LuxuryBlurb
Posts Tagged ‘tarp’
Wednesday, October 6th, 2010
 As first reported on LUXURYBLURB a few days ago, Bank of America has exited the wholesale residential lending market, cutting off its business with mortgage brokers, the bank announced yesterday.
“After receiving $ 45 BILLION in TARP funding from the US Governemnt/taxpayers, BOFA was one of the first banks to re-pay this debt,” says Leonard Steinberg, managing director of Prudential Douglas Elliman and publisher of LUXURYLETTER.
The move came as a surprise to local mortgage providers who did business with the Charlotte, N.C.-based bank. It means that mortgage brokers and their clients will have one less option when they are looking for a loan to buy a condo or co-op in the city.
A BofA spokesperson said, given the opportunity in retail business, the bank preferred “to reallocate its resources to its retail channel and correspondent lending channel.” Less than 5% of the mortgages that the bank annually made came from its wholesale channel. In just the first six months of the year, BofA originated $145 billion in mortgages, according to trade publication Inside Mortgage Finance.
Loan applications via the wholesale lending channel were accepted through the end of the business day on Tuesday and must close by Dec. 1.
“This was not expected,” said Melissa Cohn, president of Manhattan Mortgage, adding that the bank had scheduled a conference for top mortgage brokers in the New York area and had abruptly cancelled it. “We were caught flat-footed.”
BofA’s exit follows a similar move by J.P. Morgan Chase & Co., which got out of the wholesale lending business last year.
“It’s another way for banks to cut back,” Mr. Weinstein said. Yes, but at whose expense?
Monday, March 29th, 2010
The U.S. government, which announced Monday that it plans to slowly unload its 27% stake in Citigroup Inc. over the remainder of this year, currently stands to pocket an $8 billion profit on the investment from last September. That’s a remarkable 30% return in six months, or triple the return generated by the average hedge fund manager investing in distressed securities, according to data from Hedge Fund Research Inc. Of course, the value of the government’s huge stake in Citi could fall by the time it’s all sold. After all, the U.S. Treasury is proposing to sell a whopping 7.7 billion shares, which would be the second-largest stock sale of any kind ever.
So why all the noise about TARP funds when for one of the first times in history a US government program actually turns a huge profit? Where are all the naysayers and tea-party buffoons now that their complaints about the TARP program look quite simply….stupid? And this is good for New York City as the sale of all this stock will produce huge commissions…..that will result in bonuses…..that will be taxed to pay for Albany’s stupidity….and spent in the City…..hopefully on real estate!
Friday, March 26th, 2010
It was announced to-day that the cost of a movie theater ticket will rise from anywhere between 5% and 25%….this after a record-breaking 2009 where profits surged over $ 10 billion. Hmmmmmm…..
This will probably affect more American’s pockets than any tax of any kind. So where is the outrage? There was outrage about the TARP funds! Outrage about the Wall Street bonuses! Is outrage only deemed appropriate for select abuses? Very interesting.
Where was the outrage when NBC (owned by GE, who received TARP MONEY) paid Conan O’Brien tens of millions of dollars for a failed TV show? If he was the boss of a bank, would outrage have been less or more appropriate?
So why on LUXURYBLURB? Surely this is a clear indicator of coming inflation….and inflation results in rising interest rates and a rush to safe assets such as real estate. AND, we ARE outraged at the cost of movie theater tickets! What about raising real estate broker commissions after a record year of profits? What do you think?
Monday, March 8th, 2010
 On Monday, AIG announced that it would sell foreign life insurance business Alico to MetLife (MET, Fortune 500) for $15.5 billion. Last week, AIG said it reached an agreement to sell Asian life insurance giant AIA for $35.5 billion.
That’s $51 billion that AIG said will eventually be used to pay down its debt to the government. The two sales mark the most significant progress that AIG has made to-date in its efforts to repay its bailout, which is worth up to $182 billion.
Taxpayers won’t get their money back overnight. The sales still need to be completed, and AIG has said that more than $19 billion will come over time from proceeds generated by sales of securities.
So far, the government has given AIG $136.5 billion, of which the insurer owes $102 billion. But AIG’s debt total will be cut in half after the insurer turns over the $51 billion it secured from the Alico and AIA sales.
So if all these TARP funds are being re-paid, why is everyone so focused on this part of the ‘big government bail-out’? Surely everyone should be more concerned about the big government bail outs that will never be re-paid?
Surely this is good news for everyone including the housing markets?
Friday, February 19th, 2010
 Under pressure to do more for troubled homeowners, President Obama is expected to announce to-day a $1.5 billion program to help borrowers in the five states hit hardest by the housing crisis. The initiative calls for pumping money into state housing agencies in California, Arizona, Nevada, Florida and Michigan to fund programs to prevent foreclosure for people who are unemployed or who owe more than their homes are worth. Also, the agencies can assist homeowners having trouble securing loan modifications because of second liens, as well as promote affordable housing opportunities.
Obama is scheduled to unveil the initiative, which will be funded with money from the TARP bank bailout, at events in Nevada, which has the highest number of underwater homeowners at 65% and the nation’s second-highest unemployment rate at 13%. The president will be joined by Senate Majority Leader Harry Reid, D-Nev., who is facing a tough relection campaign…..maybe this is all designed to help Mr. Reid’s re-election efforts?
The funds will be allocated based on a formula that takes into account home price declines and unemployment. The agencies’ programs must be approved by the Treasury Department. The move is the administration’s latest attempt to fix its signature foreclosure-prevention effort, the Home Affordable Modification Program, which has been widely panned for not doing enough.
The year-old initiative, which lowers qualified borrowers’ monthly payments to no more than 31% of pre-tax income, has placed more than one million people in trial modifications. But it has given lasting help to only 116,000 homeowners, mainly by lowering their interest rates. Consumer advocates and housing experts for months have called on Obama to expand the program to help the jobless and those suffering steep declines in their home value, two sectors that have received relatively little assistance from the modification effort. Administration officials repeated as recently as Wednesday that they were working on the problem, but that it was a complex issue.
None of this affects the luxury market in New York, except to possibly add further debt to all taxpayers. It also highlights one of the biggest failures of the entire process: the unwillingness of banks and governments to re-value properties based on market realities. This ostrich-head-in-the-sand mentality is infuriating. But it is good for elections, although that remains to be seen.
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Bank of America controls more assets than any bank in the US with the exception of Citi Group.
Bofa claims to waive fees but also quote higher rates.
This is a huge blow to mortgage brokers.