Posted on April 29, 2009 by Hunton & Williams LLP Print This Article

Making Home Affordable Update: Second Lien Program, H4H and Participating Servicers

The Obama Administration’s Homeowner Affordability and Stability Plan (“HASP”) has added a second lien modification program (the “Second Lien Program”) to the Home Affordable Modification Program (“HAMP”). HASP is a part of the Administration’s comprehensive Financial Stability Plan, designed to stabilize the U.S. housing market, which also includes the Public-Private Investment Program (“PPIP”). Residential mortgage loan servicers who want to participate in the PPIP must also participate in the new Second Lien Program, in addition to HAMP and the Hope for Homeowners (“H4H”) refinancing program.

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Posted on April 24, 2009 by Hunton & Williams LLP Print This Article

Federal Regulators Release Bank "Stress-Test" Rules

The Federal Reserve Board released the methodology, commonly referred to as a "stress test," used by federal banking supervisory agencies in their "forward-looking capital assessment" of U.S. bank holding companies today.  The results of the Supervisory Capital Assessment Program, which examined all U.S. bank holding companies with year-end 2008 assets exceeding $100 billion are expected in early May.  Today's white paper notes that "these 19 firms collectively hold two-thirds of the assets and more than one-half of the loans in the U.S. banking system."  The federal bank regulatory agencies participating in the Supervisory Capital Assessment Program are the Board of Governors of the Federal Reserve System, the Federal Reserve Banks, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. 

Click here for the Federal Reserve Board's press release, and click here for today's white paper.

Posted on April 23, 2009 by Hunton & Williams LLP Print This Article

The "Missing Link" Redux: Update on Home Affordable Modification Program

The Home Affordable Modification Program (“HAMP”) was created as part of the Administration’s  Financial Stability Plan, announced on February 10, 2009. The initial details of HAMP were released on March 4, 2009. See here and here regarding these developments.

Fannie Mae and Freddie Mac have issued guidelines on how the loan modification program works for loans owned, securitized or guaranteed by them, and links to these guidelines can be found here and here. The IRS clarified some of the tax questions that were raised, as we described in our recent client alert, here. What remained were questions about how this program would apply to loans in securitizations sponsored by entities other than Fannie Mae and Freddie Mac.

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Posted on April 21, 2009 by Hunton & Williams LLP Print This Article

New TALF Interest Rates and May 5 Operation Date Announced

Two new interest rates for loans under the Term Asset-Back Securities Loan Facility (TALF) were unveiled today by the Federal Reserve Board.  The rates will apply to certain loans secured by asset-backed securities (ABS) and will take effect under the upcoming May 5, 2009 TALF operation date.  Subscriptions will be accepted on May 5, 2009, with a May 12, 2009 settlement date, and a May 14, 2012 maturity date.  The term is three years.
 
Click here for the Federal Reserve Board's press release, and click here for the Federal Reserve Bank of New York's press release. 

Click here for the revised TALF Form, and click here to compare it with the prior version.  

Click here for the revised Term Sheet, and click here to compare it with the prior version. 

Lastly, click here for the revised Frequently Asked Questions (FAQs), and click here to compare it with the prior version.

Posted on April 15, 2009 by Hunton & Williams LLP Print This Article

IRS Issues Notice and Revenue Procedure Regarding Mortgage Loan Modifications Under the Home Affordable Modification Program

On April 10, 2009, the Internal Revenue Service (“IRS”) issued Notice 2009-36 (the “Notice”) and Revenue Procedure 2009-23 (the “Revenue Procedure”) to provide guidance regarding the impact of loan modifications made pursuant to the Obama administration’s recently announced Home Affordable Modification Program (“HAMP”). The HAMP contains several incentives to encourage modifications, including payments to servicers, borrowers and lenders/investors, which would include securitization vehicles. The Notice and the Revenue Procedure provide issuers and servicers greater flexibility to implement loan modifications pursuant to the HAMP.

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Posted on April 2, 2009 by Hunton & Williams LLP Print This Article

The Saga Continues -- More on The State of Banking 2009

On February 25, 2009, the UST announced the terms and conditions of the Capital Assistance Program (“CAP”). Under CAP, the federal banking regulators will conduct “stress tests” to evaluate the capital needs of banks with in excess of $100 billion in assets. These “stress tests” have been much discussed with regard to what approach UST will take if it determines that such institutions need additional capital and such capital is not forthcoming from private sources.

What has not been discussed is how the bank regulators will evaluate banks under $100 billion in assets on a going-forward basis. Stress testing of loan portfolios and liquidity sources that yield positive results will assist those facing regulatory pressures. For others, however, such testing will exacerbate regulatory presumptions of a financial institution’s problems. Unfortunately, there is becoming less choice here.

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