Moe: Question Re B of A Pay Back of TARP Funds

[Irish Gal]

Hi Moe,

The latest media buzz is that BofA plans to pay back all of its TARP funds soon. If it does, what is your opinion of how this will affect borrowers thereafter ? BofA has done virtually nothing re loan mods anyways, with the gov't involved. So, what outcome do you see for borrowers still left hanging re mods, once they pay the funds back in full ? It then won't have to mess w/ the politics involved i.e. pretend it wants to and are assisting homeowners, etc.? I think once the TARP funds are paid in full, BofA will get even worse with homeowners, and be more blatant about not intending to help at all, and start foreclosing in droves. What's your take?

[Garry]

I think Chase is one of the banks that have paid back the Gov. They're still doing Mods and have even been getting better at it. The real question we should be asking is where did BOA get the cash to pay it back? I say the Gov handed it to them in a very slick way, the Mod process. Not to mention RAPING us on credit card interest.

[Melanie702]

I think Chase is one of the banks that have paid back the Gov. They're still doing Mods and have even been getting better at it. The real question we should be asking is where did BOA get the cash to pay it back? I say the Gov handed it to them in a very slick way, the Mod process. Not to mention RAPING us on credit card interest.

Garry, I read this last night
http://att.cnnmoney.mlogic.mobi/mone...B35.liveapp19j

[Irish Gal]

I think Chase is one of the banks that have paid back the Gov. They're still doing Mods and have even been getting better at it. The real question we should be asking is where did BOA get the cash to pay it back? I say the Gov handed it to them in a very slick way, the Mod process. Not to mention RAPING us on credit card interest.

Agree, but Chase has had a better track record (re mods) overall than BofA anyways, so the fact that Chase is still doing mods (post TARP) doesn't mean much, IMO. And, recently Jamie Dimon's name was being tossed around ("allegedly") to replace Geithner, so Dimon seems to be on this Admin's short list of "good guys" (allegedly wasn't as risky pre-crash as BofA with toxic crap, etc.). I guess my thinking is that if BofA did so poorly in assisting homeowners with TARP aid, what's it's plan going to look like w/out having to play politics (pretend they care and are doing mods)? To me, it doesn't matter where they are getting the $$$ to pay back. The whole (big) banking system continues to be corrupt, so where ever they are getting the pay back $$$ - it's more of the same: continuing accounting fraud and bankers' chess games to cover up, and shuffle around the numbers to serve their CEO big bonus needs. It's similar to "It's the economy, stupid!" With these bankers, "It's the bonuses, stupid!" Preserving that system, at all costs, even though it wipes out the rest of the real economy. Big banks want to get out from under gov't oversight, mainly so they can blatantly blow off any chatter from anywhere re their big bonuses, and not have to deal w/ the surrounding politics re stopping foreclosures. BofA is also in flux due to Lewis (supposedly) leaving at the end of this mo. No one wants the job. They're having a hard time replacing him. There's even talk that BofA might try to keep Lewis on, as no one wants the job. That's another reason they want to get TARP off their arse, so they can offer (again) prospective CEOs the big bonus and compensation programs. I may be wrong, but once TARP is off BofA's plate, I'm thinking BofA will get more brutal (than it already is) re foreclosures.

[Riley18]

I think that BofA is going to get worse after they pay back the money. The government should still enforce the HAMP more anyway. The bank took that money and used it interest free, and now they get to pay it back with no strings attached. We should all have been so fortunate. If the money had been given to taxpayers, we could have gotten on our feet as well.

[Garry]

Agree, but Chase has had a better track record (re mods) overall than BofA anyways, so the fact that Chase is still doing mods (post TARP) doesn't mean much, IMO. And, recently Jamie Dimon's name was being tossed around ("allegedly") to replace Geithner, so Dimon seems to be on this Admin's short list of "good guys" (allegedly wasn't as risky pre-crash as BofA with toxic crap, etc.). I guess my thinking is that if BofA did so poorly in assisting homeowners with TARP aid, what's it's plan going to look like w/out having to play politics (pretend they care and are doing mods)? To me, it doesn't matter where they are getting the $$$ to pay back. The whole (big) banking system continues to be corrupt, so where ever they are getting the pay back $$$ - it's more of the same: continuing accounting fraud and bankers' chess games to cover up, and shuffle around the numbers to serve their CEO big bonus needs. It's similar to "It's the economy, stupid!" With these bankers, "It's the bonuses, stupid!" Preserving that system, at all costs, even though it wipes out the rest of the real economy. Big banks want to get out from under gov't oversight, mainly so they can blatantly blow off any chatter from anywhere re their big bonuses, and not have to deal w/ the surrounding politics re stopping foreclosures. BofA is also in flux due to Lewis (supposedly) leaving at the end of this mo. No one wants the job. They're having a hard time replacing him. There's even talk that BofA might try to keep Lewis on, as no one wants the job. That's another reason they want to get TARP off their arse, so they can offer (again) prospective CEOs the big bonus and compensation programs. I may be wrong, but once TARP is off BofA's plate, I'm thinking BofA will get more brutal (than it already is) re foreclosures.

The Gov still has a strangle hold over the banks, they can start letting BK judges do mods and cut principal. Hopefully this threat will keep the banks in line.

[BadBobMo]

The Gov still has a strangle hold over the banks, they can start letting BK judges do mods and cut principal. Hopefully this threat will keep the banks in line.

If you would like to see how Gov. will help with BK just look up my post "Fired Up and Ready to go.
I also remember seeing a Fortune-500 interview with our gal Sheila Bair where she told the interviewer that she was totally against principal write downs, but today she all of a sudden changed her mind. Why because the FDIC is flat broke period. 2 more banks hit her pocket book today, so now she has a new plan to raise money.
"This is very "IMPORTANT" people she and Timmy put this whole "Screw" the home owner plan in place. As the problem gets worse they start to wake-up. How many of our brothers and sisters lost their homes and still might because they are all in bed with the lenders, and I thought they where both all ready married.
16.7bn in bonus pay, all though Timmy made a statement today you think anything will come of it.
Have Fun!!
Bair Weighs Loan Principal Cuts to Fight Foreclosure (Update1) - Bloomberg.com

[Moe Bedard]

Sorry I missed this earlier Irish. Here is my take on TARP and the big banks.

Most everything being done is about the best it is going to get. It will get no worse or better. BofA is no different than Chase or Wells when it comes to the big 3, they just unfortunately (for them) decided to invite the poster child for predatory lending, Countrywide into their family, thus tainting their once decent name. Until they picked up CW and Lehman, they was no news on them except that TARP which they all got.

I think Chase and Wells are just as culpable, but more cunning with the media. Chase and Jaimie Dimon own the media and I feel they use this leverage to bad mouth other banks and keep their name clean. They can dominate markets with this simple tactic like they are.

As far as loan mods etc., I have come to conclusion as I mentioned before, that most all homeowners will be sacrificed to the foreclosure Gods in order to revive Main Street and get real estate moving again. This is a business about money and these are bankers. They are not a non profit, Moe or social welfare firm looking to do Gods work. That is how they think, how it is and how banks will always work.

There is collusion in this from banks, mortgage servicers and our government. Not evil collusion, but just for what they feel is the greater good of the US economy.

Kinds of like if there was a super deadly virus and they had to kill 3 million to save 30 million, you better believe they would slaughter the 3 million so 30 million can live for the greater good of humanity. Sure, the killing of 3 million is unconscionable, but what about just letting 33 million die?

[BadBobMo]

Keep Giving To The Pack! American should be up in arms after viewing this short video regarding this so called United States Senator from Utah (Robert Bennett) and the Mortgage Bankers Association lobbying the night before our U.S. Senate voted for the BK-Reform to help save millions of homes from foreclosures and this also would have been accomplished without spending one penny of taxpayer money.

Yes I lost every penny I worked for building up a little something for my family to have when I’m not around to watch over them anymore, but just when I was looking for some type of fairness the banking lobby's millions once again carried the day, the very next day the Senate failed to pass the bill, the final vote was 45 in favor to 51 against. YouTube - Mortgage Bankers Celebrate Victory


[YOUTUBE]vS_6zn3B0pw[/YOUTUBE]

[BadBobMo]

Happy Friday everyone, time to go shopping!!
The Federal Deposit Insurance Corp. took over AmTrust Bank, based in Cleveland, with about $12 billion in assets and $8 billion in deposits. Its failure is expected to cost the federal deposit insurance fund an estimated $2 billion.

[davephx]

I think that BofA is going to get worse after they pay back the money. The government should still enforce the HAMP more anyway. The bank took that money and used it interest free, and now they get to pay it back with no strings attached.

Actually they paid a huge amount of interest, fees and the special preferred stock as part of TARP which has generated a huge profit to TARP.

BofA has has paid $2.54 billion to the government so far in dividends on the TARP money. This is all profit to TARP and it still has billions in preferred stock warrents that have to be bought back (all profit to TARP). It is repaying the TARP principal from a stock offerring.

It seems it can avoid the pay czar restrictions if pays back TARP but less clear is if the Treasury still has the warrants worth billions if it can get out of HAMP or not.

[davephx]

From a Mortgage Modification Attorney
11/20/09 - Bank of America processors tell me that they get 120,000 “requests” per day. To get down to issuing a modification, they take the longest of any lender or servicer that I have worked with.

For those who do not qualify for a Home Affordable HAMP modification, Bank of America offers a forbearance plan, which capitalizes your arrearage, that is, adds it to the total balance, and then raises your payment, without lowering your interest rate.

If you do qualify for a HAMP modification, Bank of America says it can give you a provisional lower interest rate and payment provided you are more than 30 days late. Otherwise, if you are current on your loan, you are still eligible for a HAMP modification – other things being equal – but you will have to wait 60 to 120 days, during which time you will have to continue making your current payments unless you want to risk going into foreclosure.

Bank of America is one of the lender/servicers which took the TARP money from the Feds and therefore was obligated to offer HAMP modifications. However, there are cases where Bank of America does not own a given loan but merely services it, and if the lender which is the actual owner did not take the TARP money nor sign onto the Obama Plan, then that lender, prepresented by Bank of America as servicer, is not obligated to give you as good a modification or any modification at all.

Bank of America has plenty of staff to originate a record number of new loans but not enough staff to handle modifications and so is making modification applicants wait longer than any other lender.

If a Borrower does not qualify for HAMP because his deficit is too large, Bank of America will try to qualify the Borrower under its own HOPE program. Under HOPE the monthly payment can be higher than 31% of gross income, and the interest rate might be higher than under the HAMP program.

After many months of waiting, a Borrower will generally be approved for a trial payment plan, where he will make payments for three months. Payments cannot be paid online. They can be mailed in by ordinary check or sent by Western Union. They are best paid by check over the phone.

When a trial payment plan is set up, most lenders will send out a letter outlining of the terms of the trial payment. Bank of America may or may not send out a trial payment letter. You may have to press for such a letter so you will know when payments are due. Each lender has its own excentricities.

Source: Mortgage Modification Attorney Bank of America

[Irish Gal]

Sorry I missed this earlier Irish. Here is my take on TARP and the big banks.

Most everything being done is about the best it is going to get. It will get no worse or better. BofA is no different than Chase or Wells when it comes to the big 3, they just unfortunately (for them) decided to invite the poster child for predatory lending, Countrywide into their family, thus tainting their once decent name. Until they picked up CW and Lehman, they was no news on them except that TARP which they all got.

I think Chase and Wells are just as culpable, but more cunning with the media. Chase and Jaimie Dimon own the media and I feel they use this leverage to bad mouth other banks and keep their name clean. They can dominate markets with this simple tactic like they are.

As far as loan mods etc., I have come to conclusion as I mentioned before, that most all homeowners will be sacrificed to the foreclosure Gods in order to revive Main Street and get real estate moving again. This is a business about money and these are bankers. They are not a non profit, Moe or social welfare firm looking to do Gods work. That is how they think, how it is and how banks will always work.

There is collusion in this from banks, mortgage servicers and our government. Not evil collusion, but just for what they feel is the greater good of the US economy.

Kinds of like if there was a super deadly virus and they had to kill 3 million to save 30 million, you better believe they would slaughter the 3 million so 30 million can live for the greater good of humanity. Sure, the killing of 3 million is unconscionable, but what about just letting 33 million die?

Thanks, Moe! Always appreciate your ongoing insights.

[Garry]

As far as loan mods etc., I have come to conclusion as I mentioned before, that most all homeowners will be sacrificed to the foreclosure Gods in order to revive Main Street and get real estate moving again. This is a business about money and these are bankers. They are not a non profit, Moe or social welfare firm looking to do Gods work. That is how they think, how it is and how banks will always work.

There is collusion in this from banks, mortgage servicers and our government. Not evil collusion, but just for what they feel is the greater good of the US economy.

I understand what your saying about sacrificing some for the good of the nation Moe, I know in reality that's how it works. But I don't see how sacrificing homeowners is good for the nation, I see it as just the opposite.

[Garry]

At first they where letting everyone go belly up, that proved to be a big mistake. Next thing we know regular people just started walking away because they couldn't re-finance or sell their homes. They did the math and the best logical solution was to walk. Now we are in a vicious spiral and it just keeps getting worse. The only way to stop it is to help people save their homes and stabilize the market. If they don't, none of our houses will be worth a nickle and everyone will walk. Then we have a real catastrophe. Maybe I'm wrong, who knows?

[Garry]

I still think they should have used the TARP funds to buy down every mortgage in the U.S. to a realistic value and gave everyone a fixed 5%. It would have saved a lot of peoples asses and put big smiles on the rest of the people that where doing ok. We would be a hell of allot better off right now as a Nation. People would actually be out Christmas shopping, may have even been a record season. Instead, it's going to be a record season for the worst, and guess what happens next. More businesses will be closing and even less jobs. This seems like pretty simple math to me and I don't have the highest of educations.

[auroraproblem]

The TARP funds were never about bailing out home owners, it was about bailing out banks and investors. We were used at the 'sell' point.

For those defending the 'profit' made by the government for the TARP loans, one thing can always be said about the banking institute, if it hurts they will b*tch about it. Funny you hear lots of posts about how the bonus caps are hurting them, yet never a post about how the 'profit' hurts them to pay back to the government. Reason is quite simple, it did not hurt, it is profitable. Not one of them turned their greedy hand away from that money when offered, even though they knew the payback rules.

As well, can we stop posting about how they were 'forced' to take it. Ford said no, the banks could have said no. They took it because the deal was very good for them. Only the later rule of bonus caps were unacceptable to them and as well they should, with the huge profits being made while the TARP funds were in their hands, huge bonuses were due and to get a cap on those was not going to be gleefully accepted.

I hope BofA does not change its stance on mods, but something makes me feel that in the long run it will. Likely it was not the reason for paying back the TARP funds (the bonus cap was), but this may sadly become another casualty due to it. I am confident though that those in the trial payments will likely see through to a perm mod from them. I would be shocked if they went as far as to openly create an issue after documenting a process like that.