the same staff that identified the company for designation in the first place.”

MetLife also asserts that it is not a “nonbank financial company” subject to FSOC designation.  The Dodd-Frank Act permits FSOC to designate U.S. or foreign nonbank companies, under § 113(a)(1) or (a)(2).  The difference between the U.S. and foreign companies depends on where they are chartered.  For both U.S. and foreign companies, the definition of a nonbank financial institution, in § 112(a)(4), and depends on whether the company is “predominantly engaged” in financial activities.  A company is predominantly engaged in financial activities if at least 85% of its consolidated annual gross revenues are from, or consolidated assets are related to, “activities that are financial in nature” as defined in § 4(k) of the Bank Holding Company Act.  MetLife states that it is not predominantly engaged in activities that are financial in nature because more than 15% of its revenues are from, and assets are related to, insurance activities in foreign markets, while the Bank Holding Company Act defines insurance activities as financial in nature only if they are conducted in the U.S.  MetLife v. Financial Stability Oversight Council, No. 15-45 (D.D.C. Jan. 13. 2015).

• On January 14, 2015, FHFA released its 2015 Scorecard outlining specific priorities for Fannie Mae, Freddie Mac and their joint venture common securitization platform (CSP).  The 2015 Scorecard furthers the goals outlined in FHFA's Strategic Plan for the Conservatorships.  The goals include:  
  • Maintain, in a safe and sound manner, credit availability and foreclosure prevention activities for new and refinanced mortgages to foster liquid, efficient, competitive and resilient national housing finance markets. [40%].  For this goal, the GSEs are to:
    • Work to increase access to mortgage credit for creditworthy borrowers, consistent with the full extent of applicable credit requirements and risk-management practices: 

§  Effectively implement key loss mitigation activities, 

§  Maintain the dollar volume of new multifamily business for each Enterprise at $30 billion or below, excluding affordable housing loans, loans to small multifamily properties, and loans to manufactured housing rental communities. 

• Reduce taxpayer risk through increasing the role of private capital in the mortgage market.  [30%]  For this goal, the GSEs are to:

§  Transact credit risk transfers on reference pools of single-family loans with UPB of at least $150 billion for Fannie Mae and $120 billion for Freddie Mac.

§  Determine the feasibility of multifamily risk transfers; and

• Implement private mortgage insurance eligibility requirements. 
• Build a new single-family securitization infrastructure for use by the GSEs and adaptable for use by other participants in the secondary market in the future.  [30%]  For this goal the GSEs are to:
  • Finalize the Single Security structure, including security features, disclosure standards, and related requirements. 
  • Develop a plan to implement the Single Security in the market.
  • Provide active support for mortgage data standardization initiatives:

• The Federal Reserve and FDIC released the public portions of resolution plans for firms with generally less than $100 billion in qualifying nonbank assets, and the FDIC released the public portions of resolution plans of 22 insured depository institutions, mostly subsidiaries of bank holding companies that submitted resolution plans.

This is the January 11, 2015 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• On January 6, 2015, GAO released a TARP report entitled Treasury Continues to Wind down Most Programs, but Housing Programs Remain Active, as of September 14, 2014, showing:
  • Treasury has exited four of the nine TARP non-housing programs, and was managing $2.9 billion in remaining assets. 
  • Treasury incurred $15.2 billion in lifetime losses on AIG.
  • Treasury has recouped 86% of its expenditures and incurred an estimated lifetime cost of $12.2 billion for the Automotive Industry Finance Program.  It still holds 13% in Alley Financial.
  • Treasury has disbursed $13.7 billion (36%) of the $38.5 billion in TARP housing funds.  The number of new HAMP permanent modifications added on a monthly basis rose in early 2013 but fell in 2014 to the lowest level since the program’s inception.  Homeowners have until at least December 31, 2016, to apply for assistance under MHA programs, and Treasury will continue to pay incentives for up to 6 years after the last permanent modification begins.  Treasury’s obligation under FHA Short Refinance will continue until September 2020.
  • Treasury estimates it had income of $16.1 billion on CPP and $4 billion each on its Asset Guarantee Program and Targeted Investment Programs.
  • Treasury does not know when it will completely exit the CPP program.  By the end of 2014, all of the institutions with outstanding preferred share investments were required to pay dividends at a 9 percent rate, rather than the 5 percent rate that had been in place for the past 5 years.

This is the December 28, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• FHFA announced that it is challenging two Nevada foreclosures by homeowners’ associations (“HOA”) based on the HOAs’ assertions of super-lien status.  Some states, including Nevada, grant HOA liens for a few months’ of unpaid HOA assessments priority, and this HOA lien takes priority even over a first mortgage lien that predates the HOA lien.  In one suit, FHFA claims that the HOA did not establish that its lien fell into the super-priority category, and in both cases FHFA asserts that the HOA lien cannot be prior to Fannie Mae’s lien, while Fannie Mae is in conservatorship.  This argument is based on HERA § 1145(j)(3), which provides that during conservatorship:

“No property of the Agency shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Agency, nor shall any involuntary lien attach to the property of the Agency.”

In both cases, the HOA foreclosure sales price was considerably less than the outstanding mortgage loan amount.

FHFA also emphasizes that the GSEs cannot purchase a mortgage loan on a property that has a first-lien PACE loan attached to it.  FHFA stresses that “it is important for states and municipalities to understand these restrictions before continuing to offer the [PACE] programs.  Additionally, FHFA believes that borrowers should fully understand these restrictions prior to taking out a first-lien PACE loan.”  FHFA states that, in addition to aggressive enforcement of PACE policies, it is continuing to explore other possible remedies and legal actions to protect the GSEs’ lien position in response to first-lien PACE programs.

• CBO released a report, Transitioning to Alternative Structures for Housing Finance, on mechanisms that could attract private capital to the secondary mortgage market:
  • A market with a single, fully federal agency that would carry out the two GSEs’ main function of buying eligible mortgages and turning them into securities that are guaranteed against losses from default on the underlying mortgages.  The transition to such an agency would require little or no change to the structure of the GSEs’ guarantees, the fees charged for them, or the GSEs’ loan limits because no significant amounts of new private capital would be required beyond those that are expected to be invested under current policy.  By the end of the transition period, the federal agency would have a smaller share of the market than Fannie Mae and Freddie Mac have today.
  • A hybrid public-private market with federal guarantees against catastrophic losses.  Under that structure, the government and private investors would share credit losses on eligible MBSs, with federal guarantees covering catastrophic risks (those associated with severe downturns in the housing market) for a significant share of mortgages.  As a result, taxpayers would bear most of the losses during a crisis, but private investors would bear most of the losses in other periods.  The main policy mechanism used to transition to that structure would be sharing credit risk with private investors.
  • A market with the federal government as “guarantor of last resort,” in which private companies would guarantee most new mortgages in normal times, but the government would fully guarantee most new mortgages during financial crises.  (In normal times, the government would guarantee a small sample of mortgages of all sizes to ensure that it is capable of doing so in times of crisis.)  The major policy actions taken to establish the new structure would be auctioning off the GSEs’ new guarantees and raising their loan limits.
  • A largely private market with no explicit federal guarantees of MBSs (other than those provided by the Ginnie Mae).  That structure would minimize the explicit credit risk borne by taxpayers.  The main policy changes made during the transition would be raising guarantee fees and lowering loan limits until the GSEs no longer guaranteed new mortgages.

• FHFA released its Foreclosure Prevention Report for the third quarter of 2014, showing:
  • Fannie Mae and Freddie Mac completed 72,700 foreclosure prevention actions in the third quarter, bringing the total to more than 3.3 million since the start of the conservatorships.  These measures have helped nearly 2.8 million borrowers stay in their homes, including 1.7 million who received permanent loan modifications.   
  • The number of 60+ day delinquent loans declined 3 percent to the lowest level since the start of conservatorships;
  • The serious delinquency rate fell to 2 percent at the end of the third quarter;
  • Approximately 34 percent of all permanent loan modifications helped to reduce homeowners' monthly payments by over 30 percent in the third quarter;
  • About 22 percent of borrowers who received permanent loan modifications in the third quarter had portions of their mortgage balance forborne;
  • Nearly 12,900 short sales and deeds-in-lieu were completed in the third quarter, bringing the total to approximately 594,200 since the start of the conservatorships; 
  • Third-party sales and foreclosure sales fell 9 percent to nearly 39,100 while foreclosure starts dropped 13 percent to approximately 74,600 in the third quarter;
  • The REO inventory of Fannie Mae and Freddie Mac declined 9 percent during the quarter to nearly 120,100 as dispositions continued to outpace acquisitions.

This is the December 21, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• Treasury announced that it agreed to sell all of its remaining 54.9 million shares of Ally Financial common stock at $23.25 per share, recovering $1.3 billion.  Treasury reports that in total it recovered $19.6 billion on Ally, $2.4 billion more than it put in.  

• The OCC released its Mortgage Metrics Report for the third quarter of 2014, showing:
  • 93% of mortgages were current and performing at the end of the quarter, compared with 91.4% a year earlier.  
  • The percentage of mortgages that were 30 to 59 days past due was 2.4% of the portfolio, an increase of 1.9% from the previous quarter but an 8% decrease from a year earlier.  Seriously delinquent mortgages were 3.1% percent of the portfolio, a decrease of 14.5% from a year earlier.
  • Loans in the process of foreclosure at the end of the third quarter fell 41.5% from a year earlier. 
  • The number of home retention actions decreased by 34.3% from a year earlier. 
  • Servicers implemented 3,595,553 modifications from January 1, 2008, through June 30, 2014.  Of these, almost 57% were active at the end of the third quarter and almost 43% had exited the portfolios of the reporting institutions, through payment in full, involuntary liquidation, or transfer to a non-reporting servicer.  Of the 2,047,719 modifications that were active at the end of the third quarter, approximately 68.6% were current and performing, 25.7% were delinquent, and 5.7% were in the process of foreclosure.

• The Federal Reserve and OCC released an interim final regulation that amends the definition of “qualifying master netting agreement” under the regulatory capital rules, and the liquidity coverage ratio rule, as well as under the lending limits rule applicable to national banks and Federal savings associations.  The rule also amends the definitions of “collateral agreement,” “eligible margin loan,” and “repo-style transaction” under the regulatory capital rules.  The amendments are designed to ensure that the regulatory capital, liquidity, and lending limits treatment of certain financial contracts is not affected by implementation of special resolution regimes in foreign jurisdictions or by the International Swaps and Derivative Association Resolution Stay Protocol.

• The banking agencies propose to clarify, correct, and update their regulatory capital rules applicable to banking organizations that are subject to the advanced approaches risk-based capital rule.  The proposed revisions are largely driven by the agencies’ observations during the parallel-run review process.  They are also intended to enhance consistency of the U.S. regulations with international standards.

• Treasury released a report on the State Small Business Credit Initiative (“SSBCI”), a program enacted in 2010 and funded with $1.5 billion.  Under this program, states could apply for federal funds to extend credit to small businesses by demonstrating a minimum of $10 in new private lending for every $1 in federal funding.  Applications were due in June 2011.  The report shows that, as of September 30, 2014, states deployed $1,003,975,220, of which $943,285,735 was from original SSBCI allocations and $60,689,485 was from funds repaid and reused.  

This is the December 14, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• The Federal Reserve proposed a capital regulation  to identify whether a U.S. bank holding company is a global systemically important banking organization (“GSIB”).  A GSIB would be subject to a risk-based capital surcharge based on its systemic risk profile.  Eight U.S. firms would currently be GSIBs: Bank of America Corporation, The Bank of New York Mellon Corporation, Citigroup Inc., The Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, and Wells Fargo & Company.  

A first method would consider the GSIB's size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity, consistent with a methodology developed by the Basel Committee.  A second method would replace substitutability with use of short-term wholesale funding, and would generally result in significantly higher surcharges than the BCBS framework.  

-Under the proposal, estimated surcharges for bank holding companies that are GSIBs currently would range from 1.0 to 4.5 percent of total risk-weighted assets.

• The Federal Reserve proposed a capital regulation that would illustrate application of the common equity tier 1 capital qualification criteria to depository institution holding companies that are not organized as stock corporations.  The proposal would amend Regulation Q to address unique issues presented by certain savings and loan holding companies that are trusts and by depository institution holding companies that are employee stock ownership plans.  

Institutional investors may structure their investments in banks and bank holding companies through non-stock entities, such as limited liability corporations and limited partnerships.  However, certain capital instruments issued by these firms may not qualify as common equity tier 1 capital.  The Federal Reserve expects to propose regulatory capital rules in the future for savings and loan holding companies that are personal or family trusts and are not business trusts, and would provide a temporary exemption for those entities from the revised capital rules.  The Federal Reserve also expects to clarify the application of its regulatory capital rules to depository institution holding companies that are employee stock ownership plans.  The proposal does not apply to most depository institution holding companies.

• Treasury announced that it completed its first pre-defined written trading plan for common stock of First BanCorp., Puerto Rico, selling 4,388,888 shares for $22 million (about $5 per share), leaving Treasury with 15,291,553 shares, or 7.2 percent of the company’s common stock, down from 9.2 percent.  Treasury intends to sell additional shares of common stock in the company through a second pre-defined written trading plan.  Treasury reported that on November 30, its outstanding investment in the company was worth $239 million, its largest remaining CPP investment, while the second-largest was worth much less, $50.2 million.

This is the December 7, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• Treasury and HUD announced enhancements to Making Home Affordable (MHA) programs as follows:
  • Homeowners in HAMP will be eligible to earn $5,000 in the sixth year of their modification.  Before this change, HAMP Tier 1 permanent modifications earned a “pay for performance” principal balance reduction, payable annually for the first five years, if the loan is in good standing and has not been paid in full.  HAMP Tier 2 borrowers will be eligible to receive a principal balance reduction payment of $5,000 in year six.  The announcement says approximately one million homeowners with HAMP modifications are eligible to earn the increased HAMP incentive.
  • Subject to investor guidelines, servicers must offer to re-amortize an eligible HAMP Tier 1 reduced loan balance (excluding deferred principal) over the remaining loan term, at year 6.
  • The interest rate for HAMP Tier 2 modifications will be reduced by 50 basis points.
  • Relocation assistance is increased to $10,000, up from $3,000.

This is the November 30, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• FHFA directed the GSEs to permit former homeowners who have been through foreclosure and want to buy their homes back to purchase them at fair-market value, for use as their principal place of residence.  The GSEs used to require repayment of the full loan amount.  Under existing GSE rules, former borrowers must wait three years after a foreclosure to be eligible for a GSE loan.  This policy revision is limited to GSE REO of single-family homes as of November 25, 2014.  The GSEs hold approximately 121,000 REO properties.  Certain property exclusions may apply.

• FHFA released its Refinance Report for the third quarter of 2014, showing:
  • Total refinance volume for the third quarter exceeded 389,000, while HARP refinances were down slightly at 44,136, or 11% of total refinance volume. 
  • Since 2009, there have been nearly 20 million GSE refinances, including more than 3.2 million through HARP.  
  • More than 25% of all HARP refinances for underwater borrowers (LTV greater than 105%) were for 15- and 20-year mortgages through the third quarter.
  • Year-to-date through September, HARP refinances represented 33% of total refinances in Georgia and 31% in Florida, nearly double the 16% of total refinances nationwide.

• FHFA released an interactive map of HARP-eligible loans with a refinance incentive, meaning a note rate 150 basis points above the market rate.  FHFA estimates that, as of second quarter 2014, there are more than 722,000 such borrowers.  FHFA states that nationwide these borrowers could save, on average, as much as $200 per month.

• The Federal Reserve announced, and invited public comment on, a proposal to apply enhanced prudential standards to General Electric Capital Corporation (“GECC”).  The agency describes the standards as including standards similar to those for large bank holding companies, such as for risk-based and leverage capital, capital planning, stress testing, liquidity, and risk management.  The standards would also include independence requirements for GECC’s board, restrictions on intercompany transactions, and the enhanced supplementary leverage ratio that applies to the largest, most systemic U.S. banking organizations.  

• The Federal Reserve and FDIC announced that they had completed their review of Wells Fargo’s 2014 resolution plan, and noted improvements from the original plan, including the description of the firm’s preferred resolution strategy and the progress in addressing obstacles identified by the agencies.  The agencies note that the firm's 2014 plan provides a basis for a resolution strategy that could facilitate an orderly resolution under bankruptcy.  The agencies have also identified specific shortcomings of the 2014 plan that need to be addressed in the 2015 plan. 

This is the November 23, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• FHFA released its strategic plan for 2015 through 2019.  FHFA states that it reflects the strategic goals established in the agency’s 2014 strategic plan.  The strategic goals are:
  • Ensure safe and sound regulated entities
    • Assess the safety and soundness of regulated entity operations 
    • Identify risks to the regulated entities and set expectations for strong risk management 
    • Require timely remediation of risk management weaknesses 
  • Ensure liquidity, stability and access in housing finance
    • Ensure liquidity in mortgage markets 
    • Promote stability in the nation’s housing finance markets 
    • Expand access to housing finance for qualified financial institutions of all sizes and in all geographic locations and for qualified borrowers 
  • Manage the GSEs’ ongoing conservatorships
    • Preserve and conserve assets 
    • Reduce taxpayer risk from GSE operations
    • Build a new single-family securitization infrastructure.
• FHFA released its fiscal 2014 Performance and Accountability Report.  It discusses the agency’s success under a number of goals as met, partially met, or unmet.  Most were met.  Partially met goals include: maintaining the rate of HARP refinances; completing the common securitization platform; and completing plans to standardize data.  Goals not met include:  increasing single-family g-fees; completing beta-testing for the national mortgage database; and establishing mortgage insurer standards.
• FHFA released its annual report on g-fees, showing that g-fees more than doubled from 2009 through 2013, and increased at a higher annual rate in 2013 than in the prior four years.  
  • G-fees increased to an average of 51 basis points in 2013 compared to an average of 36 in 2012 and 22 in 2009;
  • The g-fee increases in 2012 reduced pricing differences between small and large lenders in 2013; 
  • The percentage of loans sold to the GSEs by extra-large lenders decreased from 60 percent in 2010 to 49 percent in 2013 while the percentage of loans sold by extra-small lenders increased from 8 percent to 19 percent over the same time period;
  • The 2012 fee increases substantially reduced the pricing difference between 30-year fixed rate and 15-year fixed rate loans.
• The Federal Reserve Board announced two reviews to ensure that its examinations of large banking organizations are consistent, sound, and supported by all relevant information.  At the request of the Board, its Inspector General is examining whether there are adequate methods for decision-makers to obtain all necessary information to make supervisory assessments and determinations, and whether channels exist for decision-makers to be aware of divergent views among an examination team.  The Board is reviewing whether its decision-makers receive the information needed to ensure consistent and sound supervisory decisions regarding the supervision of the largest, most complex banking organizations, and whether adequate methods are in place for those decision-makers to be aware of material matters that required reconciliation of divergent views related to supervision of those firms.
• GAO released a report on FSOC entitled Further Actions Could Improve the Nonbank Designation Process.  GAO found key areas in which FSOC could enhance the accountability and transparency of its designation process.  The report states:
  • Tracking and monitoring.  FSOC has not centrally recorded key processing dates, tracked the duration of evaluation stages, or collected information on staff conducting evaluations, such as the number or type of staff contributed by member agencies. Without such data, FSOC’s ability to effectively monitor the progress and evaluate the quality and efficiency of determination evaluations is limited.
  • Disclosure and transparency.  FSOC’s transparency policy states its commitment to operating transparently, but its documentation has not always included certain details.  For example, FSOC’s public documents have not always fully disclosed the rationales for its determination decisions. 
  • Scope of evaluation procedures.  FSOC has evaluated how companies might pose a threat to financial stability using only one of two statutory determination standards (a company’s financial distress, not its activities).  By not using both standards when appropriate, FSOC may not be able to comprehensively ensure that it has identified and designated all companies that may pose a threat to U.S. financial stability.
• GAO released a report on bank capital entitled Initial Effects of Basel III on Capital, Credit, and International Competitiveness.  The report states:
  • The U.S. Basel III capital requirements likely will have a modest impact on lending activity, as most banks may not need to raise additional capital to meet the minimum requirements.  GAO estimated that less than 10 percent of the bank holding companies collectively would need to raise less than $5 billion in total additional capital to cover the capital shortfall.  Banks with a shortfall tended to be small, with less than $1 billion in assets.  According to officials from the eight community banks GAO interviewed, they do not anticipate any difficulties meeting the capital requirements but expect to incur additional compliance costs.  Officials from the 10 global systemically important banks that GAO interviewed said they have been incurring significant costs to comply with the new requirements, but three said that U.S. minimum capital ratios for Basel III tend not to be the binding capital constraint. 
  • Jurisdictional differences in the implementation of the Basel III capital standards have arisen, but their competitive effect on internationally active banks is unclear.  For example, some jurisdictions are subjecting certain of their banks to capital or leverage requirements above the Basel III minimums or exempting banks from certain capital requirements.  In addition, other factors can affect the competitive position of internationally active banks, such as differences in accounting treatment, cost of capital, and tax rules across jurisdictions.
• Treasury announced results of its auctions of CPP shares in three institutions.  Treasury had announced it would also auction its shares in Liberty Shares, Inc. (Hinesville, GA) but it did not because it did not receive sufficient bids above its required minimum.
  • First United Corporation (Oakland, MD), for $30,060,300; Treasury paid $30,000,000;
  • Lone Star Bank (Houston, TX), for $2,000,881; Treasury paid $3,072,000; and
  • Porter Bancorp, Inc. (Louisville, KY), for $3,500,000; Treasury paid $35,000,000.  Measured by the investment amount outstanding, this was the third-largest remaining institution in CPP at the end of October 2014.

This is the November 16, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• Treasury announced that it intends to auction all of its CPP shares in four institutions:
  • First United Corporation (Oakland, MD);
  • Liberty Shares, Inc. (Hinesville, GA);
  • Lone Star Bank (Houston, TX); and
  • Porter Bancorp, Inc. (Louisville, KY).

This is the November 9, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• The GSEs announced David Applegate as Chief Executive Officer for the GSEs’ common securitization platform.  They also announced appointments to the board – David Lowman and Jerry Weiss of Freddie Mac, and Terry Edwards and Rick Sorkin of Fannie Mae. 
• Fannie Mae announced results for the third quarter of 2014, showing net income of $3.9 billion and a net worth of $6.4 billion as of September 30.  Fannie Mae will pay $4 billion in dividends to Treasury for the third quarter.
• Freddie Mac announced results for the third quarter of 2014, showing net income of $2.1 billion and a net worth of $5.2 billion as of September 30.  Freddie Mac will pay $2.8 billion in dividends to Treasury for the third quarter.  
• The Federal Reserve finalized a regulation that prohibits mergers of banking organizations if the ratio of the resulting company's liabilities exceeds 10 percent of the aggregate consolidated liabilities of all financial companies.

This is the November 2, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• SIGTARP released a quarterly report highlighting SIGTARP’s escalated efforts to seek individual and corporate accountability for TARP-related crime.  
  • The report shows $24.7 billion remains available to be spent on housing programs.  SIGTARP continues to recommend that Treasury ensure that HAMP servicers have sufficient resources to review applications, and that Treasury do more to ensure HAMP applications are transferred when loan servicing transfers.
  • SIGTARP analyzed some of the interconnections between six of the largest TARP recipients (JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley) in 2008 through 2014, and how the interconnections contributed to the financial crisis and TARP.  SIGTARP states, “The institutions themselves must continue to assess how interconnectedness caused the crisis, whether those same connections exist today, and whether they still pose excessive risk.  In order to address too big to fail, regulators must understand, monitor, and address any interconnection that could spiral one institution’s troubles into a threat to the entire country.”

• The Federal Reserve announced amended management standards for financial market utilities that have been designated as systemically important, and that it is replacing two sets of risk-management standards for payment systems and for central securities depositories and central counterparties with a common set of risk-management standards for all types of designated financial market utilities.  The new management standards are based on the Principles for Financial Market Infrastructures developed by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions and published in April 2012.  The revised standards include separate standards to address credit risk and liquidity risk, new requirements on recovery and orderly wind-down planning, a new standard on general business risk, a new standard on tiered participation arrangements, and heightened requirements on transparency and disclosure.

• The European Commission approved Portuguese plans for a development financial institution, supervised by the Bank of Portugal, to manage specialized funds to provide small and medium sized businesses with access to funding on a co-investment basis with private investors.  The institution will not take deposits.  It will have starting capital of €100 million, fully subscribed by the Portuguese state. 

• The European Commission announced partnership agreements with Belgium, Croatia, Italy, Luxembourg, Malta, Slovenia, Spain, Sweden, and the United Kingdom that enable the countries to receive €92 billion in European funding through 2020.  They will also receive €30 billion for rural development and fisheries and the maritime sector.

This is the October 26, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• Six agencies released a final risk retention rule that largely retains the risk retention framework contained in the proposed rule of August 2013, and generally requires ABS sponsors to retain five percent of the credit risk of the assets collateralizing the ABS issuance.  The rule also sets prohibitions on transferring or hedging the credit risk that the sponsor is required to retain.  The final rule aligns the QRM definition with that of a QM definition.  The agencies will review the QRM definition within four and every five years thereafter, and allows each agency to request a review of the definition at any time.  The final rule exempts commercial loans, commercial mortgages, or automobile loans that meet specific underwriting standards.  

• The federal banking agencies released the supervisory scenarios for the 2015 capital planning and stress testing program.  The program includes the Comprehensive Capital Analysis and Review (CCAR) of 31 bank holding companies with $50 billion or more of total consolidated assets, and banks over $10 billion.  The scenarios are baseline, adverse, and severely adverse.  The baseline scenario is similar to the average projections from surveys of economic forecasters.  This year’s adverse scenario is characterized by a global weakening in economic activity and an increase in U.S. inflationary pressures that, overall, result in a rapid increase in both short- and long-term U.S. Treasury rates.  The severely adverse scenario features a substantial weakening in global economic activity, accompanied by large reductions in asset prices. 

• The European Commission adopted a delegated act and a proposal on calculating bank contributions to the national bank resolution funds established under the Bank Recovery and Resolution Directive (BRRD).  The BRRD, which became effective in July 2014, provides authorities with a common set of powers for dealing with failing banks, such as requiring resolution plans.  It has a target resolution fund level of at least 1% of covered deposits by the end of 2024.  

This is the October 12, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• The International Swaps and Derivatives Association (ISDA)announced that 18 major global banks (G-18) have agreed to sign a new ISDA Resolution Stay Protocol, which has been developed in coordination with the Financial Stability Board to support cross-border resolution and reduce systemic risk.  The protocol will impose a stay on cross-default and early termination rights within standard ISDA derivatives contracts between G-18 firms in the event one of them is subject to resolution action in its jurisdiction. The stay is intended to give regulators time to facilitate an orderly resolution of a troubled bank.  The protocol essentially enables adhering counterparties to opt in to certain overseas resolution regimes by changing their derivatives contracts.  While many existing resolution frameworks impose stays on early termination rights, these stays might only apply to domestic counterparties trading under domestic law agreements.  Participating firms are:  Bank of America Merrill Lynch, Bank of Tokyo-Mitsubishi UFJ, Barclays, BNP Paribas, Citigroup, Crédit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Mizuho Financial Group, Morgan Stanley, Nomura, Royal Bank of Scotland, Société Générale, Sumitomo Mitsui Financial Group, and UBS.
• GAO released a TARP report, Treasury Could Better Analyze Data to Improve Oversight of Servicers’ Practices.  GAO recommends that Treasury evaluate why servicers differ in their reasons for denying HAMP trial modifications and in their HAMP redefault rates.
• GAO released a report titled Housing Finance System—A Framework for Assessing Potential Changes.  GAO developed a draft framework that it shared with seven discussion groups composed of government officials, experts from academia and research organizations, and interested parties such as consumer advocates and industry representatives.  The discussants provided input on market developments and the framework.  The framework contains 9 elements:
  • Clearly defined and prioritized housing finance system goals;
  • Policies and mechanisms that are aligned with goals and other economic policies;
  • Adherence to an appropriate financial regulatory framework;
  • Government entities that have capacity to manage risks;
  • Mortgage borrowers are protected and barriers to mortgage market access are addressed;
  • Protection for mortgage securities investors;
  • Consideration of the cyclical nature of housing finance and the impact of housing finance on financial stability;
  • Recognition and control of fiscal exposure and mitigation of moral hazard; and
  • Emphasis on implications of the transition. 
• FSOC held a closed meeting to discuss the asset management industry, with an open session at which the council heard a presentation from Richard Berner, Director of the Office of Financial Research, on data gaps and data quality. 
• The European Commission adopted detailed standards for:
  • Solvency II standards for insurance regulation, including rules on asset valuations for capital purposes, governance standards, equivalence assessments of third-country solvency regimes, the internal model framework. and rules related to insurance groups;
  • A liquidity coverage ratio for all 8000 EU banks, requiring sufficient liquid assets to last a 30-day stress period, applicable both at an individual and at a consolidated level.  It includes as eligible assets some covered bonds and certain ABS, including auto-loan backed ABS.
  • A bank leverage ratio that is not directly binding, but indicates whether a bank’s supervisor should require more capital.

This is the October 5, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• The Federal Reserve Bank of New York published Community Credit Profiles, an interactive tool of information about single-family home prices, distressed sales, delinquencies, and foreclosures at the national, state and county levels.  Users can view the categories from 2006 to the present, and compare categories across all three geographic levels.  The Bank expects semi-annual updates.

• Treasury announced that, of the $1 billion it has disbursed under the State Small Business Credit Initiative, enacted with the 2010 Small Business Jobs Act, states have spent $590 million, which leveraged more than $4 billion in new loans and investments to approximately 8,500 businesses through 2013.  Business owners have reported that more than 95,000 jobs will be created or saved.  Additionally, 80% of SSBCI supported loans or investments went to businesses with ten employees or less.  This program provides funding to states that demonstrate $10 in private lending for each dollar of federal funding.

• The Federal Reserve announced that it will study the potential effects of its revised regulatory capital framework on insurance holding companies (thrift holding companies and nonbank financial companies The Federal Reserve supervises that are substantially engaged in insurance underwriting activity).  In July 2013, the Federal Reserve finalized its Basel III capital rules for bank holding companies, certain thrift holding companies, and state member banks.  Thrift holding companies substantially engaged in insurance underwriting were excluded to provide more time to appropriately tailor the capital rules for those firms.

• Canada’s Financial Institution’s Supervisor published draft guidance on derivatives for dealers and end-users to reflect the over-the-counter (OTC) derivatives market reforms initiated by G-20 leaders, to improve transparency, mitigate systemic risk, and protect against market abuse.  It reflects supervisory expectations for central clearing of standardized OTC derivatives and for reporting derivatives data to a trade repository.  It also reflects current practices with respect to the risk management of derivatives activities.

• On September 30, 2014, the European Commission announced adoption of regulatory technical standards for credit rating agency standards.  The standards set:
  • The disclosure requirements for issuers, originators and sponsors on structured finance instruments;
  • Reporting requirements to credit rating agencies (CRAs) for the European Rating Platform; and
  • Reporting requirements for CRAs on fees for supervision by the European Securities and Markets Authority.

The European Parliament and the Council now have a review period of up to three months before the standards can be final.  The standards do not need to be made into law by individual countries. 

This is the September 28, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• Treasury, HUD, and the Ad Council announced public service advertisements (PSAs) for Making Home Affordable.  The ads encourage homeowners to call a HUD-approved housing counseling agency about solutions for struggling homeowners who may be current on their payments. 
• OCC released a Mortgage Metrics report for the second quarter of 2014.  The report shows:
  • At quarter-end, 92.9% of mortgages were current and performing, compared with 93.1 percent at the end of the previous quarter and 90.6 percent a year earlier. 
  • Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—decreased 17.0% from a year earlier.
  • The percentage of early-stage delinquencies – 30 to 59 days past due – decreased 17.3% from a year earlier to 2.4% of the portfolio.
  • The number of mortgages in foreclosure fell to 391,591, a decrease of 47.4% from a year earlier.
  • Servicers initiated 79,781 new foreclosures during the quarter, a decrease of 47.0% from a year earlier.
  • Servicers implemented 208,150 home retention actions during the quarter, a decreased of 12.5% from the previous quarter and 34.1% from a year earlier.  
  • More than 91% of modifications in the quarter reduced monthly principal and interest payments; 56.1% reduced payments by 20% or more.  Modifications reduced payments by $252 per month on average, while HAMP modifications reduced monthly payments by an average of $269.
  • Servicers implemented 3,525,913 modifications from the beginning of 2008, through March 31, 2014.  At the end of the second quarter of 2014, more than 59% of these were active and almost 41% had exited the portfolios of the reporting institutions, through payment in full, involuntary liquidation, or transfer to a non-reporting servicer.  
  • Of the 2,084,292 modifications that were active at the end of the second quarter of 2014, approximately 69% were current and performing at the end of the quarter, 25% were delinquent, and 6% were in the process of foreclosure.
  • Transfer of loans to servicers not included in the report contributed to the decline in foreclosure activity.
• FHFA released a Foreclosure Prevention Report for the second quarter of 2014.  The report shows:
  • The number of 60+ days delinquent loans declined 5% to the lowest level since the start of the GSE conservatorships.
  • The serious delinquency rate fell to 2.1% at the end of the second quarter compared with 6.2% for FHA loans, 3.4% for VA loans, and 4.8% for all loans.
  • As of June 30, 2014, about 13% of loans modified in the second quarter of 2013 had missed two or more payments one year after modification.
  • Approximately 37% of all permanent loan modifications helped to reduce homeowners’ monthly payments by more than 30% in the second quarter.
  • Approximately 25% of borrowers who received permanent loan modifications in the second quarter had portions of their mortgage balance forborne.
  • Approximately 14,500 short sales and deeds-in-lieu were completed in the second quarter, bringing the total to more than 581,400 since the start of the conservatorships.
  • Third-party sales and foreclosure sales fell 10% to 42,800 while foreclosure starts increased slightly in the second quarter.
  • The GSEs’ REO inventory declined 10% during the quarter to approximately 131,500.

This is the September 21, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• GAO testified that FSOC lacks a comprehensive, systematic approach to identify emerging threats to financial stability.  In 2012, GAO reported that FSOC’s approach might not help identify new risks or threats that member agencies had not already identified.  GAO testified that the Office of Financial Research (OFR) has made some progress in developing data tools to support FSOC since 2012, but GAO’s observations of two of these tools suggest that one tool does not focus on risks to the financial system, while another remains in a prototype phase.  FSOC has taken steps to improve its communication with the public but, according to GAO, could do more to improve transparency and accountability.  FSOC has taken steps to improve collaboration and coordination among member agencies but, GAO stated, does not plan to act on some of GAO’s recommendations on coordination.  In May 2014, FSOC approved one formal mechanism that supported coordination—bylaws for the Deputies Committee of senior officials from member agencies that describe its role in coordinating FSOC activities.  According to GAO, FSOC does not plan to clarify the roles and responsibilities of FSOC, OFR, and member agencies because the overlapping responsibilities for monitoring systemic risk had not been problematic.  GAO stated that FSOC would not adopt practices to coordinate rulemaking across member agencies, as it does not have the authority to direct independent agencies.  GAO maintains that action is needed as its past work has shown that the lack of clear roles and coordination can lead to duplication, confusion, and regulatory gaps.

This is the September 14, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• Treasury announced it completed the first pre-defined written trading plan for Ally Financial common stock.  Treasury sold 8,890,000 shares for $218.7 million.  Treasury now holds 66.2 million common shares, or 13.8%, of Ally.  Treasury will sell additional Ally common stock through a second pre-defined written trading plan.
• Treasury announced that it would sell common stock in First BanCorp, Puerto Rico, through its first pre-defined written trading plan.  Treasury currently holds 19,680,441 shares, or 9.2%, of First BanCorp. common stock.  Treasury did not indicate the number of shares or the price.  Its original investment in the company was $400 million.  Treasury reports its outstanding investment in the company is worth $239 million, and is its largest remaining CPP investment.

This is the September 7, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the August 31, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the August 24, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following

This is the August 17, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the August 10, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

The agencies are committed to finding an appropriate balance between transparency and confidentiality of proprietary and supervisory information in the resolution plans, and will be working with these firms to explore ways to enhance public transparency of future plan submissions.

This is the August 3, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:    

This is the July 27, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the July 13, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the July 7, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• Treasury announced it received a full repayment of $946 million from Popular, Inc., the largest bank that remained in the Capital Purchase Program (CPP).  With this repayment, taxpayers recovered $1.22 billion of principal and interest from the original investment of $935 million in Popular.  Treasury still holds warrants to purchase 2,093,284 shares of Popular common stock.
• The Federal Reserve and FDIC released the public portions of annual resolution plans for 17 financial firms.  Thirteen of the firms previously have submitted at least one resolution plan.  They are: Bank of America Corporation, Bank of New York Mellon Corporation, Barclays PLC, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group, HSBC Holdings plc, JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, UBS AG, and Wells Fargo & Company.  The agencies also released initial public resolution plans for AIG, Prudential Financial, Inc., General Electric Capital Corporation, and Bankia SA.  The agencies granted requests for extensions until October 1, 2014 for BNP Paribas SA and Royal Bank of Scotland Group plc for their second resolution plan submissions.
• The European Court of Auditors released a report entitled European Banking Supervision Taking Shape — EBA and its Changing Context.  It reviews the revised regulation and supervision of the banking sector by the European Commission and the newly-created European Banking Authority from 2011 to early 2013.  The report identified shortcomings in cross-border banking supervision, in assessing EU banks’ condition, and consumer financial protection.  It states that the Commission was timely in drafting legislation but public consultation periods were short and there was no overall impact assessment for the legislative package.  The report notes that the EBA does not supervise financial institutions directly.  It says national supervisory authorities’ (NSAs) convergence through the college of supervisors is limited, and colleges spent too much time discussing procedures rather than focusing on risks.  The report recommends clarification of roles and responsibilities.  In the fall of 2014, the European Central Bank (ECB) will supervise the banking sector in all the euro area Member States and other Member States that wish to participate.  This Single Supervisory Mechanism (SSM) will involve cooperation between the ECB and the NSAs, where the ECB will be responsible for the overall functioning of the SSM.  The report recommends clarification of roles and responsibilities.

This is the June 29, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the June 22, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the June 15, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• The Federal Reserve proposed to amend its capital plan and stress test rules to modify the start date of the capital plan and stress test cycles from October 1 of a calendar year to January 1 of the following calendar year.  The proposal would also amend the capital plan rule to limit a bank holding company’s ability to make capital distributions to the extent that its actual capital issuances are less than the amount indicated in its capital plan under baseline conditions. The proposal would clarify application of the capital plan rule to a bank holding company that is a subsidiary of a U.S. intermediate holding company of a foreign banking organization and the characteristics of a stressed scenario to be included in company run stress tests.
• The OCC proposed to similarly adjust its stress testing cycle dates.  It also would provide that covered institutions will not have to calculate their regulatory capital requirements using the advanced approaches method until the stress testing cycle beginning on January 1, 2016.
• Treasury announced the transfer of $4,345,555 in State Small Business Credit Initiative (SSBCI) funds to a consortium of 17 Wyoming communities, and announced $5,567,137 to Colorado, to leverage private investment in small businesses.  Total funds disbursed by Treasury through the SSBCI program reached $1 billion last year.  The Small Business Jobs Act created the State Small Business Credit Initiative and funded it with $1.5 billion.  States can receive federal funds for programs to extend credit to small businesses.  States must demonstrate a minimum of $10 in new private lending for every $1 in federal funding.
• The Administration released its May housing scorecard and April servicers’ report.  They show that, according to the Federal Reserve, homeowners’ equity was up $795 billion in the first quarter of 2014, reaching more than $10.8 trillion, the highest level since the second quarter of 2007.
• Treasury announced its intention to auction all of its preferred stock in the following six institutions:
  • Marine Bank & Trust Company (Vero Beach, FL);
  • Market Bancorporation, Inc. (Elko New Market, MN);
  • Maryland Financial Bank (Towson, MD);
  • Royal Bancshares of Pennsylvania, Inc. (Narberth, PA);
  • United American Bank (San Mateo, CA); and
  • White River Bancshares Company (Fayetteville, AR). 

This is the June 8, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the May 25, 2014 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

This is the May 18, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

Under Director DeMarco, the strategic plan goals centered on building a new infrastructure for the secondary market, contracting the GSEs’ market dominance while simplifying and shrinking their operations, and maintaining foreclosure prevention activities and credit availability.  FHFA explains that the reformulated goals take into account that the GSEs are no longer generating losses, and that FHFA’s responsibilities do not involve making policy decisions on the future of housing finance reform.

This is the May 11, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the May 5, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the April 27, 2014 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This updates include the following:

• The FDIC finalized without substantive change what had been an interim final risk-based and leverage capital rule, and that is substantially similar to Federal Reserve and OCC rules.  This rule defines regulatory capital, implements a common equity tier 1 minimum capital requirement, a minimum tier 1 capital requirement, and, for institutions subject to the advanced approaches risk-based capital rules, a supplementary leverage ratio that incorporates a broader set of exposures in the denominator.  In addition, the rule establishes limits on a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a specified amount of common equity tier 1 capital. 

This is the April 13, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the April 6, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• GAO released a report on international financial reforms, entitled U.S. and Other Jurisdictions’ Efforts to Develop and Implement Reforms.  GAO found that the U.S. and other jurisdictions have made progress implementing many of the G20 financial reform commitments, but most reforms have not been fully implemented by all jurisdictions.  According to a September 2013 progress report, the report says that only the U.S. reported having rules at least partly in effect to implement the G20 reforms requiring derivatives to be centrally cleared, traded on organized trading platforms, and reported to trade repositories, while many other jurisdictions reported having rules in effect for only some of these reforms or adopted or proposed legislation to implement the reforms.  GAO stated that in some cases, inconsistent implementation of international financial standards could lead to certain activities migrating to less regulated jurisdictions or could adversely affect financial stability.
• The Acting Special Master for TARP Executive Compensation, Patricia Geoghegan, released 2014 compensation determinations for the top 25 executives at Ally Financial, finding that the compensation will not result in payments that are inconsistent with EESA and will not be contrary to the public interest.  Specifically, the Special Master found:
  • CEO compensation remains frozen;
  • The cash compensation for the top 25 executives at Ally Financial has not increased from 2013;
  • Compensation is predominantly in stock;
  • The total direct compensation for the group of 24 executives covered by the 2014 determination letter is seven percent lower than the total for the 23 executives covered by the 2013 determination letter. 
• Treasury announced results of its sale of its preferred shares and subordinated debt in four institutions:
  • Community First, Inc. (Columbia, TN), for $5,815,060; Treasury paid $17,806,000;
  • Freeport Bancshares, Inc. (Freeport, IL), for $3,171,301; Treasury paid $3,000,000;
  • Great River Holding Company (Baxter, MN), for $10,653,531; Treasury paid $8,400,000; and
  • Patriot Bancshares, Inc. (Houston, TX), for $31,434,779; Treasury paid $26,038,000. 

This is the March 30, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the March 23, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the March 16, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The European Commission adopted regulatory technical standards to implement its Basel III capital requirements.  The standards:
  • Require a credit valuation adjustment to reflect deterioration in counterparty credit risk, based on either a credit spread or, if unavailable, a proxy.
  • Specify how banks investing in securities must ensure that the originator, sponsor, or original lender retains a material net economic interest in the instrument (“skin in the game”).
  • Specify the classes of instrument that banks can use when awarding bonuses, to ensure that the instruments adequately reflect the credit quality of the institution and are appropriate for use in bonuses.
  • Specify how institutions should assess whether changes or extensions to internal capital models are material enough that they require prior permission.
  • Strengthen the cooperation between competent authorities of home and host Member States by specifying the information to be exchanged about noncompliance and supervisory actions.
  • Define the term “market” as the Eurozone, or otherwise by jurisdiction, for purposes of the requirement to hold capital against the market risk of the equity instruments.  For market risk purposes, the institution must add together equity instruments trading within the same market.
  • Specify three alternatives to calculate the “non-delta risks” of options and warrants to calculate the capital requirement for market risk.
  • Define the material exposures to specific risk and large numbers of material positions in debt instruments of different issuers, to encourage use of internal specific risk assessment.
  • Set common rules on when a close correlation exists between the value of the covered bonds issued and the value of the underlying assets, so that gains and losses on fair-valued liabilities can be reflected in capital reserves.

The European Parliament and the Council have up to three months to review the standards. 

This is the March 9, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• Treasury announced action results for CPP shares in the following institutions:

o BNCCORP, Inc. (Bismarck, ND), for $21,120,957; Treasury paid $20,093,000;
o Chicago Shore Corporation (Chicago, IL), for $7,287,700; Treasury paid $7,000,000;
o IA Bancorp, Inc. (Iselin, NJ), for $6,051,511; Treasury paid $5,976,000; and
o Meridian Bank (Malvern, PA), for $10,593,202; Treasury paid $12,535,000.

Treasury did not auction shares in Maryland Financial Bank (Towson, MD) or Rising Sun Bancorp (Rising Sun, MD), which had both been included in the original (February 22, 2014) announcement of this group of auctions. 

• The European Commission adopted regulatory technical standards setting criteria to identify categories of staff at banks and investment firms whose roles have a material impact on an institution’s risk profile.  For performance from January 1, 2014 onwards, such employees may not receive variable compensation (bonuses) of over 100% of their fixed compensation.  Under certain conditions, shareholders can increase this maximum to 200%.  The European Parliament and the Council have up to three months to review the standards.
• The European Commission proposed conflict mineral regulations that would require those who import tin, tantalum, tungsten, or gold into the EU to:

o Certify their adherence to supply chain due diligence obligations;
o Communicate their supply chain policy to suppliers and the public, and incorporate it into supply contracts;
o Establish a company-level grievance mechanism, provide such a mechanism through collaborative arrangements with other companies, or facilitate recourse to an external expert or body;
o Implement a strategy to identify and respond to risks;
o Obtain an annual third-party audit of the importer’s activities, processes, and systems used to implement supply chain due diligence; and
o Submit information annually to the Member State competent authority, including contract details.
 

This is the February 23, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

~Attached please find the February 16, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:
FHFA released its November Refinance Report, showing that Fannie Mae and Freddie Mac have completed more than 18 million refinances since the start of their conservatorships, including the 3 million through HARP.  Year-to-date through November 2013:
Borrowers with LTV ratios greater than 105% accounted for 40% of the volume of HARP loans;
20% percent of HARP refinances for underwater borrowers were for 15- and 20-year loans;
HARP refinances represented 55% of total refinances in Nevada and 49% in Florida, more than double the 22% of total refinances nationwide over the same period.
The OCC issued supervisory guidance regarding secured consumer debt discharged in Chapter 7 bankruptcy proceedings.  The guidance describes the analysis necessary to clearly demonstrate and document that repayment is likely to occur, which would preclude any charge-off, when a bank may consider post-discharge payment performance as evidence of collectability, and when this performance demonstrates both capacity and willingness to repay the full amounts due.  Immediate charge-off of amounts exceeding collateral value is not required if an analysis indicates that orderly repayment is likely to occur after the bankruptcy discharge.  Loans returned to accrual that had been discharged in a Chapter 7 bankruptcy proceeding should be monitored and considered separately for loan loss allowance purposes and generally charged down to the fair value of the collateral less costs to sell if
Regards,

Canfield Press

This is the February 9, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the January 26, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the January 19, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the January 12, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the December 29, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

The OCC released its Mortgage Metrics Report for the third quarter of 2013.  It shows:
o At quarter-end, 91.4% of mortgages were current and performing, compared with 90.6% at the end of the previous quarter and 88.6% a year earlier.
o Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—decreased to 3.6% compared with 3.8% at the end of the previous quarter and 4.4% a year earlier. The percentage of mortgages that were seriously delinquent decreased 16.8% from a year earlier.
o The percentage of early stage delinquencies, mortgages that were 30-59 days past due, was 2.6%, down 8.4% from the previous quarter and down 15.5% from a year ago.
o The number of loans in the process of foreclosure at the end of the third quarter fell to 604,763, a decrease of 47.8% from a year earlier.
o Servicers initiated 130,592 new foreclosures during the third quarter, a 48.3% decrease from a year earlier. Compared to a year ago, the number of completed foreclosures fell 27.8% to 82,841.
o Servicers implemented 311,660 home retention actions in the quarter compared with 116,214 home forfeiture actions (completed foreclosures, short sales, and deed-in-lieu-of-foreclosure actions). The number of home retention actions servicers implemented decreased by 0.9% from the previous quarter and 18.6% from a year earlier.
o In the third quarter, 92.4% of modifications reduced monthly principal and interest payments, and 62.5% of modifications reduced payments by 20% or more. Modifications reduced payments by $365 per month on average, while HAMP modifications reduced monthly payments by an average of $509.
o Servicers have modified 3,288,717 mortgages from the beginning of 2008 through the end of the second quarter of 2013. At the end of the third quarter of 2013, 45.5% of these modifications were current or paid off. Another 6.3% were 30 to 59 days delinquent, and 11.1% were seriously delinquent. Another 5.1% were in the process of foreclosure, and 7.8% had completed the foreclosure process.
 

This is the December 22, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the December 15, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

FHFA expects these increases and decreases to produce an overall average g-fee increase of approximately 11 basis points based on loan purchases of Fannie Mae and Freddie Mac in the third quarter of 2013. This represents an average increase of 14 basis points on typical 30-year mortgages and 4 basis points on 15-year mortgages. This increase follows FHFA-directed increases of 10 basis points each announced in December 2011 and August 2012. 

This is the December 8, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the December 1, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the November 24, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the November 17, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the November 10, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• The FDIC, Bank of England, German Federal Financial Supervisory Authority, and the Swiss Financial Market Supervisory Authority wrote ajoint letter to encourage the International Swaps and Derivatives Association to adopt derivatives contracts language that would suspend early termination rights and other remedies upon commencement of a resolution proceeding of a counterparty or its specified entity, guarantor, or credit support provider.  The letter states that this would allow, where operative law permits, exercise of all resolution powers, especially expeditious transfer of derivatives to a third party including a bridge entity, a bail-in of a failing institution by liability write-down, or by converting liabilities into equity.  The letter describes this as a critical step to provide increased certainty to resolution authorities. 
• The Administration released its October housing scorecard and September servicers’ report, showing gains in home prices and in home equity, and that 2009 and 2010 modifications have 60- and 90-day redefault rates of just over 40 percent. 
• The Federal Reserve issued a final policy statement describing the processes it will use to develop scenarios for future capital planning and stress testing exercises.

This is the November 3, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the October 27, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

 The report also notes that reform of Fannie Mae and Freddie Mac, as well as Dodd-Frank reforms, may affect FHA.  HUD had no comments for GAO’s report.

This is the October 20, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This includes the following:

This is the October 13, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

Treasury had earlier announced that its shares in Liberty Shares, Inc. (Hinesville, GA) would also be auctioned, but were not.  Prices paid are here. 

This is the October 6, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• The Federal Reserve and FDIC released the public sections of living wills filed by October 1 by eleven banking organizations, generally with U.S. nonbank assets greater than $250 billion.

This is the September 29, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• The OCC released its Mortgage Metrics Report for the second quarter of 2013.  It shows the following:
  •  90.6% percent of mortgages were current at the end of the quarter, compared with 90.2% for the previous quarter and 88.7% a year earlier.  Seriously delinquent mortgages—60 days past due or with bankrupt borrowers and 30 days past due—decreased to 3.8% from 4.0% in the previous quarter and 4.4% a year ago.  The percentage of mortgages that were seriously delinquent decreased 15% from a year earlier.  The percentage of early stage delinquencies, mortgages that were 30-59 days past due, was 2.9%, an increase of 11.6% from the previous quarter and up 1.8 percent from a year ago.
  • Foreclosure activity fell to its lowest level since the first OCC Mortgage Metrics Report in the first quarter of 2008.  The number of loans in the process of foreclosure at the end of the second quarter of 2013 fell to 744,369, a decrease of 39.8% from a year ago.  
  • After falling materially at the end of 2012, the number of newly initiated foreclosures continued to decline to its lowest levels since early 2008.  During the second quarter of 2013, servicers initiated 150,592 new foreclosures, a 50.8% decrease from a year ago.  Compared to a year ago, the number of completed foreclosures fell 22.2% to 79,960.
  • During the quarter, servicers implemented 314,672 home retention actions compared with 121,746 home forfeiture actions.  The number of home retention actions decreased by 9.8% from the previous quarter and 25.2% from a year earlier.  In the second quarter of 2013, 93% of modifications reduced monthly principal and interest payments, and 59.1% reduced payments by 20% or more.
  • Servicers have modified 3,180,522 mortgages from the beginning of 2008 through the end of the first quarter of 2013.  At the end of the second quarter of 2013, 46.6% of these modifications were current or paid off, 6.8% were 30 to 59 days delinquent, and 11.5% were seriously delinquent.  Another 6.1% were in foreclosure, and 7.5% had completed the foreclosure process.
• The Federal Reserve issued two interim final rules that clarify how companies should incorporate the Basel III regulatory capital reforms into their capital and business projections during the next cycle of capital plan submissions and stress tests.  The first rule applies to bank holding companies with $50 billion or more in total consolidated assets, and clarifies those companies must incorporate the revised capital framework into their capital planning projections and stress tests. This rule also clarifies that capital adequacy will continue to be assessed against a minimum 5 percent tier 1 common ratio.  The second rule provides a one-year transition period for most banking organizations with between $10 billion and $50 billion in total consolidated assets.  These companies will be required to calculate their stress test projections using the current regulatory capital rules during the upcoming stress test to allow time to adjust their internal systems to the revised capital framework.
• Treasury announced it will continue selling its 101 million shares of General Motors stock.  It did not specify how many or at what price.  In December 2012, it announced that it would sell all of its GM stock by approximately March 2014.

This is the September 22, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

Purchase prices are available here.

This is the September 1, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

This is the September 1, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

• The European Commission proposed money market fund (MMF) rules that would require:
  • Constant NAV funds to hold a capital cushion of 3% of assets;
  • MMFs to hold at least 10% of their assets in instruments that mature on a daily basis and an additional 20% of assets must mature within a week;
  • Disclosure of whether the fund is short-term (holding assets with a maturity not exceeding 397 days) or standard (maturity of 2 years);
  • Customer profiling policies to help anticipate large redemptions; and
  • Internal credit risk assessment of assets by MMF managers, to avoid overreliance on external ratings.
• The European Commission approved a plan resolve the Austrian bank Hypo Group Alpe Adria by selling the operative part of the bank and winding down the non-viable remainder.

This is the September 1, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• The Overseas Derivatives Regulators Group (ODRG) of regulators of over-the-counter derivatives markets in Australia, Brazil, the European Union, Hong Kong, Japan, Ontario, Quebec, Singapore, Switzerland and the United States issued a report regarding common understandings to improve the cross-border implementation of OTC derivatives reforms.  The report reflects substantive understandings to improve the cross-border implementation of OTC derivatives reforms:
  • Early and comprehensive consultation among relevant authorities when equivalence or substituted compliance assessments are being undertaken is essential.
  • A flexible, outcomes-based approach should form the basis of final assessments regarding equivalence or substituted compliance assessments.
  • A “stricter-rule” approach would apply to address gaps in mandatory trading or clearing obligations.
  • Authorities have a framework for consultation on mandatory clearing determinations.
  • Jurisdictions should remove barriers to reporting to trade repositories by market participants and to regulators’ access to repository data.
  • There should be appropriate transitional measures and a reasonable but limited transition period for foreign entities to implement OTC derivatives reforms.

The report also recognizes that challenges will continue to arise, including authorities’ direct access to registrant information and the treatment of foreign bank branches and guaranteed subsidiaries. 

Finally, the report recognizes that open communication is vital to ensure there is common understanding of each jurisdiction’s processes and timelines to implement OTC derivatives reforms, and that flexibility in the application of cross-border regulation will be needed to make progress toward cross-border consistency.

This is the August 25, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  It includes the following:

• The OCC announced that EverBank agreed to pay $37 million to more than 32,000 eligible mortgage borrowers.  Borrowers whose homes were in any stage of foreclosure in 2009 and 2010 with EverBank will receive cash compensation.  Payments will range from $1,050 to $125,000 plus equity.  EverBank was subject to an April 2011 cease and desist order for unsafe and unsound practices in mortgage servicing and foreclosure processing.  EverBank will consent to an amendment to the order, which will effectively end the Independent Foreclosure Review process for EverBank and its customers required by the order.  EverBank will pay approximately $6.3 million to organizations that provide affordable housing, foreclosure prevention and educational assistance to low- and moderate-income families.  OCC will approve recipient organizations.  EverBank also will evaluate each eligible borrower still in the process of foreclosure for a new loan modification, where investor contracts allow, and will establish a special complaint process to resolve borrower complaints regarding credit report errors.  As is the case with the previous amended orders, borrowers who accept a payment will not be prevented from taking any action related to their foreclosure. 
• The Federal Reserve Board released a paper entitled Capital Planning at Large Bank Holding Companies: Supervisory Expectations and Range of Current Practice.  The paper concludes that bank holding companies have made advances in identifying and measuring risks to their capital and in integrating stress testing and capital planning into their broader strategic planning.  The paper states that some bank holding companies fall short of leading practice in:
  • Not being able to show how all their risks were accounted for in their capital planning processes;
  • Using stress scenarios and modeling techniques that did not address the particular vulnerabilities of the organization’s business model and activities;
  • Generating projections for some components of loss, revenue, or expenses using approaches that were not robust, transparent, or repeatable, or that did not fully capture the impact of stressed conditions;
  • Having capital policies that did not clearly articulate the organization’s capital goals and targets, did not provide analytical support for how these goals and targets were determined, or were not comprehensive or detailed enough to provide clear guidance about how the organization would respond as its capital position changed; and
  • Having less-than-robust governance or controls around the capital planning process, including around fundamental risk-identification, risk-measurement, and risk-management practices.

The Federal Reserve said that as capital planning practices advance, its expectations for how bank holding companies implement capital planning and stress testing will evolve.

This is the August 11, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  It includes the following:

• Fannie Mae reported results for the second quarter, showing net income of $10.1 billion, and a positive net worth of $13.2 billion as of June 30, 2013.  Fannie Mae will pay $10.2 billion of that net worth as a dividend to Treasury in the third quarter.
• Freddie Mac reported net income of $5 billion for the second quarter, and a positive net worth of $7.4 billion, as of June 30, 2013.  Freddie Mac will pay $4.4 billion of that net worth as a dividend to Treasury in the third quarter.
• FHFA solicits comment on strategies for reducing Fannie Mae and Freddie Mac’s presence in the multifamily housing finance market in 2014.  FHFA notes that most GSE multifamily lending is for loans with terms longer than five years, and asks whether it should consider loan term as a factor in reducing GSE multifamily business.  It also asks whether it should limit loan product types or per-unit loan amounts.
• The Administration released its July housing scorecard and June servicers’ report, showing home equity increased $816 billion in the first quarter of 2013.  Making Home Affordable, through June 2013, has included 1.7 million HAMP first and second lien modifications, short sales and deeds in lieu of foreclosure, and principal forbearance for the unemployed.

This is the August 4, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This include the following:

• GAO released a report on the effects of the regulatory response to the 2007-2009 financial crisis on insurance markets.  The report states:
  • The effects of the financial crisis on insurers and policyholders were generally limited, but varied by market segment.  Some life insurers that offered variable annuities with guaranteed living benefits, as well as financial and mortgage guaranty insurers, were more affected by their exposures to the distressed equity and mortgage markets.  Some mortgage and financial guaranty policyholders received partial claims or faced decreased coverage availability.
  • To identify potential risks, state regulators said they increased the frequency of information sharing among the regulators, and used National Association of Insurance Commissioners (NAIC) analysis and information to help focus their inquiries.
  • Insurance business practices, regulatory restrictions, and a low interest rate environment helped reduce the effects of the crisis.
  • The NAIC and state regulators’ efforts have included an increased focus on insurers’ risks and capital adequacy, and oversight of noninsurance entities in group holding company structures. The Own Risk and Solvency Assessment, an internal assessment of insurers’ business plan risks, will apply to most insurers and is expected to take effect in 2015.  NAIC amended its Insurance Holding Company System Regulatory Act to address the issues of transparency and oversight of holding company entities. However, most states have yet to adopt the revisions, and implementation could take several years.
• Treasury announced that it auctioned all of its preferred stock and subordinated debt in five institutions as follows:
  • Community Pride Bank Corporation (Ham Lake, MN), for $5,064,436; Treasury paid $4,400,000 million;
  • First Banks, Inc. (Clayton, MO), for $107,739,520, Treasury paid $295,400,000;
  • First Intercontinental Bank (Doraville, GA), for $3,411,433; Treasury paid $6,398,000;
  • Universal Bancorp (Bloomfield, IN), for $9,887,476; Treasury paid $9,900,000; and
  • Virginia Company Bank (Newport News, VA), for $2,957,455; Treasury paid $4,700,000.

This is the July 28, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  It includes the following:

• The Federal Reserve announced an amendment to its April 2011 consent order against GMAC Mortgage, under which GMAC will pay $230 million in cash to borrowers without waiting for an independent review of each loan.  The amendment is similar to those announced in February 2013 between 13 mortgage servicers and the OCC and the Federal Reserve.  More than 232,000 borrowers whose homes were in any stage of foreclosure in 2009 and 2010 with GMAC Mortgage will receive cash compensation under the amendment.  As is the case with the previous amendments, borrowers who accept a payment will not be prevented from taking any action related to their foreclosure.
• SIGTARP released a quarterly report showing the following:
  • As of June 30, 2013, $420 billion in TARP funds has been expended.  Of this, $8.6 billion was for housing subsidies that will not be repaid; $352 billion has been repaid; Treasury has realized losses or written off $29.1 billion; and $58 billion is still owed. 
  • TARP funds remain available to be spent only for housing programs, and $29.9 billion is available. 
  • SIGTARP investigations have resulted in 107 convictions.  Of the se defendants, 51 have been sentenced to prison, nine to probation, and the remainder await sentencing.
  • SIGTARP investigations have resulted in 102 civil charges and other actions against 58 individuals (including 44 senior executives) and 47 corporate entities.  These charges have resulted in 55 settlements yielding over $282 million in civil penalties and other actions.
  • SIGTARP currently has more than 150 ongoing investigations.
• Treasury announced it intends to sell all of its preferred shares and subordinated debt in six institutions:
  • Calvert Financial Corporation (Ashland, MO);
  • Community Pride Bank Corporation (Ham Lake, MN);
  • First Banks, Inc. (Clayton, MO);
  • First Intercontinental Bank (Doraville, GA);
  • Universal Bancorp (Bloomfield, IN); and
  • Virginia Company Bank (Newport News, VA).

This is the July 21, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This includes the following:

• The Federal Reserve Bank of New York posted a paper, Improving Access to Refinancing Opportunities for Underwater Mortgages, by Joshua Abel and Joseph Tracy.  The paper discusses the effects of relaxing two HARP requirements, one that permits only one HARP refinance, and another that limits HARP to borrowers who obtained their loans by June 1, 2009.   
• GAO released a report entitled Need to Further Consider Proposals’ Impact on Systemic Risk.  It discusses proposals to give financial regulators a greater role in financial company bankruptcies.  Experts reported that funding is needed to facilitate orderly and effective financial company bankruptcies, but a source is not clear.  Experts did not agree on advantages or disadvantages of proposals to change the automatic stay exemption for qualified financial contracts (including derivatives), and the ability of bankruptcy courts to avoid qualified financial contracts in some circumstances.  GAO recommends that FSOC consider the implications of changing the role of regulators and the treatment of qualified financial contracts in financial company bankruptcies.  The report states that FSOC believes it would be premature to consider proposals to change the Bankruptcy Code. 

This is the July 14, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This includes the following:

• The Treasury Department announced that it priced auctions of preferred shares and subordinated debt in eight institutions, as follows:
  • Alarion Financial Services, Inc. (Ocala, Florida), for $6,743,382; Treasury paid $6,514,000;
  • ColoEast Bankshares, Inc. (Lamar, Colorado), for $9,536,875; Treasury paid $10 million;
  • Commonwealth Business Bank (Los Angeles, California), for $7,689,740; Treasury paid $7,701,000;
  • Crosstown Holding Company (Blaine, Minnesota), for $10,997,752; Treasury paid $10,650,000;
  • Fidelity Federal Bancorp (Evansville, Indiana), $7,293,847; Treasury paid $6,657,000;
  • Mountain Valley Bancshares, Inc. (Cleveland, Georgia), $3,432,035; Treasury paid $3,300,000;
  • Omega Capital Corp. (Lakewood, Colorado), for $3,403,293; Treasury paid $2,816,000; and
  • Premier Financial Corp. (Dubuque, Iowa), for $8,339,805; Treasury paid $6,349,000.

• The Administration released its June housing scorecard and May servicers’ report, showing more than 1.2 million permanent HAMP modifications and more than 3.6 million HOPE Now proprietary mortgage modifications through April. 

This is the July 7, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This includes the following:

• FHFA released a Foreclosure Prevention Report for the first quarter of 2013.  It shows:
  • The GSEs completed more than 130,000 foreclosure prevention actions during the quarter, bringing the total actions to nearly 2.8 million since the start of conservatorships. The GSEs have helped more than 2.3 million borrowers stay in their homes, including nearly 1.4 million who received permanent loan modifications.
  • Half of troubled homeowners who received permanent loan modifications in the first quarter had their monthly payments reduced by more than 30%.
  • More than a third of permanent loan modifications in the first quarter included principal forbearance.
  • As of March 31, 2013, 12% of loans modified in the second quarter of 2012 had missed two or more payments.
  • Completed short sales and deeds-in-lieu fell 7% during the quarter to nearly 30,300, bringing the total to over 476,300 since the start of conservatorship.
  • The number of GSE borrowers 60-plus-days delinquent declined 11% in the first quarter to the lowest level since first quarter of 2009.
  • Serious delinquency rates declined to 3.0% at the end of the quarter compared with 8.05 for FHA loans, 4.2% for VA loans, and 6.4% for all loans (industry average).
  • Third-party sales and foreclosure sales continued a downward trend in the first quarter while foreclosure starts increased.
  • REO inventory continued to decline as property dispositions outpaced property acquisitions in the first quarter.
  • Over 1 million homeowners have been offered a HAMP trial modification since the program started in April 2009. More than half of these have been permanently modified.
  • Non-HAMP modifications accounted for 77% of all permanent loan modifications in the first quarter.
  • More than 48,800 borrowers received permanent loan modifications through the GSEs’ proprietary modification programs in the first quarter, bringing the total number of non- HAMP permanent modifications to approximately 657,500 since October 2009. 
• Treasury announced it intends to sell all of its preferred shares and subordinated debt in eight institutions:
  • Alarion Financial Services, Inc. (Ocala, Florida);
  • ColoEast Bankshares, Inc. (Lamar, Colorado);
  • Commonwealth Business Bank (Los Angeles, California);
  • Crosstown Holding Company (Blaine, Minnesota);
  • Fidelity Federal Bancorp (Evansville, Indiana);
  • Mountain Valley Bancshares, Inc. (Cleveland, Georgia);
  • Omega Capital Corp. (Lakewood, Colorado); and
  • Premier Financial Corp. (Dubuque, Iowa). 

This is the June 30, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This includes the following:

• The OCC released its Mortgage Metrics Report for the first quarter of 2013.  The report shows:
  • 90.2 percent of mortgages were current and performing at the end of the quarter, compared with 89.4 percent the prior quarter and 88.9 percent a year earlier.  Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—decreased to 4.0 percent compared with 4.4 percent at the end of 2012 and 4.5 percent a year ago.  The percentage of mortgages that were seriously delinquent has decreased 10.4 percent from a year earlier.  The percentage of early stage delinquencies, mortgages that were 30-59 days past due, was 2.6 percent, down 9.3 percent from the previous quarter but up 3.0 percent from a year ago.
  • The number of loans in the process of foreclosure at the end of the first quarter of 2013 decreased by 28.6 percent from a year ago to 907,231.  Servicers initiated 178,356 new foreclosures during the quarter—a 13.8 percent increase from the previous quarter but a 37.8 percent decrease from a year ago.  The number of completed foreclosures fell to 84,972, a 19.7 percent decrease from the previous quarter and a 30.9 percent decrease from a year ago.
  • Servicers implemented 348,733 home retention actions—including modifications, trial-period plans, and shorter term payment plans—compared with 131,704 home forfeiture actions during the quarter—completed foreclosures, short sales, and deed-in-lieu-of-foreclosure actions.  The number of home retention actions implemented by servicers decreased by 5.0 percent from the previous quarter and 1.2 percent from a year earlier.  Nearly 94 percent of modifications in the first quarter of 2013 reduced monthly principal and interest payments; 56.4 percent of modifications reduced payments by 20 percent or more.  Modifications reduced payments by $361 per month on average, while modifications made under the Home Affordable Modification Program (HAMP) reduced monthly payments by an average of $547.
  • Servicers have modified 3,021,617 mortgages from the beginning of 2008 through the end of the fourth quarter of 2012.  At the end of the first quarter of 2013, 49.5 percent of these modifications were current or paid off.  Another 6.4 percent were 30 to 59 days delinquent, and 12.4 percent were seriously delinquent.  Another 7.3 percent were in the process of foreclosure, and 7.4 percent had completed the foreclosure process.
• The Federal Reserve Board proposed to require certain institutions to report daily on their federal funds transactions, Eurodollar transactions, and certificates of deposit.  The proposal would apply to insured depository institutions with total assets of $26 billion or more, and U.S. branches and agencies of foreign banks with third party assets of $900 million or more.  The intent is to assist the Federal Reserve in monitoring money market conditions.  Comments are due 60 days after Federal Register publication. 

This is the June 23, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This includes the following: 

• The monitor of the 50-state servicing settlement released a Monitor’s Report.  The Monitor uses 29 metrics, or tests, to measure compliance with 304 servicing standards.  The standards were phased in over differing schedules for the several servicers.  The first quarter of 2013 is the first quarter for which each servicer tested its performance on all the metrics.  If a servicer self-reports that it failed a metric, it must create a corrective action plan, which the Monitor must approve.  The servicer must compensate borrowers for harm.  The Monitor must review and test implementation of the corrective action plan until remediation is complete.  The Monitor reports having spent 37,900 hours over six months testing for the last two quarters of 2012.

The Monitor states that the settlement is having the intended effect of uncovering problems with servicer performance. Corrective action plans have been implemented or are in process. The Monitor found issues with the loan modification process, single points of contact, and customer records.  The report states that the problems are large and complex, and improvement will take time.

• Treasury released a small business lending fund (“SBLF”) survey showing that over 90 percent of SBLF participants reported stronger small business lending with SBLF funding.  Treasury estimates that SBLF participants have increased small business lending by an additional 38,000 loans as of December 31, 2012.  This contrasts with an April 24, 2013 SIGTARP report that former TARP banks in SBLF have not effectively increased small business lending because they used much of the funding to exit TARP.  SIGTARP found that some remaining TARP banks in SBLF increased lending, but significantly underperformed compared with non-TARP banks.
• Effective June 20, 2013. new European credit ratings agency legislation takes effect:
  • The European Supervisory Authority is restricted in its ability to use credit ratings in its regulations.
  • Credit ratings agencies must have internal controls and procedures that mitigate possible conflicts of interest, and that ensure that ratings are based on a thorough analysis of all information.
  • Amendments to ratings methodologies must be subject to public comment.
  • Anyone owning more than 5 percent of a rating agency generally may not own or control 5% of another rating agency;
  • If a rating agency will rate a resecuritization, it may not rate new resecuritizations of assets from the same originator for longer than four years, although it may update its ratings on a solicited basis.  The agency must request that the issuer determine how many agencies have a contract to rate resecuritizations of assets from the same originator, and calculate the percentage of rated resecuritizations of assets from the same originator that each agency will rate;
  • Compensation to employees involved in ratings may not be contingent on ratings revenue. 

This is find the June 16, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released its fifth annual report to Congress.
  • The report says that the country has a mortgage market reliant on federal support, with very little private capital standing in front of the federal government’s risk exposure.  Today, the government touches more than 9 out of every 10 mortgages. With this in mind, it is essential that FHFA help transition the mortgage market to a more secure, sustainable, and competitive model.
  • Nearly 1.1 million homeowners refinanced through HARP in 2012, nearly equal to the number of HARP refinances over the previous three years, bringing the total from inception to date to 2.1 million.  Underwater borrowers accounted for 44 percent of HARP refinances in 2012, up from 15 percent in 2011.  In 2012, HARP represented more than half of total refinance volume in Nevada, Florida, and Arizona.  More than 70 percent of GSE modification are performing after nine months. 
  • Both GSEs continue to be rated “critical concerns.”
    • Fannie Mae exhibits critical financial weaknesses as evidenced by its lack of capital, the quality of legacy assets, level and extent of internal control breakdowns, uncertainty over the sustainability of its recent financial performance, and the nature of conservatorship status.  Fannie Mae continues to operate with an excessive amount of credit risk in the single-family portfolio. FHFA notes ongoing concerns about the condition of key counterparties and the effect of an accelerated wind-down of the retained portfolio. 
    • Freddie Mac exhibits critical financial weaknesses as evidenced by its $72.3 billion draw from the U.S. Treasury and uncertain future prospects. Its overall risk profile remains elevated because of continuing credit losses from the pre-2009 single-family mortgage portfolio; significant concerns over counterparty credit risk; operational challenges with legacy systems and insufficient business recovery capabilities; and uncertainty over the GSE’s future state and related external events outside of management’s control. 
• Treasury announced results of auctions of its preferred shares in six institutions:
  • Farmers & Merchants Financial Corporation (Argonia, Kansas), for $447,590; Treasury paid $442,000;
  • First Western Financial, Inc. (Denver, Colorado), for $10,994,240; Treasury paid $12,440,000;
  • Intervest Bancshares Corporation (New York, New York), for $24,250,000; Treasury paid $25,000,000;
  • Pathway Bancorp (Cairo, Nebraska), for $4,601,011; Treasury paid $3,727,000;
  • Security State Bank Holding Company (Fargo, North Dakota), for $13,262,252; Treasury paid $10,750,000; and
  • Worthington Financial Holdings, Inc. (Huntsville, Alabama), for $2,459,791.; Treasury paid $2,720,000.

This is the June 9, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Treasury announced that it has agreed to sell 30 million shares of General Motors Company common stock at $34.41 per share, with aggregate proceeds expected to be $1.03 billion.  The UAW Retiree Medical Benefits Trust (VEBA) also agreed to sell 20 million shares, with aggregate proceeds expected to be $688 million.  After this offering, Treasury will have recovered $32.5 billion of its $49.5 billion put into General Motors, and will continue to hold 189.2 million shares of GM common stock.
• Treasury announced pricing of its warrant positions in 16 institutions in which Treasury no longer holds preferred shares, for aggregate net proceeds of $13,353,283.  The institutions and the proceeds are as follows:
  • Banner Corporation, Walla Walla, Washington, $134,201;
  • Carolina Trust Bank, Lincolnton, North Carolina, $19,132;
  • Central Pacific Financial Corp., Honolulu, Hawaii, $751,888;
  • Colony Bankcorp, Inc., Fitzgerald, Georgia, $810,000;
  • Community West Bancshares, Goleta, California, $698,351;
  • Flagstar Bancorp, Inc., Troy, Michigan, $12,905;
  • Heritage Commerce Corp, San Jose, California, $140,000;
  • International Bancshares Corporation, Laredo, Texas, $4,018,511;
  • Mainsource Financial Group, Inc., Greensburg, Indiana, $1,512,177;
  • MetroCorp Bancshares, Inc., Houston, Texas, $2,087,368;
  • Old Second Bancorp, Inc., Aurora, Illinois, $106,891;
  • Parke Bancorp, Inc., Sewell, New Jersey, $1,650,288;
  • S&T Bancorp, Inc., Indiana, Pennsylvania, $527,361;
  • Timberland Bancorp, Inc., Hoquiam, Washington, $1,301,856;
  • United Community Banks, Inc., Blairsville, Georgia, $6,677; and
  • Yadkin Valley Financial Corporation, Elkin, North Carolina, $75,677.
  • Treasury announced it will auction its preferred shares in six institutions:
  • Farmers & Merchants Financial Corporation (Argonia, Kansas);
  • First Western Financial, Inc. (Denver, Colorado);
  • Intervest Bancshares Corporation (New York, New York);
  • Pathway Bancorp (Cairo, Nebraska);
  • Security State Bank Holding Company (Fargo, North Dakota); and
  • Worthington Financial Holdings, Inc. (Huntsville, Alabama). 
• The Administration released its May housing scorecard and April servicers’ report.  The servicers’ report says the 50-state settlement has caused servicers to increase the use of non-PRA principal reductions.  HAMP allows principal reduction in two ways: 1) under HAMP Principal Reduction Alternative (PRA), principal is reduced to lower the LTV, the investor is eligible to receive an incentive on the amount of principal reduced, and the reduction vests over a 3-year period; or 2) servicers can offer principal reduction on a HAMP modification outside the requirements of HAMP PRA.  If they do, the investor receives no incentive payment for the principal reduction and the principal reduction can be recognized immediately. 

The report says that, of non-GSE loans eligible for principal reduction that started a trial in April 2013, 67% included a principal reduction feature.  Only 55% offered principal reduction through the HAMP PRA program.  According to the report, principal reductions granted outside of the HAMP PRA program since February 2012 are likely attributable to the settlement.  The report also shows that in January, 70% of eligible trials started with a principal reduction, 56% of which were PRA. 

• HUD announced its intent to sell unsubsidized single family mortgage loans without FHA insurance on June 26 and July 10, 2013.
• The federal banking agencies announced an “Ask the Regulator” teleconference on June 19, 2013 to discuss the recently issued leveraged lending guidance.

This is the June 2, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• On May 30, Treasury extended HAMP by two years until December 31, 2015, which is the same sunset date for HARP.  FHFA announced that Fannie Mae and Freddie Mac would participate in HAMP’s extension, and it extended the GSEs’ streamlined modification program, for borrowers 90 days delinquent, from August 2015 through the end of 2015.  
• On May 29, 2013, the Treasury announced it plans to auction its warrants in 16 institutions:
  • Banner Corporation, Walla Walla, Washington;
  • Carolina Trust Bank, Lincolnton, North Carolina;
  • Central Pacific Financial Corp., Honolulu, Hawaii;
  • Colony Bankcorp, Inc., Fitzgerald, Georgia;
  • Community West Bancshares, Goleta, California;
  • Flagstar Bancorp, Inc., Troy, Michigan;
  • Heritage Commerce Corp, San Jose, California;
  • International Bancshares Corporation, Laredo, Texas;
  • Mainsource Financial Group, Inc., Greensburg, Indiana;
  • MetroCorp Bancshares, Inc., Houston, Texas;
  • Old Second Bancorp, Inc., Aurora, Illinois;
  • Parke Bancorp, Inc., Sewell, New Jersey;
  • S&T Bancorp, Inc., Indiana, Pennsylvania;
  • Timberland Bancorp, Inc., Hoquiam, Washington;
  • United Community Banks, Inc., Blairsville, Georgia; and
  • Yadkin Valley Financial Corporation, Elkin, North Carolina. 

This is the May 26, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FSOC released its 2013 annual report.  It states that significant risks to the financial stability of the United States remain:
  • There is still vulnerability to runs in wholesale funding markets that can lead to destabilizing fire sales.
  • The housing finance system continues to rely heavily on government and agency guarantees.
  • Operational risks can cause major disruptions to the financial system.
  • Reliance on reference interest rates is a risk.
  • Financial institutions and market participants need to be resilient to interest rate risk.  Yields and volatilities in fixed income markets are very low by historical standards, providing incentives for market participants to “reach for yield,” risking exposure to market shifts. 
  • Long- term fiscal imbalances have raised questions about whether long-term fiscal problems may be resolved smoothly.
  • The United States is sensitive to possible adverse developments in foreign economies.

FSOC recommends that:

• Its members examine any money market mutual fund reforms the SEC may implement to determine whether the same or similar reforms are warranted for other cash-management vehicles.
• Market participants and financial regulatory agencies continue to address risks associated with the tri-party repo market, notably by better preparing investors and other market participants for a dealer’s or other large borrower’s distress or default.
• The relevant agencies continue their work to resolve the risk-retention rule to further encourage private capital to re-enter the mortgage finance market.  It also recommends that FHFA continue to explore changes to the housing finance infrastructure that would lead to a more efficient and sustainable mortgage market.  In addition to the common securitization platform, this should include model legal agreements, improvements to the mortgage transfer system, and an improved compensation system for mortgage servicers.  FSOC recommends coordinating with the measured wind-down of the GSEs and the implementation of a more sustainable structure for the government’s role in the housing finance system.
• International cooperation to develop high-level principles for
 financial benchmark governance, controls, data sufficiency, and oversight.
• Continued engagement by regulators, market exchanges, and participants to explore durable solutions to the challenges of managing complex technology in trading environments, and that regulators continue to monitor the adequacy of internal control and corporate governance processes of financial institutions and market utilities.
• Financial institutions commit to improve the flow of cybersecurity information both within individual firms and between firms, that government agencies enhance information-sharing and work with the private sector to assess the effects of cyberattacks, and regulators should continue to update their examination policies for information security.
• Regulators assess their policies on contingency planning and testing, incident management around market closures, positioning of key management and staff, and mitigate dependencies on power, transportation, and communications infrastructures.
• Regulatory agencies and private sector risk managers continue their scrutiny of the ways in which potential changes in interest rates could adversely affect the risk profiles of financial firms.
• Supervisors and private sector risk managers closely monitor the risks inherent in short-term funding of longer-term assets.
• Improvements be made in data standards for financial firms, globally. 

This is the May 12, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document: 

• Fannie Mae reported pre-tax income of $8.1 billion for the first quarter of 2013, the largest quarterly pre-tax income in its history.  Fannie Mae paid Treasury a $4.2 billion dividend during the first quarter of 2013.  Its net income for the quarter was $58.7 billion, reflecting a tax benefit of $50.6 billion from a release of the substantial majority of its valuation allowance against deferred tax assets.  In the second quarter, Fannie Mae will pay Treasury a $59.4 billion dividend.  
• Freddie Mac reported $4.58 billion of net income for the first quarter, its second largest ever.  It paid Treasury a $5.8 billion dividend during the first quarter of 2013.  It will pay a $7 billion dividend in June 2013.
• Edward DeMarco, in remarks on returning private capital to the housing markets, outlined two basic approaches.  One approach would use a set of specially chartered financial institutions to pool capital from the companies’ shareholders to support a guarantee of principal and interest to MBS holders. This corporate guarantee could be further backstopped by a taxpayer guarantee, for which investors would pay a government-set fee.  A second approach would use standardization and transparency to attract capital.  Under this approach, the structure of the security would pool capital to absorb losses. The simplest structure would be a senior-subordinated security structure, with a sufficiently large subordinate security to insulate the senior investors in all, or almost all, credit outcomes.  In either approach, the point is to pool capital sufficient to bear mortgage credit risk while efficiently pricing the risk.
• FHFA released its February 2013 Refinance Report, showing that refinance volumes remained high as mortgage rates hovered near historic low levels.  There were more than 463,000 refinances in February, with 97,738 through HARP.  HARP refinances to date total more than 2.3 million.  Borrowers with LTVs greater than 105 percent accounted for 45 percent of HARP refinances.  In February 2013, 22 percent of HARP refinances had LTV ratios greater than 125 percent.  FHFA will launch a nationwide campaign to educate and encourage homeowners to learn about HARP eligibility.
• The Administration released On April 5, the Administration released its April housing scorecard and March servicers’ report with quarterly redefault rates.  After 36 months. the oldest modifications reported, 39.8% are 60 or more days delinquent and 37.5% are 90 or more days delinquent.  For modifications seasoned 24 months, 33.3% of modifications started in the third quarter of 2009 have disqualified, compared to 24.7% for modifications started in the first quarter of 2011.  The scorecard shows that home prices have increased from a year ago but are still lower than in December 2008.
• GAO released a report on the Capital Purchase Program (“CPP”).  It states that as of March 31, 2013, Treasury had received $222 billion from its CPP investments, compared to the $205 billion disbursed. Treasury estimated at the end of December 2012 that CPP would have an approximate lifetime income of $15 billion after all institutions had exited the program.  In March 2012, Treasury began selling its investments in the institutions through auctions.  At the end of February 2013, 190 CPP institutions remained.  Of the remaining institutions, GAO says 25 accounted for $4.2 billion, or 68 percent, of the $6.1 billion in outstanding investments.  Most remaining participants, 125 in February, have missed scheduled dividend or interest payments, and 107 were on the FDIC problem bank list in December 2012, according to the report.  

This is the May 5, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• HUD announced upcoming sales of delinquent FHA loans through HUD’s Distressed Asset Stabilization Program (“DASP”).  On June 26^th, HUD will sell 15,000 notes through ‘national pools’ and on July 10^th it will offer 5,000 notes through expanded Neighborhood Stabilization Outcome (“NSO”) pools.  The NSO pools will offer loans in southern California, Chicago, central and southern Ohio, and North Carolina.  Once the loan is purchased, foreclosure is delayed for a minimum of six months, during which time the new servicer can work with the borrower to find an affordable solution to avoid foreclosure. These loans are purchased at market rate, which is generally below the outstanding principal balance.  HUD expects to sell more than 40,000 distressed loans this year through quarterly sales.  Eligible loans must be six months delinquent and foreclosure must have been initiated.

This announcement also says that in March 2013, HUD sold 16,000 seriously delinquent mortgages.  A March 21 auction sold 12,476 non-performing loans in ten national pools with a combined UPB of $2.2 billion.  A March 27 auction sold 4,000 loans in five different NSO pools with a total UPB of $635 million.  The NSO loans were in Atlanta; Cleveland; greater Orlando, Florida; southeastern Florida; and southern California. 

• FHFA released two reports on the GSEs’ multifamily business, one by Fannie Mae and one by Freddie Mac.  FHFA directed the Enterprises to undertake a market analysis of the viability of their multifamily operations without the government guarantee.  FHFA had the GSEs study the impact of spinning off their multifamily businesses without government guarantees and without affordable housing goals.  The reports conclude that without government guarantees, the multifamily businesses would have little inherent value. The reports conclude that the sale of the businesses would return little or no value to the U.S. Treasury and to taxpayers.  Without a government guarantee, Fannie Mae and Freddie Mac project that their multifamily businesses would likely occupy a much smaller footprint, with reduced production volume.  The businesses would likely be monoline, niche companies with a focus on non-prime lending and secondary and tertiary market transactions.  Their cost of funds and lending rates would be higher and the businesses would rely on the private securitization market or the participation of equity investors to be viable.

This is the April 28, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

This is the April 21, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• On April 19, Treasury announced results of auctions of its CPP shares in seven institutions, as follows:
  • BancStar, Inc. (Festus, MO), for $8,881,607; Treasury paid $8.6 million;
  • Brogan Bankshares, Inc. (Kaukauna, WI) for $ 2,670,160; Treasury paid $2.4 million;
  • Guaranty Federal Bancshares, Inc. (Springfield, MO) for $11,610,000; Treasury paid $12 million;
  • NewBridge Bancorp (Greensboro, NC) for $51,350,746; Treasury paid $52.372 million;
  • Plato Holdings, Inc. (St. Paul, MN) for $2,619,332; Treasury paid $2.5 million;
  • Plumas Bancorp (Quincy, CA) for $13,037,673; Treasury paid $11.949 million; and
  • Tennessee Valley Financial Holdings, Inc. (Oak Ridge, TN) for $ 3,235,471; Treasury paid $3 million.

Treasury had announced on April 11, 2013 that it would also auction shares in First Financial Service Corporation, Elizabethtown, KY, but it said it extended that auction for technical reasons.

This is the April 14, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA announced it extended HARP by two years from December 31, 2013 through December 31, 2015.  Under HARP, current borrowers of Fannie Mae or Freddie Mac loans can refinance if the LTV is greater than 80 percent.  If a new HARP loan has a fixed rate, there is no maximum LTV; if the new loan has an adjustable rate, the new LTV may not exceed 105 percent.  More than 2.2 million borrowers have refinanced through HARP since its inception in April 2009.
• GAO released a report on multiemployer private pensions.  The report states that since 2009, PBGC’s financial assistance to multiemployer plans has increased significantly.  PBGC estimates that the insurance fund would be exhausted in about 2 to 3 years if projected insolvencies of either of two large plans occur in the next 10 to 20 years.  More broadly, by 2017, PBGC expects the number of insolvencies to more than double.  According to the report, experts and stakeholders said that, in limited circumstances, trustees should be allowed to reduce accrued benefits for plans headed toward insolvency.  Some experts believe the large size of these reductions for some plans may warrant federal assistance.  The report notes that options to improve long term financial stability include changes to an employer’s liability upon leaving a plan based on their share of unfunded vested benefits; and to encourage employers to remain in or join the plan.  Experts and stakeholders also said an alternative plan design that permits adjustments in benefits tied to key factors, such as the funded status of the plan, would provide financial stability and lessen the risk to employers.  GAO recommends that Congress consider comprehensive and balanced structural reforms to reinforce and stabilize the multiemployer system.
• Treasury announced it intends to sell all of its CPP shares in eight institutions:

   *   BancStar, Inc. (Festus, MO);
   *   Brogan Bankshares, Inc. (Kaukauna, WI);
   *   First Financial Service Corporation (Elizabethtown, KY);
   *   Guaranty Federal Bancshares, Inc. (Springfield, MO);
   *   NewBridge Bancorp (Greensboro, NC);
   *   Plato Holdings, Inc. (St. Paul, MN);
   *   Plumas Bancorp (Quincy, CA); and
   *   Tennessee Valley Financial Holdings, Inc. (Oak Ridge, TN).

• Eurogroup and Ecofin Ministers agreed  to extend by seven years the weighted average maturity of loans by the European Financial Stabilization Mechanism (“EFSM”) and European Financial Stability Facility (“EFSF”) to Ireland and Portugal.  The EFSM allows the European Commission to borrow up to €60 billion with an implicit EU guarantee, and to relend the funds to member states.  The EFSF is a private company owned by the euro area member states.

This is the April 7, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Fannie Mae released its 2012 Form 10-K, showing net income of $17.2 billion for 2012, and of $7.6 billion for the fourth quarter, the largest annual and quarterly net income in the GSE’s history. 
• GAO released a reporton the foreclosure reviews at 14 servicers under the Federal Reserve and OCC’s April 2011 consent orders.  The orders originally envisioned independent review of individual loan files to determine any errors and appropriate relief.  However, in January 2013, to speed relief, the agencies replaced the foreclosure reviews for 11 of the servicers that to determine compensation without specific determinations of whether borrowers suffered financial harm.

Consultants told GAO that the reviews were complex, the number of actors directly involved in the review process was large, and there were a large number of borrowers eligible for review.  The size of the loan files and the scope of the file review made the process complicated and time-consuming. The reviews covered complex issues, including different state foreclosure laws, federal laws and regulations, and guidelines for federal and servicers’ proprietary loan modification programs.  The uniqueness of each servicer’s borrower population and process for recording and storing information posed challenges for defining the review parameters.  Reviewers told GAO that certain areas of relevant state law were unsettled and continued to evolve as courts issued decisions, causing inconsistency among reviewers.  One consultant told GAO it had to compile requirements of 40 different loan modification programs that one servicer used during the 2009 to 2010 period.  GAO found that guidance was revised throughout the process, resulting in delays.

GAO stated that regulators publicly released information on the foreclosure review process beyond what is typically disclosed in connection with a consent order.  OCC and the Federal Reserve staff said that they considered releasing additional guidance, but refrained from doing so because of concerns about disclosing confidential or proprietary information. 
The report notes that all borrowers who were eligible for foreclosure reviews are expected to receive payments ranging from hundreds of dollars up to $125,000. Under the agreements, servicers will also provide approximately $5.4 billion in foreclosure-prevention assistance to borrowers, such as loan modifications. The report says eligible borrowers were expected to receive notice about the payments by the end of March 2013.
GAO recommends that the agencies:

• improve oversight of sampling methodologies and mechanisms to centrally monitor consistency;
• develop and implement a communication strategy to regularly inform borrowers and the public about the processes, status, and results;
• identify and apply lessons from the foreclosure review process in developing and implementing the activities under the amended consent orders. 

• Treasury released a quarterly report on the Small Business Lending Facility (SBLF), a program that was available to banks with less than $10 billion in assets to borrow money to support small business lending. Treasury invested more than $4 billion (of $30 billion available) in 332 institutions, of which 270 community banks and 50 community development loan funds continue to participate.  As of December 31, 2012, the average rate paid on SBLF capital was 1.8 percent.  Individual community banks can reduce the rate they pay to one percent if they increase qualified small business lending by 10 percent over their baseline.  The baseline is the average small business lending reported for each of the four calendar quarters ended June 30, 2010, or $36.9 billion in total. The report shows that, as of December 31, SBLF participants increased their small business lending by $1.5 billion more than the prior quarter and by $8.9 billion over the baseline.
• On April 5, the Administration released its March housing scorecardand February servicers’report.  The number of trial modifications started has passed 2 million, while there have been 1.2 million permanent modifications started.  There are 862,636 active permanent modification.
• The OCC and Federal Reserve released a white paperanalyzing the impact of the agencies’ 2006 commercial real estate (CRE) concentration guidance.  The guidance is at 71 Fed. Reg. 74580(Dec. 12, 2006).  The guidance addresses construction concentration of 100 percent or more of risk-based capital; and total CRE concentration of 300 percent or more of risk-based capital, and growth in CRE lending that increased by 50 percent or more during the previous 36 months. The agencies found that 31 percent of all commercial banks in 2006 exceeded at least one of the concentration levels. In 2006, these institutions held $378 billion in CRE loans, almost 40 percent of all outstanding CRE loans. Beginning in 2007, CRE exposures began to decline and, by the fourth quarter of 2011, the supervisory criteria for concentration levels applied to only 11 percent of institutions, which held $298 billion, or 34 percent, of all outstanding CRE loans. During the three-year economic downturn, banks with high CRE concentration levels proved to be far more susceptible to failure:
  • Among banks that exceeded both supervisory criteria, 23 percent failed during the three-year economic downturn, compared with 0.5 percent of banks that exceeded neither of the criteria. Banks exceeding the construction criterion alone accounted for an estimated 80 percent of the FDIC’s losses from 2007 to 2011.
  • Banks that exceeded the supervisory criteria on CRE concentration levels were more likely than banks that did not exceed the criteria to shrink the size of their CRE portfolios from 2008 to 2011.
  • A non-trivial number of banks exceeding the supervisory criteria on concentration levels in 2007 continued to increase their CRE concentrations through 2011. This was consistent with the guidance’s absence of hard caps on CRE concentrations.
  • Banks that exceeded the supervisory criteria on CRE concentrations tended to experience greater deterioration in condition as assessed by market participants. 

• This is the March 31, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:
• FHFA announced a streamlined modification process for the GSEs.  Beginning July 1, servicers will be required to offer a modification to eligible borrowers who are at least 90 days delinquent without requiring financial or hardship documentation.  Eligible borrowers must demonstrate a willingness and ability to pay by making three on-time trial payments, after which the loan will be permanently modified.  The program runs through August 1, 2015.  Homeowners must be 90 days to 24 months delinquent, and have a first-lien mortgage that is at least 12 months old with an LTV equal to or greater than 80 percent. The property need not be owner-occupied.  Loans that have been modified at least two times previously are not eligible.  Borrowers will be advised that more beneficial terms may be available if they document their financial situation and work with their servicer to pursue the full range of foreclosure prevention options.

• FHFA released its Foreclosure Prevention Report for the fourth quarter of 201,  showing:
  • The number of Fannie Mae and Freddie Mac delinquent borrowers declined 14 percent in 2012 as mortgage delinquencies dropped in every state except New Jersey and New York.
  • Foreclosures continued downward, with foreclosure starts in the fourth quarter falling to the lowest level since the third quarter of 2008.
  • 46 percent of troubled borrowers who received loan modifications in the fourth quarter had their monthly payments reduced by more than 30 percent.
  • More than one-third of loan modifications completed in the fourth quarter included principal forbearance.
  • Over 32,600 short sales and deeds-in-lieu were completed in the fourth quarter, bringing the total for 2012 to nearly 141,500.
  • REO inventory continued to decline as property dispositions outpaced property acquisitions during the fourth quarter. 

• The OCC released its Mortgage Metrics Report for the fourth quarter of 2012, showinh:
  • The number of loans in the process of foreclosure at the end of 2012 fell below one million for the first time since the end of June 2009.  In the fourth quarter of 2012, servicers initiated 156,773 new foreclosures, the lowest number since the OCC began reporting mortgage performance in the first quarter of 2008.  The number of completed foreclosures fell to 105,875, a 7.7 percent decrease from the previous quarter and an 8.9 percent decrease from a year earlier. 
  • At the end of the quarter, 89.4 percent of mortgages were current and performing, compared with 88.6 percent the prior quarter and 88.0 percent a year earlier.  The percentage of mortgages 30 to 59 days past due was 2.9 percent, a decline of 8.2 percent from the previous quarter and 6.1 percent from a year ago.  Seriously delinquent mortgages (60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due) remained at 4.4 percent for the third consecutive quarter, down 11.6 percent from a year earlier.
  • Servicers have modified 2,878,228 mortgages since the beginning of 2008 through the end of the third quarter of 2012.  At the end of the fourth quarter of 2012, 47.7 percent of these modifications were current or paid off.  Another 7.1 percent were 30 to 59 days delinquent, and 14.2 percent were seriously delinquent.  There were 7.7 percent in the process of foreclosure, and 7.3 percent had completed the foreclosure process.

Will adopt a “bail in” plan as follows.  To the extent deposits a customer held on March 26, 2013 at the Bank of Cyprus exceed €100,000, then the following apply to the excess:

The current capital of the Bank of Cyprus is converted into new shares as follows:

This is the March 24, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Freddie Mac released loan-level credit performance data on a portion of the fully amortizing 30-year fixed-rate single-family mortgages the GSE purchased between 2000 and 2011, as part of FHFA’s efforts to increase transparency and to promote credit risk-sharing transactions.  Fannie Mae is expected to do likewise soon.  The data cover approximately 15.7 million loans, or about 53 percent of Freddie Mac's total loan acquisitions during the period.  The data exclude government-insured loans, HARP and other relief refinance loans, and other affordable or non-standard mortgages.

• The Federal banking agencies released updated supervisory guidance on leveraged lending.  Leveraged lending is lending in which the borrower’s post-financing leverage exceeds industry norms.  The guidance focuses on the following:
  • Establishing a sound risk-management framework with appropriate credit limits, oversight, and approval processes.
  • Clear underwriting standards that consider whether the borrower's capital structure is sustainable.
  • Sound valuation standards.
  • Ability to accurately measure exposure, default procedures, and periodic pipeline and portfolio stress tests.
  • Accurate reporting and analytics, including periodic reporting to the board of directors.
  • Risk rating standards that realistically determine a borrower’s ability to de-lever to a sustainable level within a reasonable period of time.
  • Underwriting and monitoring standards similar to those for loans underwritten internally.
• On March 20, 2013, the Cypriot parliament rejected an agreement with the ECB and IMF to lend Cyprus €10 billion in exchange for a tax on deposits in its banks.  Banks in the country have been closed since March 16.

This is the March 17, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Fannie Mae filed for an extension of time to file its 2012 10-K, explaining:
  • Fannie Mae has determined that it is unable to file its annual Form 10‑K for the year ended December 31, 2012 by the March 18, 2013 deadline due to the need for additional time to analyze whether conditions existed as of December 31, 2012 that would require Fannie Mae, under GAAP, to release any portion of the valuation allowance on its deferred tax assets in the fourth quarter of 2012. The release of the valuation allowance would have a material impact on the company’s 2012 financial statements and result in a significant dividend payment to Treasury.  If Fannie Mae concludes the valuation allowance should not be released in the fourth quarter of 2012, the GSE will continue to evaluate the need for the valuation allowance in future periods.  The valuation allowance on deferred tax assets was $64.1 billion as of December 31, 2011 and $61.5 billion as of September 30, 2012.
  • Regardless of the decision to release or not release the valuation allowance, Fannie Mae expects to report significant net income for the three months and the year ended December 31, 2012, compared with a net loss of $2.4 billion for the three months ended December 31, 2011 and a net loss of $16.9 billion for the year ended December 31, 2011, but this is subject to change. Fannie Mae said it is unable to provide a reasonable estimate of its results of operations for 2012. Release of the valuation allowance would result in higher net income for 2012 than if the allowance is not released.
• FHFA released a December 2012 Refinance Report, showing that with 297,461 HARP refinances in the fourth quarter, some 22 percent of total refinance volume, nearly
1.1 million HARP refinances were completed in 2012 and nearly 2.2 million were completed since HARP was implemented in April 2009.  Most HARP refinances, 1,895,827, were on primary residences, with 69,522 on second homes and 199,672 on investment properties. In December:
  • 25 percent of loans refinanced through HARP had LTVs greater than 125 percent;
  • HARP refinances were 68 percent of total refinances in Nevada, and 58 percent in Florida; and
  • 18 percent of HARP refinances for underwater borrowers were for 15- and 20-year mortgages.
• The Federal Reserve announced that it approved the capital plans of 14 banking organizations, conditionally approved another two, and objected to capital plans of two institutions.  The firms whose plans are approved are:
  • American Express Company;
  • Bank of America Corporation;
  • The Bank of New York Mellon Corporation;
  • Capital One Financial Corporation;
  • Citigroup, Inc.;
  • Fifth Third Bancorp;
  • KeyCorp; Morgan Stanley;
  • The PNC Financial Services Group, Inc.;
  • Regions Financial Corporation;
  • State Street Corporation;
  • SunTrust Banks, Inc.;
  • U.S. Bancorp; and
  • Wells Fargo & Company.    

The conditionally approved firms are The Goldman Sachs Group, Inc., and JP Morgan Chase & Co.  They must submit new capital plans by the end of the third quarter to address weaknesses in their capital planning processes.
The Federal Reserve objected to the capital plans of Ally Financial, Inc., and BB&T Corporation, meaning they may only make capital distributions with the Federal Reserve’s prior written approval.

• Treasury announced that it priced auctions of preferred stock and subordinated debt in seven institutions.  Its March 7 announcement of the auction, Treasury said it would sell all its shares in the institutions.
  • Alliance Bancshares, Inc. (Dalton, GA), for $3,020,337; Treasury paid $2,986,000;
  • AmFirst Financial Services, Inc. (McCook, NE); for $5,062,500; Treasury paid $5,000,000;
  • First Southwest Bancorporation, Inc. (Alamosa, CO) for $5,211,915; Treasury paid $5,500,000;
  • Flagstar Bancorp, Inc. (Troy, MI) for $243,057,855; Treasury paid $266,657,000;
  • Old Second Bancorp, Inc. (Aurora, IL) for $1,120,503; Treasury paid $73,000,000;
  • Stonebridge Financial Corp. (West Chester, PA) for $2,068,208; Treasury paid $10,973,000; and
  • United Community Banks, Inc. (Blairsville, GA) for $173,250,00; Treasury paid $180,000,000.

Prices Treasury paid are available here.

This is the March 10, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released a 2013 conservatorship strategic plan with performance goals for 2013.  The goals include:
  • Building a new infrastructure, weighted at 30 percent.  This will involve continuing to develop a common securitization platform; continuing to develop a common contractual and disclosure framework for mortgage investors; completing development of uniform servicing data standards; and developing a plan to standardize origination data.
  • Contract the GSEs’ dominance in the marketplace, weighted at 50 percent.  This will include continuing to shrink the GSE’s portfolios.  Each GSE will demonstrate the viability of multiple types of risk transfer transactions involving single family mortgages with at least $30 billion of unpaid principal balance (UPB) in 2013.  The GSEs will reduce the UPB of new multifamily business relative to 2012 by at least 10 percent.
  • Maintain foreclosure prevention activities and credit availability for new and refinanced mortgages, weighted at 20 percent.
• The Federal Reserve announced summary results of bank holding company stress tests, showing the nation’s largest bank holding companies have continued to improve their ability to withstand an extremely adverse hypothetical economic scenario, and are collectively in a much stronger capital position than before the financial crisis.  The aggregate tier 1 common capital ratio, of high-quality capital to risk-weighted assets, would fall from an actual 11.1 percent in the third quarter of 2012 to 7.7 percent in the fourth quarter of 2014 in the hypothetical stress scenario.  The aggregate post-stress capital ratio exceeds the actual aggregate tier 1 common ratio for the 18 firms of approximately 5.6 percent at the end of 2008.
• On March 8, 2013, the Administration released its February housing scorecard and January servicers’ report.  They show that home equity in household real estate increased above $8 trillion, but is still short of its almost $14 trillion level in the first quarter of 2006.  The report says two servicers need minor improvement, while seven servicers need moderate improvement.  
• GAO released a report on the status of its TARP recommendations to Treasury.  As of February 2013, GAO’s TARP performance audits resulted in 66 recommendations to Treasury.  Of the 66 recommendations, Treasury has implemented 51 and partially implemented seven.  With respect to four recommendations, Treasury has not taken steps to implement them.  Among these four recommendations are two directed at CPP and two directed at the MHA housing programs.  Of the remaining four recommendations, Treasury does not plan to implement two of them, and two are no longer applicable.
• GAO released a report summarizing its past work on FHA’s:  market share; financial condition; underwriting requirements; oversight of lenders and appraisers; default management; risk-assessment efforts; human capital and information systems challenges; and reverse mortgages.  GAO says the increased reliance on FHA highlights the need for FHA to better ensure that it has the proper controls in place to minimize financial risks while meeting the housing needs of borrowers.
• On March 7, Treasury announced its intent to auctions all of its preferred stock and subordinated debt  positions  in the following institutions:
  • Alliance Bancshares, Inc. (Dalton, GA);
  • AmFirst Financial Services, Inc. (McCook, NE);
  • First Southwest Bancorporation, Inc. (Alamosa, CO);
  • Flagstar Bancorp, Inc. (Troy, MI);
  • Old Second Bancorp, Inc. (Aurora, IL);
  • Stonebridge Financial Corp. (West Chester, PA); and
  • United Community Banks, Inc. (Blairsville, GA).

This is the February 24, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Freddie Mac announced its fourth quarter and full-year 2012 financial results, showing a profit of $10.982 billion for 2012, and $4.457 for the quarter.  Freddie Mac paid Treasury $1.8 billion in dividends in December and will pay $5.8 billion to Treasury in March.  The dividend increase is due to the amendment in the GSEs agreements with Treasury.  Instead of paying dividends of 10% of their Treasury draws, the GSEs in 2013 will begin a paying a “net worth sweep” dividend.
• On March 1, 2013, Treasury announced results of auctions of preferred stock and subordinated debt in nine institutions.  In its February 25 announcement that the auctions commenced, Treasury said it would auction all of its shares in these institutions.
  • Boscobel Bancorp, Inc. (Boscobel, WI) for $6,544,276; Treasury paid $5,586,000;
  • Coastal Banking Company, Inc. (Beaufort, SC) for $9,503,245; Treasury paid $9,950,000;
  • CoastalSouth Bancshares, Inc. (Hilton Head Island, SC) for $13,153,574; Treasury paid $16,015,000;
  • First Reliance Bancshares, Inc. (Florence, SC) for $11,062,276; Treasury paid $15,349,000;
  • Northwest Bancorporation, Inc. (Spokane, WA) for $11,430,725; Treasury paid $10,500,000;
  • Old Second Bancorp, Inc. (Aurora, IL) for $24,684,870; Treasury paid $73,000,000;
  • Santa Clara Valley Bank, N.A. (Santa Paula, CA) for $2,588,280; Treasury paid $2,900,000;
  • SouthCrest Financial Group, Inc. (Peachtree City, GA) for  $12,298,505; Treasury paid $12,900,000; and
  • The Queensborough Company (Louisville, GA) for $12,305,400; Treasury paid $12,000,000.

Purchase price information is available here.

This is the February 24, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released its November 2012 Refinance Report, showing that Fannie Mae and Freddie Mac have refinanced more than 2 million loans through HARP.  In November alone, the report shows nearly 130,000 HARP refinances, making it the second biggest month in 2012.  Between January and November of 2012, HARP refinanced nearly 1 million loans, HARP’s most active year.  In November 2012:
  • HARP volume represented 23 percent of total refinance volume;
  • 46 percent of HARP’s refinances had LTVs greater than 105 percent and 24 percent had LTVs greater than 125 percent;
  • HARP refinances represented 68 percent of total refinances in Nevada, and 56 percent in Florida;
  • 17 percent of HARP refinances for underwater borrowers were for 15- and 20-year mortgages.
• On February 20, 2013, the Federal Reserve Bank of New York announced a pilot program with small broker-dealers to examine options for broadening access to monetary policy operations.  The one-year pilot program will allow no more than five small firms to participate solely as counterparties in outright purchases and sales of U.S. Treasury securities for the System Open Market Account portfolio. The program will explore the effectiveness and feasibility of expanding operations to a broader range of counterparties.  Applications will be limited to firms meeting designated eligibility requirements, including size restrictions, transaction capabilities, and compliance controls.  The firms will be incorporated into the current business process for Treasury outright operations, and as such, their bids and offers will be put into direct competition with those submitted by primary dealers.  Participating firms will only have access to permanent open market operations for Treasury securities, subject to a limitation on trade sizes, and will not be eligible to participate in other types of open market operations.
• On February 22, 2013, Treasury announced that it intends to auction preferred stock and subordinated debt in the following institutions:
  • Boscobel Bancorp, Inc. (Boscobel, WI);
  • Coastal Banking Company, Inc. (Beaufort, SC);
  • CoastalSouth Bancshares, Inc. (Hilton Head Island, SC);
  • First Reliance Bancshares, Inc. (Florence, SC);
  • Northwest Bancorporation, Inc. (Spokane, WA);
  • Old Second Bancorp, Inc. (Aurora, IL);
  • Santa Clara Valley Bank, N.A. (Santa Paula, CA);
  • SouthCrest Financial Group, Inc. (Peachtree City, GA); and
  • The Queensborough Company (Louisville, GA).
• The FDIC’s TLGP program has expired.  On February 21, 2013, the FDIC released its monthly TLGP report for December 2012, showing no outstanding debt.

This is the February 17, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• GAO released a report on areas of high risk, including FHA.  GAO says FHA’s single-family insurance portfolio has grown from $300 billion in 2007 to more than $1.1 trillion in 2012, while its capital reserves have fallen below the 2 percent minimum requirement.  The report says new actions beyond those already taken are needed to help restore FHA’s financial soundness and define its future role.  GAO recommends determining the economic conditions that FHA’s primary insurance fund would be expected to withstand without drawing on the Treasury.  GAO suggests that the 2 percent capital requirement may not be adequate to avoid the need for Treasury support under severe stress scenarios.  Additionally, GAO says actions to reform GSEs and to implement mortgage market reforms in the Dodd-Frank Act will need to consider the potential impacts on FHA’s risk exposure.
• The European Commission announced that eleven countries will move forward towards implementing a financial transactions tax, of 0.1% for shares and bonds and 0.01% for derivatives, which the Commission expects to is expected to collect €30-35 billion annually.  The proposal covers only transactions in which financial institutions are involved.  The eleven countries are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain.  The eleven countries must agree on the tax before it would go into effect.  The tax would be due if any party to the transaction is established in a participating country regardless of where the transaction takes place. 

This is the February 10, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

The original announcement said Treasury would include Flagstar Bancorp, Inc., Troy, MI, but the announced results did not mention this institution.

This is the February, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

This is the January 21, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Treasury announced it intends to auction CPP preferred stock and subordinated debt, on or about January 28, 2013 in the following institutions:
  • Alliance Financial Services, Inc. (Saint Paul, MN);
  • Biscayne Bancshares, Inc. (Coconut Grove, FL);
  • Citizens Bancshares Co. (Chillicothe, MO);
  • Coastal Banking Company, Inc. (Beaufort, SC);
  • Colony Bankcorp, Inc. (Fitzgerald, GA);
  • Delmar Bancorp (Salisbury, MD);
  • Dickinson Financial Corporation II (Kansas City, MO);
  • F & M Bancshares, Inc. (Trezevant, TN);
  • First Priority Financial Corp. (Malvern, PA);
  • HMN Financial, Inc. (Rochester, MN); and
  • Waukesha Bankshares, Inc. (Waukesha, WI).

This is the January 21, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Treasury announced the full repayment with interest of its TALF investment, although TALF loans remain outstanding.  Under TALF, the Federal Reserve Bank of New York lent funds to investors in highly rated AB and CMBS.  Accumulated fees collected through TALF of $856 million exceed the total principal amount of TALF loans outstanding of $556 million, so Treasury’s commitment of TARP funds to provide credit protection is no longer necessary.  Early repayment of TALF loans has allowed the $100 million in temporary loans that Treasury made over the course of the program to be repaid in full with $13 million in interest.  The TALF remains a joint Treasury-Federal Reserve program supported by earnings due to the Treasury from the program and by collateral securing each TALF loan.  Any excess interest, fees, and gains collected above the remaining principal on outstanding loans will be divided between Treasury (90 percent) and the Federal Reserve (10 percent).  There will be an initial payment of approximately $177 million divided between Treasury and the Federal Reserve reflecting the excess of fees collected to date and the current remaining principal on outstanding TALF loans.  There will then be additional payments as the remaining TALF loans are repaid.  The final TALF loan is scheduled to mature on March 30, 2015.  As of January 9, 2013, TALF loans outstanding totaled $556 million. Accumulated fees collected through TALF totaled $743 million through January 9, 2013.
• The European Commission temporarily approved €1.1 billion Portugal capitalization of Banco Internacional do Funchal S.A. (Banif), conditional on Portugal providing a restructuring plan for Banif by March 31, 2013 with a considerable downsizing.

This is the January 13, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• The Federal Reserve and OCC announced an agreement in principle with ten banks, that agreed to April 2011 servicing consent orders, to pay $3.3 billion to eligible borrowers and $5.2 billion in other assistance.  The agreement would replace the independent foreclosure review with a broader framework allowing eligible borrowers to receive compensation significantly more quickly.  Eligible borrowers will receive compensation even if they did not request a review.  A payment agent will administer payments to borrowers.  Borrowers will not be required to waive any legal claims they may have against their servicer.  Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.  This agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.  The agencies are working on agreements with the other four servicers.
• GAO released a report on TARP progress.  It says that as of September 30, 2012, Treasury was managing $63.2 billion in nonmortgage-related TARP assets.  The report notes challenges and improvements in HAMP.  Treasury allocated $45.6 billion in TARP funds to three mortgage programs, including HAMP, but more than $40 billion of the funding has not yet been disbursed, and the programs have not reached the expected number of borrowers.  Since September 2011, Treasury has required servicers to identify a “relationship manager” or single point of contact for a borrower throughout loss mitigation process.  GAO found that Treasury’s initial reviews of servicers’ implementation of this requirement had identified some inconsistencies.  However, oversight of a second requirement, escalated cases, showed that the nine largest servicers had met the performance target.
• Treasury released a report  showing that, as of September 30, participants in the Small Business Lending Fund increased their small business lending by $7.4 billion over the $36.5 billion baseline and by $740 million over the prior quarter, and 78 percent of participants increased their small business lending by ten percent or more.  SBLF is a program under which banks with less than $10 billion in assets borrowed money to support small business lending.  The dividend rate on the a bank’s loan depends in part on how much the bank increases its small business lending.  The baseline is the average of the amounts that were reported for each of the four calendar quarters ended June 30, 2010.  Six institutions with aggregate investments of $37.0 million have fully redeemed their SBLF securities and exited the program.  Treasury invested $4.0 billion in 332 institutions through the SBLF.
• The Administration released its December housing scorecard and November servicers’ report.  The scorecard says the FHFA and Case-Shiller housing price indices increased 5.6 percent and 4.3 percent, respectively, from a year ago.

This is the January 6, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released its Property Manager’s Report for the third quarter of 2012.  It shows that the GSEs completed approximately 134,200 foreclosure prevention actions in the third quarter, for a total of over 2.5 million since the start of the conservatorships.  Over 2.1 million of these actions have helped borrowers to stay in their homes, including nearly 1.3 million permanent loan modifications.  Approximately 45 percent of troubled borrowers who received modifications in the third quarter had their monthly payments reduced by more than 30 percent.  More than one-third of modifications in the third quarter included principal forbearance.  Fewer than 15 percent of modifications in the fourth quarter of 2011 had missed two or more payments, nine months after modification.  The GSEs completed nearly 38,000 short sales and deeds-in-lieu in the third quarter, up 4 percent compared with the second quarter.  A substantial number of the GSEs’ delinquent borrowers have missed more than a year of payments, and 29 percent of these borrowers are in Florida.
• In accordance with a law enacted a year ago, GAO released a report on bank failures.  Between 2008 and 2011, ten states had more than ten bank or thrift failures – Arizona, California, Florida, Georgia, Illinois, Michigan, Minnesota, Missouri, Nevada, and Washington.  GAO found that failures of banks with less than $1 billion in assets were largely caused by losses on commercial real estate lending.  Fair value accounting also has been cited as a potential contributor to bank failures, but GAO found that between 2007 and 2011, fair value accounting losses in general did not appear to be a major contributor, as over two-thirds of small failed banks’ assets were not subject to fair value accounting.  During 2008-2011, FDIC resolved 281 of 414 failures using shared loss agreements on assets purchased by the acquiring bank.  FDIC estimates that the use of shared loss agreements saved the DIF over $40 billion.  GAO also found that bank failures in a state were more likely to affect its real estate sector than its labor market or broader economy.  GAO did not make any recommendations.
• Effective January 1, 2013, Europe has a new fiscal compact treaty that will require the national budgets of participating member states to be in balance or in surplus, defined as an having annual structural government deficit not exceeding 0.5% of nominal GDP.  The deficit must also be in line with the country-specific minimum benchmark for long-term sustainability that is reassessed annually.  Temporary deviation from this balanced budget rule is allowed only in exceptional economic circumstances, such as during severe economic downturns.  If government debt is significantly below 60% of GDP, the limit for the deficit can be set at 1% of GDP.  Deviation from the balanced budget rule triggers an automatic correction mechanism, requiring the member state to correct the deviations over a defined period of time.  The mechanism will fully respect the prerogatives of national parliaments. 

The member states will have to incorporate the requirement for budgetary discipline and the automatic correction mechanism into their national legal systems.  The deadline for doing so is January 1, 2014.  Should a member state fail to meet the deadline, the EU Court of Justice will have jurisdiction to decide the matter.  The Court’s judgment will be binding, and noncompliance could result in a penalty of up to 0.1% of GDP. 

Countries that have ratified the treaty are Austria, Cyprus, Germany, Denmark, Estonia, Spain, France, Greece, Italy, Ireland, Lithuania, Latvia, Portugal, Romania, Finland, and Slovenia. 

This is the December 30, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• The European Commission approved new state aid by Belgium, France, and Luxemburg for the orderly resolution of the Dexia group, the sale of its subsidiary Dexia Municipal Agency, and the restructuring of Belfius (formerly Dexia Banque Belgique).  It includes a refinancing guarantee of €85 billion and a recapitalization of €5.5 billion.  The Belgian state bought the Belfius entity, and the Dexia Municipal Agency will be coupled with a new development bank in France, to which the French state, the Caisse des Dépôts et Consignations, and La Banque Postale will participate.  The new development bank structure in France will exclusively grant loans in sectors where there is a well identified market failure, i.e. loans to French local authorities and public hospitals.

This is the December 9, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• HUD announced preliminary results from the first loan sale under its expanded Distressed Asset Stabilization Program (DASP).  HUD is accelerating the use of loan sales, selling severely delinquent FHA loans through a competitive bidding process.  HUD will sell at least 40,000 distressed loans over the next year, generally in quarterly sales, to reduce total claims cost and increase recovery on losses.  

HUD’s September sale took place in two parts.  The first part consisted of approximately 5,300 non-performing loans in six different “national” pools with a combined balance of $950 million.  The second part consisted of approximately 4,100 loans in seven different NSO pools with a total balance of approximately $770 million.  The NSO pools consist of loans pooled in geographically concentrated areas and are accompanied by sale terms that promote neighborhood stability in hard-hit communities.  NSO pools in September were in Chicago, Tampa, Phoenix, and Newark, New Jersey.  The estimated September results are here and here.  Usually, they show bids less than half of the loan balances. 

DASP allows pools of mortgages headed for foreclosure to be sold to qualified bidders.  An FHA servicer can place a loan into the loan pool if the following criteria are met:

• The borrower is at least six months delinquent;

• The servicer has exhausted all FHA loss mitigation steps; and

• The servicer has initiated foreclosure proceedings.

After the sale, foreclosure is delayed for a minimum of six months, during which time the new servicer can work with the borrower to find an affordable solution to avoid foreclosure.  HUD’s Neighborhood Stabilization Outcome (NSO) pools require that no more than 50 percent of the loans within a purchased pool be marketed as REO properties and, if the servicer and borrower are unable to avoid taking the loan through foreclosure, the servicer must achieve some other neighborhood stabilizing outcome, which may include holding the property for rental for at least three years.
The first sale in 2013, which be in the first quarter, will have two parts.  In the first part, HUD will accept competitive bids for non-performing loans bundled into national pools.  In the second part, loans will be offered in NSO pools in geographically concentrated areas including Atlanta; Southern California (Los Angeles, Riverside, San Bernardino and Long Beach); Ohio (Cleveland, Akron and Canton); and Florida (Fort Lauderdale, Miami and Greater Orlando).

• The Administration released its November housing scorecard and October servicers’ report.  The servicers’ report states that, in recent months, principal reductions granted outside of the HAMP principal reduction alternative program are likely attributable to the 50-state servicers’ settlement.  They also show home equity increased for the third consecutive quarter. 
• On December 5, 2012, the European Commission approved an emergency €1.5 billion Austrian recapitalization of Hypo Group Alpe Adria (HGAA).  The bank needs the aid to comply with regulatory equity ratios by year end.  The recapitalization consists of €500 million in the form of shares and a state guarantee on subordinated Tier-2 capital instruments with a nominal value of €1 billion.

This is the December 2, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released a September Refinance Report showing that the GSEs refinanced 90,000 homeowners through HARP in September, and more than 709,000 since the beginning of 2012.  HARP refinances represented almost a quarter of all refinances in the third quarter of 2012.  FHFA attributes the continued high volume of HARP refinances to record-low mortgage rates and program enhancements announced last year.  The report shows:

• Since the program began, the GSEs have refinanced more than 1.7 million loans through HARP.

• In September, half of the loans refinanced through HARP had loan-to-value (LTV) ratios greater than 105 percent and one-fourth had LTVs greater than 125 percent.

• In September, 19 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages.

• HARP refinances in September represented 45 percent of total refinances in states hard hit by the housing downturn–Nevada, Arizona, Florida and Georgia–compared with 21 percent of total refinances nationwide.

• Also in September, HARP refinances for borrowers with LTV ratios greater than 105 percent accounted for more than 70 percent of HARP volume in Nevada, Arizona and Florida and more than 60 percent of the HARP refinances in California.

• Treasury announced that it priced a secondary public offering of 5,789,909 warrants to purchase common stock of Zions Bancorporation at $1.35 per warrant.  The aggregate net proceeds to Treasury from the offering are expected to be $7,666,419. 

• Treasury announced that it intends to auction all of its preferred stock and subordinated debt positions in seven institutions:

   

  • The Baraboo Bancorporation, Inc. (Baraboo, WI);

  • Central Community Corporation (Temple, TX);

  • Community West Bancshares (Goleta, CA);

  • First Advantage Bancshares, Inc. (Coon Rapids, MN);

  • Manhattan Bancshares, Inc. (Manhattan, IL);

  • Presidio Bank (San Francisco, CA); and

  • Security Bancshares of Pulaski County, Inc. (Saint Robert, MO).

• The European Commission approved restructuring plans for four Spanish banks, BFA/Bankia, NCG Banco, Catalunya Banc and Banco de Valencia.  Banco de Valencia will cease to exist as an independent entity and will be sold and integrated into CaixaBank because its viability could not be restored on a standalone basis.  The balance sheets of BFA/Bankia, NCG Banco and Catalunya Banc will shrink 60 percent, from 2010 levels, by 2017.  Spain committed to sell NCG and Catalunya Banc before the end of the five-year restructuring period, or present an orderly resolution plan if no sale occurs.

This is the November 11, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Fannie Mae and Freddie Mac reported third quarter financial results.  Fannie Mae reported $1.8 billion in profit, before paying $2.9 billion in dividends to Treasury, and had equity of $3.2 billion.  Freddie Mac had net income and $2.7 billion, before it paid $1.8 billion in dividends to Treasury.  It had $4.9 billion in equity September 30.  This is the second consecutive quarter Freddie Mac took no draw from Treasury, and the third consecutive quarter for Fannie Mae. 

• GAO released an audit of TARP financial statements.  The financials show that TARP has disbursed $417 billion since inception.  As of September 30, 2012, it reported $40.2 billion in investments.  During the year ended September 30, 2012, TARP reported $49.9 billion from repayments and sales.  Since inception, TARP reports it has incurred a net cost of $20.3 billion.

• The Federal Reserve launched 2013 Comprehensive Capital Analysis and Review (CCAR) of 19 firms as well as the Capital Plan Review (CapPR) of an additional 11 bank holding companies with $50 billion or more of total consolidated assets.  The 19 bank holding companies in the CCAR have increased their aggregate tier 1 common capital to $803 billion in the second quarter of 2012 from $420 billion in the first quarter of 2009.  The tier 1 common ratio to risk-weighted assets for these firms has more than doubled to a weighted average of 10.9 percent from 5.4 percent.

• The federal banking agencies announced that “In light of the volume of comments received and the wide range of views expressed during the comment period, the agencies do not expect that any of the proposed [capital] rules would become effective on January 1, 2013.  As members of the Basel Committee on Banking Supervision, the U.S. agencies take seriously our internationally agreed timing commitments regarding the implementation of Basel III and are working as expeditiously as possible to complete the rulemaking process.  As with any rule, the agencies will take operational and other considerations into account when determining appropriate implementation dates and associated transition periods.”

• The Administration released its October housing scorecard  and September servicers’ report.  They show that thirty months after modification, 35% of modifications are 60 days delinquent, and 32% are 90 days delinquent. 

This is the November 25, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Treasury announced results of auctions of CPP shares in the following institutions:
  • Alaska Pacific Bancshares, Inc. (Juneau, AK) for $4,267,568.  Treasury paid $4,781,000.
  • Bank of Commerce (Charlotte, NC) for $2,627,100.  Treasury paid $3 million.
  • Carolina Trust Bank (Lincolnton, NC) for $3,412,000.  Treasury paid $4 million.
  • CBB Bancorp (Cartersville, GA) for $4,232,613.  Treasury paid $4,937,000.
  • Clover Community Bankshares, Inc. (Clover, SC) for $2,757,721.  Treasury paid $3 million.
  • Community Bancshares of Mississippi, Inc. (Brandon, MS) for $1,052,750.  Treasury paid $1,050,000.
  • Community Business Bank (West Sacramento, CA) for $3,909,595.  Treasury paid $3,976,000.
  • Corning Savings and Loan Association (Corning, AR) for $577,640.  Treasury paid $638,000.
  • Country Bank Shares, Inc. (Milford, NE) for $7,283,197.  Treasury paid $7,525,000.
  • FFW Corporation (Wabash, IN) for $6,943,418.  Treasury paid $7,289,000.
  • Hometown Bancshares, Inc. (Corbin, KY) for $1,886,605.  Treasury paid $1,900,000.
  • KS Bancorp, Inc. (Smithfield, NC) for $3,473,400.  Treasury paid $4 million.
  • Layton Park Financial Group, Inc. (West Allis, WI) for $2,500,305.  Treasury paid $3 million.
  • Parke Bancorp, Inc. (Sewell, NJ) for $11,712,864.  Treasury paid $16,288,000.
  • TriSummit Bank (Kingsport, TN) for $5,377,425.  Treasury paid $7,002,000.

Prices paid are here.  

• The European Commission approved an amended restructuring of Dutch Bank ING.  ING had failed to pay remuneration for its state support and could not divest Westland Utrecht Bank as planned.  In its amended restructuring plan, ING committed to repay the outstanding state capital to the Dutch State by 2015.  The Commission agreed to prolong the deadline for divesting ING’s insurance business in Europe.  The modalities of the divestment of ING Insurance US have also been modified.  To compensate for these changes, the acquisition ban and the price leadership ban will be prolonged.  The creation of NN Bank, through the divestment of ING’s mortgage bank WUB together with its Dutch insurance business by 2015, will ensure competition is enhanced.  To address the reasons of ING’s failure to divest WUB within the initial schedule, ING also committed to a series of constraints aiming to ensure the commercial success of NN Bank.  The price leadership ban in The Netherlands is not extended as it is made redundant by these new constraints.  By contrast, the price leadership ban of ING Direct Europe is both prolonged and strengthened.

This is the November 18, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

This is the October 28, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released updated projections of Fannie Mae’s and Freddie Mac’s financial performance and future draws from the Treasury.  The update shows reduced and more stable cumulative Treasury draws.  The key drivers include an overall reduction in actual and projected credit-related expenses and changes in the dividend structure in the agreements with Treasury, which eliminated the need to borrow from Treasury to pay dividends.  
• In a quarterly report, SIGTARP notes that recently Treasury appears to have shifted its emphasis from promoting financial stability to assessing returns on investment.  SIGTARP says a full economic recovery has been slower than anticipated, and is not guaranteed, so it is imperative that Treasury bring back its primary focus to promoting financial stability for the long term.  The report predicts that TARP will exist for several years to come.  The report recommends:
• On October 24, Treasury announced that PrivateBancorp, Inc., Chicago, Illinois repurchased in full its $243.8 million in outstanding CPP shares at Treasury’s purchase price, plus accrued dividends.
• On October 24, 2012, Treasury announced results of auctions of CPP shares of eleven institutions.  Treasury’s purchase prices are available here.
• On October 24, 2012, the European Commission determined that all legal conditions are met for moving forward with a financial transactions tax in ten Member States that want the tax authorized.  The proposal must be adopted by a qualified majority of Member States, and receive the Parliament's consent, in order for the ten Member States to move forward.  Any Member State that wishes to join at a later stage could do so.  The ten countries are Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain.  The exchange of shares and bonds would be taxed at a rate of 0.1% and derivative contracts, at a rate of 0.01%.
• The European Commission approved Austrian restructuring aid to Austrian bank Österreichische Volksbanken AG (ÖVAG).  ÖVAG is the central institute of Austria's Volksbanken (local credit co-operatives), providing them with centralized back-office services, liquidity management and financial products.  The support included capital injections of €1 billion, liquidity guarantees of €3 billion, and an asset guarantee of €100 million.

This is the October 21, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released a Refinance Report showing that Fannie Mae and Freddie Mac HARP refinances accounted for nearly one-quarter of all refinances in August.  Nearly 99,000 homeowners obtained HARP refinances in August, and more than 618,000 have done so since the beginning of this year.  FHFA expects HARP will refinance a million borrowers in 2012.  FHFA attributes the continued high volume of HARP refinances to record-low mortgage rates and program enhancements announced last year.
  • Since the program’s inception in 2009, Fannie Mae and Freddie Mac have financed more than 1.6 million loans through HARP.
  • In August, borrowers with loan-to-value (LTV) ratios greater than 105 percent continued to account for more than half the volume of HARP loans as HARP enhancements were fully implemented in the second quarter of 2012.
  • In August, nearly 18 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages, which help build equity faster.
  • In August, HARP refinances represented nearly half or more of total refinances in states hard-hit by the housing downturn – Nevada, Arizona and Florida –compared with 24 percent of total refinances nationwide.
  • Also in August, HARP refinances for borrowers with LTV ratios greater than 105 percent accounted for more than 70 percent of HARP volume in Nevada, Arizona and Florida and more than 60 percent of the HARP refinances in Idaho and California.
• Treasury announced that it intends to auction all of its CPP shares in eleven institutions.  Prices have not been announced.  The institutions are:
  • Blue Ridge Bancshares, Inc., Independence, MO;
  • First Gothenburg Banschares, Inc., Gothenburg, NE;
  • Blackhawk Bancorp Inc., Beloit, WI;
  • Germantown Capital Corporation, Inc., Germantown, TN;
  • CenterBank, Milford OH;
  • Oak Ridge Financial Services, Inc., Oak Ridge, NC;
  • Congaree Bancshares Inc., Cayce, SC;
  • Metro City Bank, Doraville, GA;
  • Peoples Bancshares of TN, Inc., Madisonville, TN;
  • The Little Bank, Incorporated, Kinston, NC; and
  • HomeTown Bankshares Corporation, Roanoke, VA
     
• The European Commission adopted procedural rules by which the European Securities and Markets Authority may bring enforcement actions against credit ratings agencies for violations of EU law.  The rules do not require implementation by individual countries.
   

This is the October 14, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released its Strategic Plan for 2013 – 2017, setting four strategic goals:
  • Safe and sound housing GSEs;
  • Stability, liquidity, and access in housing finance;
  • Preserve and conserve GSE assets;
  • Prepare for the future of housing finance in the U.S.

The fourth goal entails building a new infrastructure for the secondary mortgage market, including a common platform and national standards for mortgage securitization.  It also entails establishing improved standards standards for mortgage servicing, servicer compensation, and improved data and transparency.

• ​Treasury released a report on the Small Business Lending Fund (“SBLF”), a program enacted in 2010 that was available to banks with less than $10 billion in assets to borrow money to support small business lending.  The dividend rate on the loans depends in part on how much the bank increases its small business lending.  SBLF was authorized to invest up to $30 billion, but Treasury funded about $4 billion.  The report states that as of June 30, 2012, more than 76 percent of SBLF participants have increased their small business lending by 10 percent or more.

This is the October 7, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released for public input a white paper on a proposed framework for a common securitization platform and a model Pooling and Servicing Agreement.  The white paper seeks to identify the core components of mortgage securitization that will be needed in the housing finance system going forward.  Comments are due December 3, 2012.
• FHFA announced the winning investor in a Chicago REO pilot initiative.  The Cogsville Group, LLC has purchased 94 Fannie Mae properties in Chicago near or above market value.  Fannie Mae will continue to offer for sale pools of properties in markets across the United States that have a strong demand for rental housing and a substantial supply of REO properties.
• The Federal Reserve Bank of New York released an Assessment of the Distressed Residential Real Estate Situation.  It contains interactive maps showing the status and potential future scenarios for REO properties at the national and state levels.  Another interactive map gives a county-level look at proportion of distressed sales in New York, New Jersey and Connecticut. 
• The Administration released its September housing scorecard and August servicers’ report.  They show that homeowners in 2MP with an active permanent modification save a median of $159 per month on their second mortgage, resulting in a median total first and second lien payment reduction of 41%.  Homeowners who receive a full extinguishment of their second lien receive a median total first and second lien payment reduction of 53%.
• On October 4, 2012, the European Commission approved a capital injection of €220 million into Austrian bank Hypo Tirol Bank AG.  According to its restructuring plan, the bank will focus on its core market in Tirol, Austria and mostly withdraw from Germany and Italy.  
• On October 3, 2012, the European Commission welcomed the commercial launch in Austria of a new European Union loan guarantee facility for innovative small and medium-sized enterprises (SMEs).  

This is the September 30, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released a Foreclosure Prevention Report for the second quarter of 2012.  The report shows that serious delinquency rates (90 or more days delinquent or in foreclosure) continued to decline, but the percentage of loans that have missed one or two monthly payments increased during the second quarter.
  • The GSEs’ delinquent loan count has declined by 11 percent year-to-date, but in certain states the number of loans that have been delinquent for one year or more has increased substantially over the past six months.
  • Foreclosure starts and foreclosure sales decreased in the second quarter.
  • REO inventory declined for the seventh consecutive quarter as property dispositions continue to outpace property acquisitions in the second quarter.

The report contains a section on state-level data.  FHFA also posted an interactive map showing GSE delinquencies, foreclosure prevention activities, and REO, broken down by state.

• OCC released its Mortgage Metricsreport for the second quarter of 2012.  It shows the overall quality of first-lien mortgages serviced by large national and federal savings banks improved from the same period a year ago but showed seasonal decline from the prior quarter.
  • Current and performing loans at the end of the quarter were 88.7 percent, compared with 88.9 percent the prior quarter and 88.1 percent a year earlier.  The percentage of loans 30 to 59 days past due was 2.8 percent, up 12.1 percent from the prior quarter but down 7.5 percent from a year ago.  Loans 60 or more days past due or held by bankrupt borrowers whose payments are 30 or more days past due fell to their lowest level in three years, 4.4 percent, down 0.8 percent from the prior quarter and 9.2 percent from a year earlier. 
  • Servicers implemented 416,036 new home retention actions during the quarter, while starting 302,636 new foreclosures.  The number of home retention actions implemented increased 17.9 percent from the prior quarter but decreased 8.8 percent from a year earlier.  On average, the modifications implemented in the second quarter of 2012 reduced borrowers’ monthly principal and interest payments by 24.6 percent, or $381.  HAMP modifications reduced payments by 35.3 percent on average, or $576.
  • At the end of the second quarter of 2012, 55.4 percent of modifications made since the beginning of 2008 that reduced payments by 10 percent or more were current and performing, compared with 34.3 percent of modifications made during that time that reduced payments by less than 10 percent.
  • Since the beginning of 2008, servicers have modified 2,645,290 mortgages through the end of the first quarter of 2012.  At the end of the second quarter of 2012, 48.6 percent of those modifications remained current or had been paid off.  Another 7.6 percent were 30 to 59 days delinquent, and 14.9 percent were seriously delinquent.  There were 10.5 percent in the process of foreclosure and 6.5 percent had completed the foreclosure process.
• Treasury announced that Zions Bancorporation repurchased $700 million in preferred shares and has now repurchased all of its TARP shares.  Treasury originally invested $1.4 billion in the company.  In March 2012, Zions repurchased $700 million in preferred shares.  The company paid interest of $253 million on its TARP shares.  Treasury still holds warrants to purchase common stock.
• The Bank of Spain announced that stress test results on Spanish banks, making up 90 percent of the Spanish banking system, showed a need for €60 billion in capital under an adverse scenario.  Seven banking groups, accounting for more than 62% of the analyzed portion of the Spanish banking system’s credit portfolio, do not need additional capital.

This is the September 23, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• FHFA released and solicits comment on a notice setting forth an approach to increasing Fannie Mae and Freddie Mac single-family guarantee feed (g-fees) in states that have exceptionally high costs of defaults.  States differ in their requirements for lenders or investors to manage a default, foreclose, and obtain marketable title to the property.  FHFA’s approach would focus on the small number of states that have average total carrying costs that significantly exceed the national average and, therefore, impose the greatest costs on Fannie Mae, Freddie Mac, and taxpayers.  Mortgages originated in these highest-cost states would have an upfront fee of between 15 and 30 basis points, which would be charged to lenders as a one-time upfront payment on each loan acquired by the GSEs.  Based on current data, those five states are Connecticut, Florida, Illinois, New Jersey, and New York.  A homeowner in an affected state obtaining a 30-year, fixed- rate mortgage of $200,000 could see a monthly mortgage payment increase of approximately $3.50 to $7.00, reflecting a range of upfront fee adjustments of 15 to 30 basis points.  Comments are due 60 days after Federal Register publication.
• The European Commission released a paper on the progress of Ireland’s economic adjustment program.  It shows Ireland’s government deficit for 2012 is expected to remain within the program ceiling of 8.6% of GDP.  The financial sector continues to strengthen:  deleveraging is ahead of schedule and banks recorded deposit inflows for a fourth consecutive quarter, though deposit rates were higher.  Legislation to reform wage-setting mechanisms and strengthen the competition law framework has recently been enacted.  More needs to be done to eliminate or alleviate work disincentives and unemployment traps caused by some features of Ireland's benefits system.  Authorities are exploring tapping the European Investment Bank, combined with some resources from the national pension reserve fund, to finance new capital projects while remaining within the agreed deficit path.  Ireland successfully returned to the market raising more than €5.5 billion of new funding through Treasury bills and bonds with maturities ranging from 3 months to 35 years.  The overall positive assessment paves the way for the release of €1 billion European funding, €1.4 billion from the IMF, and €0.5 billion from a bilateral loan from the UK.

This is the September 16, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Treasury announced it would sell 636.9 million shares of AIG common stock at $32.50 per share in an underwritten public offering for expected proceeds of $20.7 billion.
• Treasury announced it priced a public offering of preferred shares in Yadkin Valley Financial Corporation.
• Treasury announced pricing for sales of preferred shares in four additional institutions.

This is the September 2, 2012 update to the Roadmap to the Financial and Housing Market Stabilization Plans:

• FHFA directed Fannie Mae and Freddie Mac to raise guarantee fees (g-fees) on single- family loans by an average of 10 basis points.
• FHFA released its fourth annual report on Fannie Mae and Freddie Mac guarantee fees, as required by HERA, the law that created FHFA. 
• Spain’s Bankia S.A. reported a loss of €4.4 billion for the first half of the year. 

Attached please find the August 26, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

• Treasury announced it had priced offerings of all of its preferred shares in four institutions.
• The Federal Reserve Bank of New York announced the sale of the remaining securities in the Maiden Lane III portfolio, for a net gain of approximately $6.6 billion, including $737 million in accrued interest on the Bank’s loan to Maiden Lane III. The total profit on assistance to AIG was $7.7 billion.

This is the August 19, 2012 update to the Roadmap to Financial and Housing Market Stabilization Plans:

• Treasury and FHFA amended the Treasury's agreements with Fannie Mae and Freddie Mac. Through 2012, the GSEs will continue to pay 10% dividends to Treasury on the preferred shares Treasury has purchased.
• Treasury announced that it exercised its right to appoint two directors to Ally Financial Inc., and shareholders approved them. The directors are Henry Miller and Gerald Greenwald.
• Treasury announced that it will offer at par 230,000 shares of M&T Bank Corporation Fixed Rate Cumulative Perpetual Preferred Stock, Series A, and 151,500 shares of M&T Fixed Rate Cumulative Perpetual Preferred Stock, Series C.
• Treasury announced that it intends to auction preferred stock in five banks.

This is the August 12, 2012 update to the Roadmap to Financial and Housing Market Stabilization Plans:  

• The GSEs reported their best quarter since their conservatorships began.
• Treasury reported that during July, its holdings of GSE MBS remained the same, at $3.377 billion.
• Treasury announced that underwriters in the sale of AIG common stock exercised their overallotment option in full to purchase 24.6 million shares of AIG stock.
• The banking agencies released a final and three proposed capital rules to implement Basel. 

This is the Augsut 5, 2012 update to the Roadmap to Financial and Housing Market Stabilization Plans: 

• The SEC released a report on the municipal securities market. The SEC says the market is more than 75 percent retail, and is traditionally described as buy-and-hold.
• Treasury announced that it agreed to sell 163,934,426 shares of AIG common stock at $30.50 per share in an underwritten public offering, for a total of $5.0 billion.
• The Administration released its July housing scorecard. It announced but did not post its June servicers report.

This is the July 29, 2012 update to the Roadmap to Financial and Housing Market Stabilization Plans:

• Treasury sold TARP CPP shares at a loss
• SIGTARP reports to Congress
• FDIC releases TLGP data
• The EC proposed to ban benchmark manipulation while it approved bank assistance

This is the July 22, 2012 update to the Roadmap to Financial and Housing Market Stabilization Plans:

• FSOC designates 8 financial market utilities as systemically important
• New York Fed update on tri-party repo infrastructure reform, and staff paper on money market fund reforms
• ECB pressures Greece on its budget

This is the July 15, 2012 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:

• The SEC released a staff report entitled, Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers.
• Treasury announced that it intends to auction all of its preferred stock and subordinated debt positions in 12 banks later in July, primarily to institutional investors.

This is the June 24, 2012 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:

• The European Central Bank announced it would accept additional categories of assets as collateral on loans to Eurozone banks.
• The OCC released a report on the status of implementing the consent orders against several servicers in April 2011
• Treasury announced it would sell its CPP preferred shares in seven banks

This is the June 17, 2012 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:

• FHFA released its annual report to Congress.
• FHFA released a foreclosure prevention report for the first quarter of 2012.
• On June 14, 2012, the Federal Reserve Bank of New York announced the full repayment of its loans to Maiden Lane LLC and Maiden Lane III LLC, with interest.
• On June 14, Treasury announced priced secondary public offerings of the preferred stock it holds in seven financial institutions.

This is the June 10, 2012 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:

The federal banking agencies released three proposed capital rules and FAQs:

o The “Basel III” proposed rule would revise risk-based and leverage capital requirements, consistent with the Dodd-Frank Act and Basel III. Banking organizations would be subject to generally stricter regulatory capital deductions.

o The “standardized approach” proposed rule would revise rules for calculating risk-weighted assets to enhance their risk sensitivity and address weaknesses identified over recent years. It would incorporate aspects of Basel II’s standardized framework, Basel III, and alternatives to credit ratings for the treatment of certain exposures, consistent with the Dodd-Frank Act.

o The “advanced approaches” proposed rule would revise the advanced approaches risk-based capital rule and incorporate certain aspects of Basel III that the Board would apply only to advanced approaches (generally, large or complex) banking organizations.

This is the June 3, 2012 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:

• FHFA announced that HARP refinances topped 180,000 in the first quarter of the year, compared to approximately 93,000 in the fourth quarter of 2011.
• The European Commission approved Spanish restructuring aid to Banco CAM in the context of the sale of its banking activities to Banco Sabadell.

This is the May 20, 2012 update to the Roadmap to Financial and Housing Market Stabilization Plans:

• The banking agencies released final guidelines on stress testing for banking organizations with more than $10 billion in assets.
• The European Commission announced its approval of Greek support of €680 million by the Hellenic Deposit and Investment Guarantee Fund (HDIGF) to facilitate the acquisition of the economic activities of the Greek T Bank by Hellenic Postbank in the context of T Bank’s resolution.

This is the April 15, 2012 update to the Roadmap to Financial and Housing Market Stabilization Plans:

• SIGTARP released a report on an audit of the Hardest Hit Fund (HHF). The report states: This program was originally announced as a $1.5 billion TARP program for five states with home price declines greater than 20%, but it grew to
$7.6 billion to 18 states and the District of Columbia through four rounds of funding. Treasury approved HHF programs in five categories of assistance: (1) principal reduction; (2) second-lien reduction or payoff; (3) reinstatement through payment of past due amounts; (4) unemployment or underemployment assistance; or (5) transition assistance such as a short sale, deed-in-lieu of foreclosure, or relocation assistance.

This is the March 25, 2012 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:​

• Treasury announced it has sold the last of its GSE MBS portfolio, with a total return of $25 billion.
• Treasury announced that AIG repaid $1.5 billion of preferred equity.
• The European Commission released a green paper soliciting comment.
• The European Commission announced that the European Regional Development Fund will guarantee up to €500 million in loans with an expected leverage of €1 billion, through EIB loans to small and medium-sized entities in Greece..

This is the March 18, 2012 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:​

• Treasury announced that it intends to auction off its preferred stock in six banking organizations, on or about March 26, 2012.
• Treasury released a monthly report showing that its holdings of GSE MBS declined in February by $12 billion, and now total $8.19 billion.
• The Federal Reserve Board released summary results of stress tests of the 19 largest bank holding companies

This is the March 11, 2012 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:​

• FHFA released a Conservatorship Scorecard
• Freddie Mac filed its 2011 10-K
• Treasury announced that it will sell 206,896,552 common shares of AIG
• GAO released a report on the Capital Purchase Program (CPP)

This is the December 11, 2011 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:​

• The Administration released its November housing scorecard and Making Home Affordable performance report.  Eighty-two percent of eligible homeowners entering a HAMP trial modification since June 1, 2010 received a permanent modification with an average trial period of 3.5 months, while the number of active trials continued to decline.  FHFA released its quarterly Foreclosure Prevention and Refinance Report, showing an 11% increase in cumulative HARP refinances.  Both are covered beginning on page 214 in the Roadmap.
• Treasury announced that Union First Market Bankshares Corporation, Richmond, Virginia, and S&T Bancorp Indiana, Pennsylvania, repaid their CPP funds, of $36 million and $108 million, respectively.
• The European Council agreed on a new “fiscal compact” and on stronger coordination of economic policies.  The Council committed to establish a rule against government deficits, with a schedule for countries to meet that goal.  It also agreed to reinforce procedures for states with deficits above a ceiling of 3% of GDP.  When this occurs, “there will be automatic consequences unless a qualified majority of euro area Member States is opposed.”  The European Stability Mechanism (ESM) treaty will become effective as soon as Member States representing 90% of the capital commitments have ratified it, and the objective is to have the treaty effective by July 2012.  The Council agreed to amend voting rules in the ESM to include an emergency procedure when a qualified majority of 85% in case the Commission and the ECB conclude that an urgent decision related to financial assistance is needed when the financial and economic sustainability of the euro area is threatened.  The Council agreed to consider, and confirm within ten days, whether to make up to €200 billion available to the IMF, and is “looking forward to parallel contributions from the international community.”
• Amended European rules on the supervision of financial conglomerates (financial groups that are often active in more than one country and operate in both the insurance and banking businesses) went into effect.  The rules give national financial supervisors new powers to better oversee the conglomerates’ parent entities.  The rules allow supervisors to apply banking supervision, insurance supervision, and supplementary supervision at the same time, remedying the unintended loopholes identified during the financial crisis.  Supervisors should be able to obtain better information at an earlier stage should a financial conglomerate run into trouble, and should be better equipped to intervene.  In addition, banking groups, insurance groups, and conglomerates will be required to publish basic elements of a resolution plan.  Finally, managers of alternative investment funds (such as hedge funds) will be included in the scope of supplementary supervision when they are part of a conglomerate.
• The European Banking Authority recommended that some banks increase their capital levels.  The banks and their capital deficiencies are listed here.
• The European Commission extended its approval until June 30, 2012 of a Danish plan to wind up credit institutions, approved August 1, 2011, if that is a lower cost than paying depositors.  The EC also approved two amendments to the program that will facilitate the sale of whole or part of a failing bank.  The amendments entail compensation from the state when an acquiror takes over the entire failing bank or when the failing bank is split into sound and distressed parts.  State compensation will be provided through the state-owned Financial Stability Corporation (FSC), and the Guarantee Fund for Depositors and Investors (Fund).  Under the two new amendments, Denmark will first assess whether a sale of the entire bank is feasible, and if not, the good bank / bad bank option will be assessed.  Under the first amendment, an acquiring bank would bid competitively for the entirety of a failing bank.  The FSC would provide the acquiring bank with cash or guarantees, in addition to compensation from the Fund.  If the first option is not feasible, under the second amendment, the FSC would take over the bank and split it into a good bank and a bad bank.  The FSC would resell the good bank to a buyer and wind down the bad bank.  The FSC and the Fund would provide compensation to the bad bank to conduct the run-off.  Under both amendments, the existing shareholders and subordinated debt holders of the failing bank would be wiped out, while senior creditors would not contribute to losses.
• The European Commission extended its approval of Irish guarantees on deposits, and on senior bank debt with a maturity up to five years.  The guarantee fee is tied to remuneration structure.  The program was originally approved in November 2009, and has been extended since.
• The European Commission approved a Lithuanian program under which the state-owned company INVEGA will provide short-term export-credit insurance coverage to companies established in Lithuania, which face a temporary insufficiency of coverage in the private market for credits for exports to France, Italy, Poland, Spain, Estonia, and the United Kingdom.  Only financially sound transactions will be eligible for support.  INVEGA’s share will not exceed 50% of the total coverage, and exporters will have to retain at least 20% of the underlying risk.  Premiums will be set at a level that provides an incentive for exporters to have return to private insurers when they are available.

This is the November 13, 2011 update to the Roadmap to Financial and Housing Market Stabilization Plans:

• Fannie Mae announced third quarter results, including a loss of $5.3 billion, and in addition a $2.5 billion dividend payment to Treasury, for a total of $7.8 billion it will need to draw from Treasury.  Its total draws from Treasury will now be $171.8 billion.
• Treasury released its monthly statement showing the amount of its GSE MBS holdings decreased by 10.9 billion, to a total of $58.2 billion.
• GAO released a report concluding that FHA needs to improve its risk assessment and human capital management.  Internal control standards require agencies to have an integrated risk assessment plan. 
• The Office of Single Family Housing’s (SFH) quality control initiative and Office of Risk Management (ORM) activities remain separate efforts.  Although HUD’s guidance requires annual risk assessments, SFH has not updated its assessments since 2009, and it lacks mechanisms to anticipate changing conditions.  Results of quarterly quality control activities are not shared outside the Office of Single Family Housing.  Actions that headquarters has taken based on the quarterly risk assessments are not clear. 
• FHA plans to establish a two-tiered structure, with an enterprise risk committee to address overall risk to the organization and a second tier of committees to address program and operational risks.
• FHA’s loan volume and the number of lenders and appraisers participating in its programs grew significantly from 2006 to 2010.  FHA insured almost half a million loans, totaling $70 billion in mortgage insurance, in 2006.  For 2010, the agency insured about 1.7 million loans, totaling $319 billion in mortgage insurance.
• During the same time period, Single Family Housing field staffing levels remained relatively constant.  Increases in contractor staff and workload related to management of foreclosed or real estate-owned properties were substantial, but noncontractor staff levels increased at more modest levels and, at 158 FTEs, are below the level recommended in 2009, 177 FTEs.  Loss mitigation actions more than doubled from 2006 to 2010, while loss mitigation staff levels have remained relatively constant.
• Although it has determined that SFH needs more staff, FHA has not created a workforce plan that systematically identifies critical skills and gaps in skills.  Also, 63 percent of homeownership center staff (who conduct most day-to-day functions) are eligible to retire in the next 3 years, but FHA has not developed a plan to manage retirements or hire staff with needed skills.
• GAO issued an audit of fiscal 2010 and 2011 TARP financials. In GAO’s opinion, these financial statements are fairly presented in all material respects.  GAO found a continuing significant deficiency in the Office of Financial Stability’s (OFS) internal control over its accounting and financial reporting processes.  GAO does not consider this deficiency a material weakness.
• GAO stated that, while OFS improved its review and approval process for preparing its financial statements, notes, and MD&A for TARP for fiscal year 2011, GAO continued to identify incorrect amounts and inconsistent disclosures in OFS’s draft financial statements, notes, and MD&A that were significant, but not material, and that OFS did not detect.  For fiscal year 2011, GAO also continued to identify instances where other OFS accounting and financial reporting procedures were not complete or effectively implemented.  OFS had other controls over TARP transactions and activities that reduced the risk of misstatements resulting from these deficiencies.  For significant errors and issues that were identified, OFS revised the financial statements, notes, and MD&A, as appropriate.
• The estimated net cost of TARP transactions from inception through September 30, 2011, was $28.0 billion.  This net cost primarily consists of net subsidy costs on direct loans and/or equity investments in automobile companies and AIG, partially offset by the net subsidy income related to TARP’s bank support and credit market programs. 

This is the November 6, 2011 update to the Roadmap to Financial and Housing Market Stabilization Plans.

This is the October 30, 2011 update to the Roadmap to Financial and Housing Market Stabilization Plans:

• FHFA issued updated projections for the performance of Fannie Mae and Freddie Mac under three different scenarios.  It last issued projections a year ago.  Under three scenarios, cumulative projected Treasury draws (without subtracting the 10% dividends the GSEs pay Treasury) at the end of 2014 range from $220 billion to $311 billion.  In FHFA’s initial projections in October 2010, cumulative draws at the end of 2013 ranged from $221 billion to $363 billion.  FHFA cautioned that the projections are not expected outcomes, and actual outcomes could be very different.  Changes in house prices have had the largest impact on the GSEs’ financial results, so FHFA changed only this factor across the three scenarios.  Credit-related expenses, particularly the provision for credit losses, continue to drive projected Treasury draws across all three scenarios.  Fannie Mae’s credit-related expenses increase by $57 billion from Scenario 1 to Scenario 3, and for Freddie Mac they increase $23 billion.
• SIGTARP released a quarterly report to Congress.  According to Treasury, the highest losses from TARP are expected to come from housing programs and from assistance to AIG and the automotive industry.  Almost all of the funds left available to be spent are for housing programs.  Treasury obligated $45.6 billion to housing support programs, of which $2.5 billion has been expended as of September 30, 2011.  These funds paid for the following:
  • $1.5 billion for HAMP first-lien modification incentives;
  • $134 million for Home Price Decline Protection (HPDP);
  • $68.9 million for Home Affordable Foreclosure Alternatives incentives;
  • $50.4 million for second-lien modification (2MP) incentives;
  • $4.3 million for FHA-HAMP incentives;
  • $55 million to cover potential losses on FHA Short Refinances, by a pre-funded reserve account with $50 million to pay future claims, plus $5 million spent on administrative expenses; and
  • $655 million on the Help for the Hardest Hit program, most of which SIGTARP says has been allocated to administrative expenses.
• Seventeen European leaders agreed to provide more support for countries with debt problems and restore financial stability to Europe.  The agreement includes the following:
  • Lending up to €100 billion from the EU and the IMF until 2014 to recapitalize Greek banks.
  • Banks and other private creditors have agreed to write off 50%, or €100 billion, of Greek debt.  The aim is to decrease the Greek debt-to-GDP ratio to 120% by 2020.
  • Enlarging the lending capacity of the European Financial Stability Facility (EFSF), created in June 2010, five-fold to €1 trillion.  The EFSF will offer optional risk insurance to private investors buying bonds from euro countries, and it will create SPVs for public and private investments to extend loans, recapitalize banks, and buy bonds in the primary and secondary markets.
  • Governments will provide guarantees for banks affected by the sovereign debt crisis.  A temporary measure will require banks to increase their capital base to 9% by June 2012.  Banks will first use private sources of capital, with national governments providing support if necessary.  Loans can also be made through the EFSF, as a last resort.
• Eurozone countries also approved measures to improve economic governance.  There will be more coordination of economic and national budget policies, along with increased monitoring to ensure the measures are implemented.

This is the October 23, 2011 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:

• The CFTC proposed to extend an order it issued July 14 that extended effective dates.  Some provisions of Dodd-Frank went into effect, and certain CFTC laws were repealed, on July 16, 2011, but the CFTC’s relevant definitions were not yet effective, prompting the July 14 extension. 
• The CFTC finalized a rule establishing compliance standards for derivatives clearing organization (DCO) core principles, rules for DCO chief compliance officers, procedures for transfer of a DCO registration, and adding requirements for approval of DCO rules that establish a portfolio margining program for accounts carried by a futures commission merchant that is a registered securities broker-dealer.
• GAO released a report entitled, Federal Reserve Bank Governance: Opportunities Exist to Broaden Director Recruitment Efforts and Increase Transparency.
• GAO found the diversity of Reserve Bank boards was limited from 2006 to 2010.  GAO recommends that the Federal Reserve Board encourage all Reserve Banks to consider ways to help enhance the economic and demographic diversity of perspectives on the boards.Directors can have ties to the financial sector that can create the appearance of a conflict of interest, as illustrated by the participation of director-affiliated institutions in the Federal Reserve System’s emergency programs.  Most Reserve Banks’ bylaws do not document the board’s role in supervision and regulation.  GAO recommends that all Reserve Banks clearly document the directors’ role in supervision and regulation activities in their bylaws, and that they develop and document a process for requesting from the Federal Reserve Board conflict waivers for directors.  GAO also recommends that the Reserve Banks publicly disclose when a waiver is granted, as appropriatiate.
• The Federal Reserve System’s governance practices are generally similar to those of selected central banks and comparable institutions such as bank holding companies but tend to be less transparent.  GAO recommends that Reserve Banks make public key governance documents, such as bylaws, ethics policies, and committee assignments.

This is the October 16, 2011 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:

This is the October 9, 2011 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:

• Treasury released a TARP three-year anniversary report.  Treasury estimates TARP overall to cost $37 billion dollars, although it also says the final cost will not be known for some time.
• Treasury estimates the (gains) and losses by program as of August 31, 2011 as follows (in billions):
• Treasury finalized TARP conflict of interest rules, issued as interim rules in January 2009. The final rule is similar to the interim final rule. Generally, the rule prohibits Treasury’s subcontractors and consultants (retained entities) from permitting an actual or potential organizational conflict of interest unless disclosed and mitigated with Treasury approval. Retained entities are required to ensure that all key individuals have no personal conflicts of interest unless mitigation measures have neutralized the conflict, or Treasury has waived the conflict. The retained entity’s officers, partners, or employees performing work under the arrangement with Treasury must not accept or solicit gifts above $20 in value from anyone that the retained entity knows is seeking official action in connection with the arrangement, and the total gifts may not exceed $50 in any calendar year. Any information that Treasury provides to a retained entity or that the retained entity obtains or develops is deemed nonpublic until the Treasury determines otherwise in writing or the information otherwise becomes public.
• Treasury and HUD released their monthly housing scorecard and servicing report. In September, there were 10,600 trial period plans offered, and 15,500 new active permanent modifications. 

This is the October 2, 2011 update to the Roadmap to Financial and Housing Market Stabilizat​ion Plans:

• Treasury announced final funding under the Small Business Lending Fund (SBLF).  An additional 141 community banks received $1.6 billion for the final funding for this program.  This brings the total funding for the program to $4 billion for 332 banks.  Treasury also released a map showing how many institutions in each state received funding.  The individual institutions and funding amounts are listed beginning on page 2 of the Roadmap.
• FHFA released a discussion paper on two alternatives for mortgage servicer compensation.  One alternative is to lower minimum servicing fees and require funds to be put into a reserve account, to be drawn in the event of poor loan performance.  Another alternative is a fee-for-service model, under which servicers would receive a set dollar amount per loan regardless of loan size, plus incentive compensation for nonperforming loans, with bifurcated selling and servicing representations and warranties.  FHFA will accept comments through December 26. 
• On September 27, Treasury announced that it priced a secondary public offering of 6,008,902 warrants to purchase common stock of SunTrust Banks, Inc. (the A Warrants) at $2.70 per warrant and a secondary public offering of 11,891,280 warrants to purchase the common stock of the company (the B Warrants) at $1.20 per warrant.  Treasury expects aggregate net proceeds of approximately $30,066,661.  CPP warrant auctions are covered beginning on page 44.
• The European Commission proposed a financial transaction tax in the 27 EU member states.  The tax would be levied on all transactions on financial instruments between financial institutions when at least one party to the transaction is located in the EU.  The exchange of shares and bonds would be taxed at a rate of 0.1%, and derivatives at a rate of 0.01%.  This could raise approximately €57 billion a year.  The Commission proposed a January 1, 2014 implementation date.
• The European Commission approved the recapitalizations of NCG Banco, Catalunya Banc, and Unnim Banc by Spain’s Fondo de Reestructuración Ordenada Bancaria (FROB).  FROB will take control of the banks.  All three banks were created this year as part of the restructuring of the Spanish savings bank system.  Final approval is conditioned on submission of restructuring plans that ensure long-term viability and appropriate shareholder burden.
• The European Commission asked Spain and the Netherlands to explain within two months the steps they are taking to implement certain capital requirements for banks and investment firms as laid down in the Second Capital Requirements Directives (known as CRD II).  The implementation deadline was October 31, 2010.  Spain needs to adopt certain required technical measures.  The Netherlands has yet to adopt measures to implement the Directives.

Roadmap Update (12-09-09)

Roadmap Update (11-14-09)

Roadmap Update (11-07-09)

Roadmap Update (10-23-09)

Roadmap Update (10-19-09)

Roadmap Update (10-15-09)

Roadmap Update (10-05-09)

Roadmap Update (09-17-09)

Roadmap Update (09-09-09)

Roadmap Update (08-31-09)

Roadmap Update (08-28-09)

Roadmap Update (08-20-09)

Roadmap Update (08-17-09)

Roadmap Update (08-03-09)

Roadmap Update (07-05-09)

Roadmap Update (07-01-09)

Roadmap Update (06-22-09)

Roadmap Update (06-10-09)

Roadmap Update (06-04-09)

Roadmap Update (05-27-09)

Roadmap Update (05-20-09)

Roadmap Update (05-13-09)

Roadmap Update (04-23-09)

Roadmap Update (04-06-09)

Roadmap Update (04-01-09)

Roadmap Update (03-25-09)

Roadmap Update (03-23-09)

Roadmap Update (03-20-09)

Roadmap Update (03-18-09)

Roadmap Update (03-17-09)

Roadmap Update (03-08-09)

Roadmap Update (03-03-09)

Roadmap Update (02-25-09)

Roadmap Update (02-22-09)

Roadmap Update (02-19-09)

Roadmap Update (02-10-09)

Roadmap Update (02-06-09)

Roadmap Update (02-04-09)

Roadmap Update (02-03-09)

Roadmap Update (01-29-09)

Roadmap Update (01-27-09)

Roadmap Update (01-22-09)

Roadmap Update (01-16-09)

Roadmap Update (01-15-09)

Roadmap Update (01-06-09)

Roadmap Update (01-05-09)

Roadmap Update (12-31-08)

Roadmap Update (12-30-08)

Roadmap Update (12-20-08)

Roadmap Update (12-19-08)

Roadmap Update (12-17-08)

Roadmap Update (12-15-08)

Roadmap Update (12-14-08)

Roadmap Update (12-05-08)

Roadmap Update (12-04-08)

Roadmap Update (12-03-08)

Roadmap Update (11-25-08)

Roadmap Update (11-24-08)

Roadmap Update (11-20-08)

Roadmap Update (11-18-08)

Roadmap Update (11-17-08)

Roadmap Update (11-16-08)

Roadmap Update (11-15-08)

Roadmap Update (11-14-08)

Roadmap Update (11-12-08)

Roadmap Update (11-11-08)

Roadmap Update (11-10-08)

Roadmap Update (11-05-08)

Roadmap Update (11-02-08)

Roadmap Update (10-29-08)

Roadmap Update (10-27-08)

Roadmap Update (10-24-08)

Roadmap Update (10-22-08)

Roadmap Update (10-21-08)

Roadmap Update (10-20-08)

Roadmap Update (10-18-08)