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UB LE DA OG RA TRO M L SP E C INSPE TOR GEN E RA AL CI S S E T R E LI E F P R SIGTARP Office of the Special Inspector General for the Troubled Asset Relief Program to advance economic stability through transparency, coordinated oversight, and robust enforcement related to tarp Quarterly Report to Congress October 28, 2015 MISSION SIGTARP’s mission is to advance economic stability through transparency, coordinated oversight, and robust enforcement related to TARP. STATUTORY AUTHORITY SIGTARP was established by Section 121 of the Emergency Economic Stabilization Act of 2008 (“EESA”), as amended by the Special Inspector General for the Troubled Asset Relief Program Act of 2009 (“SIGTARP Act”). Under EESA and the SIGTARP Act, the Special Inspector General has the duty, among other things, to conduct, supervise and coordinate audits and investigations of any actions taken under the Troubled Asset Relief Program (“TARP”) or as deemed appropriate by the Special Inspector General. In carrying out those duties, SIGTARP has the authority set forth in Section 6 of the Inspector General Act of 1978, including the power to issue subpoenas. Office of the Special Inspector General for the Troubled Asset Relief Program General Telephone: 202.622.1419 Hotline: 877.SIG.2009 SIGTARP@treasury.gov www.SIGTARP.gov C INSPE TOR GEN E L SP E AL RA CI UB LE SIGTARP enforces our nation’s criminal laws and conducts audits over everyone and everything involved in the TARP bailout. Given the massive size and expanse of TARP, we must prioritize our work. We do so by choosing what law enforcement, what public report, or what action rights a wrong, strengthens a weakness—what drives change where change is needed. While we target law enforcement to those violating the law, and target audits to make TARP programs better and more responsive to needs, our work has the power to drive change far beyond one investigative case or audit. Just as enforcement of seat belt laws saved one life at a time, with the tectonic shift of drivers who at first put on a seat belt only to avoid “click-it-or-ticket” law enforcement, but now do so out of habit, so can SIGTARP enforce the law one case at a time, and bring to light one unfair act or need for improvement through audits. At first, others may change behavior to avoid becoming the subject of a SIGTARP investigation or audit—that is the deterrent impact of law enforcement and oversight. Over time, just as cultural norms made seat belt use a habit, SIGTARP’s work has the power to drive change in others, to right what is wrong, strengthen weakness and protect all Americans. The world of banking will be changed by SIGTARP’s work resulting in criminal charges against 70 bankers, including 50 who are already convicted (24 of which have already been sentenced to prison) and their nearly 50 co-conspirators. For example, Ebrahim Shabudin, chief credit officer at United Commercial Bank (the 9th largest bank to fail since the crisis) was sentenced to 8 years in prison for a fraud uncovered by SIGTARP that caused the bank to fail and a $300 million loss in TARP. Charles Antonucci, the CEO of Park Avenue Bank, was sentenced to 30 months in prison for a fraudulent attempt to obtain $11 million in TARP. The world of recalls of defective automotive parts will be changed by SIGTARP’s finding of criminal conduct by GM with the Manhattan U.S. Attorney’s office that led to a $900 million deferred prosecution agreement and substantial changes. The world of banks who sell defective mortgages to the Government will be changed after SIGTARP’s and the Manhattan U.S. Attorney’s successful jury verdict against Bank of America for the sale of defective mortgages. The world of opaque sales practices of mortgage-backed securities will be changed by SIGTARP’s investigation that led to the conviction of Jefferies & Co. senior trader Jesse Litvak (despite the defense that his tactics were consistent across the industry), and finding of criminal liability by his firm (DOJ entered into a $25 million non-prosecution agreement). TARP housing programs will be changed by SIGTARP reports on unfair practices by mortgage servicers in HAMP, and ineffectiveness of the Hardest Hit Fund’s ability to get TARP assistance to homeowners (which is the subject of SIGTARP’s recent audit as well as section 3 of this report). SIGTARP’s three audits on Treasury approving excessive compensation for the top 25 employees at GM, Ally, and AIG, while they were in TARP, changed the TARP companies’ pay proposals, making them less likely to propose, and Treasury less likely to approve, large pay raises and large cash salaries. Determining where change is needed is not easy, and SIGTARP is impartial without regard to politics, public discourse, or influence. Public discourse about the crisis centers around law enforcement of large banks. The crisis cannot be summed up in one type of case, crime or unfair act, but many, in TARP-bailed out industries that were weak and susceptible to crisis. To make this determination, SIGTARP looks through the perspective of those most impacted. Over time, changes by others viewing SIGTARP’s work may become new habits, like putting on a seat belt, with incremental change making the industries we work in or transact business in, much safer and stronger. It is a safer world when defective parts in cars manufactured by one of the largest car companies are replaced before injury or loss of life. It is a safer world when bank officers who commit a crime to hide past due or defaulted loans are convicted and removed from banking. It is a safer world when homeowners seeking HAMP do not become victims of scams, and if members of the struggling middle class are given a fair shot by mortgage servicers and state housing agencies. It is a safer world if the shadowy, opaque sales tactics by brokers to overcharge customers in the RMBS market are exposed. We already see the changes driven from our work. There is more to come. We have a unshakeable commitment to prioritize work that will drive change—changes that will flow far beyond TARP—to make bailed-out industries safer and stronger. Respectfully, CHRISTY GOLDSMITH ROMERO Special Inspector General DA OG RA TRO for the Troubled Asset Relief Program (“SIGTARP”) M Message from the Special Inspector General S S E T R E LI E F P R CONTENTS EXECUTIVE SUMMARY 3 Examples of Public Results of SIGTARP’s Work This Quarter (Since July 2015) That Reflect SIGTARP’s Priorities 5 SIGTARP’s Work Drives Change Far Beyond One Investigative Case or Audit 7 Section 1 THE OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET RELIEF PROGRAM SIGTARP Oversight Activities Section 2 SIGTARP RECOMMENDATIONS Recommendations Concerning TARP’s Hardest Hit Fund in Florida Update to Prior Recommendations SIGTARP Made to Improve TARP 13 15 67 69 81 Section 3 HOMEOWNERS HAVE STRUGGLED WITH LOW ADMISSION RATES AND LENGTHY DELAYS IN GETTING HELP FROM TARP’S SECOND-LARGEST HOUSING PROGRAM — THE HARDEST HIT FUND Fewer Than Half of Homeowners Who Applied for HHF Assistance Received Help, Far Less Than That in Certain States HHF Admission Rates Are Even Lower for Certain Types of Assistance Long Waiting Periods for Homeowners to Receive HHF Assistance More Than Half of Homeowners Are Denied or Have Their Applications Withdrawn Homeowners Continue to Need Help From HHF Section 4 TARP OVERVIEW TARP Funds Update TARP Programs Cost Estimates Housing Support Programs Update on the Hardest Hit Fund’s Blight Elimination Program to Demolish Vacant and Abandoned Homes Financial Institution Support Programs Automotive Industry Support Programs Asset Support Programs Section 5 TARP OPERATIONS AND ADMINISTRATION TARP Administrative and Program Operating Expenditures Financial Agents 107 111 113 114 119 121 127 129 132 134 136 191 261 315 317 319 321 322 Endnotes 323 A. B. C. D. E. 338 340 342 550 553 Glossary Acronyms and Abbreviations Transactions Detail CPP-Related Dividend Rate Increases OFS Service Contracts EXECUTIVE SUMMARY 4 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 SIGTARP enforces our nation’s criminal laws and conducts audits over everyone and everything involved in the TARP bailout. Given the massive size and expanse of TARP, we must prioritize our work. We do so by choosing what law enforcement, what public report, or what action rights a wrong, strengthens a weakness—what drives change. EXAMPLES OF PUBLIC RESULTS OF SIGTARP’S WORK THIS QUARTER (SINCE JULY 2015) THAT REFLECT SIGTARP’S PRIORITIES: • Ebrahim Shabudin, chief credit officer at United Commercial Bank (the ninth largest bank to fail since the financial crisis), was sentenced to eight years in prison for a fraud uncovered by SIGTARP and the U.S. Attorney in San Francisco. This fraud hid the bank’s failing financial condition and ultimately contributed to the failure of the bank, which cost TARP a $300 million loss; • SIGTARP found criminal conduct by GM while GM held TARP funds related to a defective key ignition switch. GM could have fixed the defective part for less than one dollar per vehicle, but chose not to do so because of the cost. The defect consisted of an ignition switch that had been designed and manufactured with torque resistance that was too low, causing the switch to move easily out of the “Run” position into “Accessory” or “Off.” When the switch moved out of the Run position, it could disable the affected car’s frontal airbags—increasing the risk of death and serious injury in certain types of crashes in which airbags were otherwise designed to deploy. GM has acknowledged 15 drivers who died, as well as a number of serious injuries, as a result of this defective ignition switch. GM did not announce the recall of the ignition switch until after it exited TARP. GM substantially cooperated in the investigation, agreed to substantial corporate changes so that this type of conduct never happens again, and paid $900 million (in addition to payments GM made to victims). As a result, the Manhattan U.S. Attorney agreed to defer prosecution of GM; • The former president and CEO of Park Avenue Bank Charles Antonucci was sentenced to 30 months in prison for a fraud scheme investigated by SIGTARP that included an attempt to obtain $11 million in TARP; • Candice White, former vice president at TARP recipient Front Range Bank, pled guilty to embezzlement uncovered in a SIGTARP investigation; • Four top executives at TARP recipient Wilmington Trust, including the bank president, CFO, controller, and chief credit officer, were indicted for allegedly concealing the amount of past due loans, after SIGTARP’s investigation;i • A Delaware developer was sentenced to prison for a fraud against Wilmington Trust, after SIGTARP’s investigation; i Criminal charges are not evidence of guilt, a defendant is presumed innocent until proven guilty. 5 6 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM • Three Nomura residential mortgage-backed securities traders who formerly worked at Lehman Brothers were indicted for fraud uncovered in a SIGTARP investigation with the Connecticut U.S. Attorney.ii The traders allegedly conspired to overcharge their customers, which included an investment firm that was managing the Government’s bailout money in a PPIP fund; • TARP recipient Fifth Third Bancorp settled a SIGTARP investigation with the Manhattan U.S. Attorney after the bank self-reported fraudulent misrepresentations regarding defective residential mortgages that caused losses to HUD during the time Fifth Third was in TARP. Fifth Third fired the responsible employees, agreed to corporate changes, and will pay $85 million; • Five defendants from 21st Century were sentenced to prison (one for 20 years) for a mortgage modification scam. These defendants scammed homeowners in 48 states into paying for a “guaranteed” lower mortgage through “Obama’s” foreclosure prevention program. They performed little to no work, instead homeowners lost their money and their homes; • A California woman was sentenced to more than five years in prison for a HAMP mortgage modification fraud investigated by SIGTARP; • Two New York men were convicted of a mortgage modification fraud scheme with 8,000 homeowner victims who were seeking help from HAMP and other mortgage assistance programs, after a SIGTARP investigation; • SIGTARP publicly reported on how the Hardest Hit Fund in Florida is lagging behind other states with only 20% of homeowners who applied receiving help. SIGTARP made 20 recommendations to Treasury for improvement; • SIGTARP released a report on homeowners in other states with low rates of homeowners receiving actual assistance from the Hardest Hit Fund of those that apply, and lengthy delays by state agencies in reviewing homeowner applications; • After SIGTARP publicly reported on how mortgage servicers can take months or even a year to review a homeowner’s application for HAMP, this quarter Treasury began analyzing the timeliness of the top 7 mortgage servicers’ review of HAMP applications; • SIGTARP publicly reported last quarter about how Treasury shifted TARP funds from providing direct help to homeowners to prevent foreclosures to instead attempting to prevent foreclosures by using TARP funds to demolish vacant homes. One of SIGTARP’s recommendations was that Treasury and state agencies administering those TARP funds measure whether that demolition actually results in prevented foreclosures and increased home prices. Several state housing finance agencies who administer those TARP funds are in the process of developing performance indicators; • A Westchester man was convicted of a five-year mortgage fraud scheme including false statements to a TARP bank to get millions in loans, after a SIGTARP investigation; ii Criminal charges are not evidence of guilt, a defendant is presumed innocent until proven guilty. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 • The first conviction of a lead generator who connected mortgage modification fraudsters with homeowner victims, after a SIGTARP investigation; • A New Jersey loan officer was sentenced to three years in prison for a fraudulent short sale scheme investigated by SIGTARP that caused losses to banks including TARP banks; • Another New Jersey man was sentenced to two years in prison for a $5 million mortgage fraud scheme investigated by SIGTARP that defrauded banks, including TARP banks; • A California man was sentenced to more than five years in prison for a fraud scheme investigated by SIGTARP in which he sold “TARP-owned” foreclosed property to investors he solicited on LinkedIn; • The estate of a deceased TARP bank CEO who diverted TARP funds for his personal use and family’s use settled with DOJ in a SIGTARP investigation, paying Treasury $4 million and the bank $6.9 million. Each of these SIGTARP actions has the power to drive change with the individuals and companies that are the subject of SIGTARP’s action and those wronged, unfairly treated, or unable to get TARP assistance. SIGTARP’S WORK DRIVES CHANGE FAR BEYOND ONE INVESTIGATIVE CASE OR AUDIT SIGTARP’s work also has the potential to drive change far beyond any one investigative case or audit—to drive change in industries with weaknesses that led to a taxpayer bailout. Our law enforcement mission is to investigate specific evidence of unlawful conduct, targeting those that are violating the law, not those acting lawfully. Law enforcement has a powerful deterrent effect and can also lead to changes in culture and habits to strengthen against fraud and other crime. Our audit mission focuses on making TARP programs better and more responsive to needs, in industries that have already shown weakness and need for improvement. We prioritize work that has the power and potential to drive change where change is needed. We search for harm and for victims of that harm. We seek out ways to make these emergency programs effectively and urgently reach those in need. We take action to prevent history from repeating itself, to protect future victims, to make our system safer and stronger. To understand the power of law enforcement and oversight to drive change that leads to greater safety, one need only view the tectonic shift of drivers and front-seat passengers who once put on a seat belt only to avoid “click-it-or-ticket” law enforcement, but who now do so out of habit, without thought. In 1982, about 11% of drivers and front-seat passengers used seat belts.iii By 1995, traffic accidents were the leading cause of death for young Americans between the ages iii Center for Disease Control and Prevention, “Primary Enforcement of Seat Belt Laws,” October 2011. 7 8 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM of 5 and 32.iv The Federal government in 1997 set an ambitious goal to increase seat belt usage to 85% by 2000, and 90% by 2005 through mandatory seat belt laws. By 2009, some 88% of drivers wore seat belts in states where the police could stop a driver for failure to wear a seat belt. Only 77% of drivers wore seat belts in states with weaker enforcement laws. The National Highway Traffic Safety Administration (“NHTSA”) has reported that one major reason that highway fatalities and injuries have declined over past decades is that more motorists are wearing their seatbelts. It is this incremental change in the habits and culture of our society that drives the most change. A 2001 study at Harvard Law School found that a 10% increase in national seat belt usage saves about 500 lives per year. Each one of those lives matter. Each one is saved by incremental changes in behavior. Determining where change is needed is no easy task, especially because SIGTARP makes those determinations in an objective, impartial manner without regard to politics, public discourse, or other outside influence. Public discourse about where change is needed related to the financial crisis centers around law enforcement of the largest banks. The financial crisis cannot be summed up in one type of case, crime or unfair act, but many. There were bad or unfair acts by individuals and companies dispersed throughout the many industries bailed out by TARP (including banking, housing, autos, and the opaque world of mortgagebacked securities trading) that were weak and susceptible to crisis, creating harm for all Americans. A different vantage point can bring a powerful change in perspective. SIGTARP looks through the perspective of those most impacted. Every industry bailed out by TARP can be made stronger and safer by removing bad actors or bringing unfair or ineffective practices to light. In every one of our investigations and audits, there is someone who needs protection, someone who wonders who will stand up for them, someone who demands change so that history does not repeat itself. Injured drivers of cars with safety defects or the families of those lost, the regulator of the auto industry who relies on representations made by those in the auto industry, bank employees who lose their job and bank customers who lose a source of lending when a bank fails or loses money to fraud, bank examiners who rely on representations of bank officers, buyers and sellers overcharged for mortgage-backed securities, homeowners not given a fair shot in TARP foreclosure prevention programs, are just some whose vantage point SIGTARP endeavors to see. Just as enforcement of seat belt laws saved one life at a time, so can SIGTARP enforce the law one investigative case at a time, and bring to light one unfair act or area for improvement at a time through audits. This brings immediate change resulting from each case and each audit. At first, others who view the results of our work may change behavior to avoid becoming the subject of a SIGTARP investigation or audit report—that is the deterrent impact of law enforcement and oversight. Over time, just as cultural norms made seat belt use a habit, SIGTARP’s iv Alma Cohen & Liran Einav, Harvard Law School, “The Effects of Mandatory Seat Belt Laws on Driving Behaviors and Traffic Fatalities,” November 2001, citing Insurance Information Institute (1995). SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 work has the power to drive change in others, to right what is wrong, strengthen weaknesses and protect all Americans. The world of banking will be changed by SIGTARP’s work resulting in criminal charges against 70 bankers and nearly 50 of their co-conspirators.v While trials take time, these charges have already resulted in the conviction of 50 of these bankers and 40 of their co-conspirators. And while sentencing takes time after conviction, already 27 bankers have been sentenced to prison, along with 24 of their co-conspirators. SIGTARP has also released broad information about red flags it sees in corporate cultures that can serve as a breeding ground for crime, and about the motivations SIGTARP has seen with some of these bank officers. Bank officers, independent directors on a bank’s board, and bank examiners can use this information to assess a bank and, if necessary, require changes at banks in the future. The world of recalls of defective automotive parts will be changed by SIGTARP’s finding of criminal conduct by GM with the Manhattan U.S. Attorney’s office that led to a $900 million deferred prosecution agreement and substantial changes. So too will the manner that GM’s regulator, NHTSA, conducts oversight over recalls of defective automotive parts. A senior NHTSA official recently testified before Congress on June 23, 2015, about improvements in their recall review process based on GM’s concealment of critical information from NHTSA. The NHTSA official testified that those improvements can be described in a single phrase, “question assumptions,” both internal and from the industry. Similarly, the world of banks who sell defective mortgages to the Government will be changed after SIGTARP’s and the Manhattan U.S. Attorney’s successful jury verdict against Bank of America for the sale of defective mortgages to Fannie & Freddie. Fifth Third Bancorp’s voluntary disclosure in the SIGTARP investigation and the $85 million settlement with the Manhattan U.S. Attorney announced this quarter is a key change that other mortgage originators should follow. Fifth Third Bancorp was not aware of an ongoing SIGTARP investigation or a whistleblower. It is always better for a corporation to disclose its fraudulent acts voluntarily, rather than wait for SIGTARP to show up. The world of opaque sales practices of residential mortgage-backed securities (where no exchange exists) will be changed by the March 2014 conviction and sentencing to prison of Jefferies & Co. senior trader Jesse Litvak, who was arrested by SIGTARP agents in 2013. SIGTARP’s investigation with the Connecticut U.S. Attorney revealed that as a broker-dealer, Litvak exploited information that only he had about the selling and asking prices of parties trading by misrepresenting the residential mortgage-backed securities seller’s asking price to the buyer and by misrepresenting the buyer’s asking price to the seller. This allowed Litvak to increase fraudulently the “spread” that Jefferies would pocket. Litvak also took bonds held in Jefferies’ inventory and sold them to RMBS buyers only after inventing a fictitious third-party seller, which allowed him to charge the buyer an extra commission. The victims of his fraudulent scheme included six of eight v Criminal charges are not evidence of guilt, a defendant is presumed innocent until proven guilty. 9 10 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM investment firms trading MBS using TARP dollars in TARP’s PPIP program. A federal jury convicted Litvak, despite his defense that similar negotiation tactics were widely used by traders at Jefferies and approved by supervisors, and were consistent across the industry. Other brokerage firms have seen that SIGTARP’s investigation resulted in a finding of criminal liability of Litvak’s firm Jefferies & Co. Our investigation uncovered that senior members in the fixed income division became aware that Jefferies employees were making misrepresentations to customers, but did nothing to stop it. The Connecticut U.S. Attorney agreed not to prosecute Jefferies & Co. only based on the requirement of substantial corporate changes, along with a payment of $25 million. Other brokerage firms can ensure that the criminal trading practices conducted by Litvak do not occur within their companies, and make changes to prevent this criminal conduct. Regulators, including the Securities and Exchange Commission and FINRA, can look for any similar conduct in their examinations of firms. TARP housing programs will be changed by SIGTARP’s reports on unfair practices by mortgage servicers in HAMP, and ineffective areas of the Hardest Hit Fund that need improvement to ensure that these emergency foreclosure prevention programs reach those in need, when they are most in need. SIGTARP’s report on lengthy review times for HAMP applications drives change. This quarter, Treasury has agreed to seek accountability at the largest mortgage servicers who delay in reviewing homeowners’ HAMP applications. SIGTARP’s groundbreaking reports on high numbers of homeowners falling out of HAMP (called “redefaulting”), and how homeowners in their fifth year of HAMP faced rising mortgage payments, drove change as Treasury took a series of steps to stem harm and help homeowners who continue to struggle. This included Treasury increasing TARP-funded homeowner incentives as recommended by SIGTARP, extending TARP payments for six years, requiring mortgage servicers to offer to recast (reamortize) a mortgage to lower the monthly payment after applying TARP payments to the principal balance, and announcing a new streamlined HAMP that eliminates several eligibility requirements. SIGTARP’s report on the use of TARP funds to demolish vacant houses resulted in several state agencies creating (or contracting for the creation of) performance indicators to show how that specific demolition prevented foreclosures and increased home prices, as SIGTARP recommended. The seedy world of mortgage modification fraud schemes will be changed by SIGTARP’s crackdown of those who scam homeowners out of their last dollars promising them guaranteed admission in HAMP and by training other law enforcement agencies on these investigations. SIGTARP’s investigations have led to convictions and prison sentences that serve as a warning to those engaged in, or contemplating, these crimes. SIGTARP’s three audit reports on Treasury approving excessive compensation for the top 25 employees of GM, Ally, and AIG, while they were in TARP, changed the companies’ pay proposals, making them less likely to propose, and Treasury less likely to approve, large pay raises and large cash salaries. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Over time, changes by others’ viewing the results of SIGTARP’s work may become new habits, just like putting on a seat belt, with each incremental change making the industries we work or transact business in much safer and stronger. It is a safer world when defective parts in cars manufactured by one of the largest car companies in the world are replaced before injury or loss of life. It is a safer world where bank officers who commit crime to hide past due or defaulted loans are convicted and removed from the banking industry. It is a safer world when homeowners seeking help from HAMP do not become victims of scams, and if members of the struggling middle class are given a fair shot by mortgage servicers and state housing finance agencies. It is a safer world if the shadowy, opaque sales tactics by brokers to overcharge customers in the residential mortgage-backed securities market are exposed. At SIGTARP, we already see the changes driven from our work. We also know that there is more to come. A review of this past quarter’s results cements that fact. We have an unshakeable commitment to prioritize work that will drive change— change that will flow far beyond TARP—to make bailed-out industries safer and stronger. 11 12 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SECT IO N 1 THE OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET RELIEF PROGRAM 14 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 SIGTARP OVERSIGHT ACTIVITIES SIGTARP continues to fulfill its oversight role on multiple parallel tracks: investigating allegations of fraud, waste, and abuse related to TARP; conducting oversight over various aspects of TARP and TARP-related programs and activities through 24 published audits and evaluations, 17 special reports, and 196 recommendations as of September 30, 2015; and promoting transparency in TARP and the Government’s response to the financial crisis as it relates to TARP. SIGTARP Audit Products SIGTARP’s audit and oversight work helps detect fraud, waste, and abuse. SIGTARP recently created a forensic auditing unit to provide better insight into fraud, waste and abuse. As of September 30, 2015, SIGTARP has issued 24 reports on audits and evaluations. SIGTARP has also issued 17 Special Reports and 196 recommendations. Section 2 includes a summary of recent recommendations and a detailed listing of all recommendations to date. Among the ongoing audits and evaluations in process are reviews of: (i) Treasury’s and the state housing finance agencies’ implementation and execution of the Hardest Hit Fund; (ii) the risk factors impacting the effectiveness of Treasury’s Hardest Hit Fund Blight Elimination Program; and (iii) review of Homeowners who sought or received help in HHF who ended up in foreclosure. Recent Audits/Evaluations Released Factors Impacting the Effectiveness of Hardest Hit Fund Florida When the Administration and Treasury announced that the Hardest Hit Fund would give states flexibility to tailor local solutions, it announced that flexibility would come with strict accountability by Treasury – that program effectiveness would be measured, and that there would be effective oversight by Treasury. At the beginning of HHF, Treasury told all state housing finance agencies that they were required to have a tracking system to measure progress against goals, and report to Treasury. Former Treasury Home Preservation Office (“HPO”) Chief Phyllis Caldwell told SIGTARP in 2011, that Treasury could evaluate success in HHF in ways such as, “are we reaching the right number of people, are we reaching them in a sustainable way.” After five years, HHF Florida has only used half of the allocated $1 billion in TARP dollars in a 7-year program, has decreased the number of homeowners estimated assisting by 63% from 106,000 to 39,000, and is underperforming compared to the national average of other HHF states. SIGTARP found that Treasury abandoned its intent to set goals for HHF program effectiveness and to measure progress against those goals. Treasury rejected SIGTARP’s 2012 recommendations to set goals for effectiveness and measure progress, stating that any numeric targets are “not well suited to the dynamic nature of HHF.” HHF Florida’s goals are “preserving homeownership” and “protecting home values,” more high-level expectations that could have been considered met in the first year. Treasury has not set any numeric or non-numeric 15 16 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM goals that could measure program effectiveness, except one-time for HHF Florida in 2012, after SIGTARP’s report. Instead, Treasury’s current HPO Chief Mark McArdle told SIGTARP, “there is no such thing as one set goal that works or doesn’t work.” Treasury setting no measurable goals or targets over fear of impacting the “dynamic nature” of this TARP program has led to a lack of the strict accountability promised at the launch of HHF, and what is required of all Federal agencies by the Government Performance and Results Act. Flexibility and innovation does not come in a Federal program without accountability that can be measured against targets. Treasury has tried it their new way, different than announced, with no numeric goals and targets to measure the effectiveness of HHF Florida for five years, and as a result, the numbers have not added up for distressed Florida homeowners. According to Treasury’s data, only 20% of homeowners who applied for help from HHF Florida received assistance. Treasury has not set a goal for what is the right number of people for HHF Florida to reach, as former HPO Chief Caldwell said, instead allowing HHF Florida to decrease the estimate of homeowners to be helped by 63%. SIGTARP found that this estimate has limited usefulness because Treasury has permitted Florida HFA to decrease its estimate several times, creating a shifting baseline that makes it difficult for Treasury to measure HHF Florida’s progress and to hold itself or Florida’s HFA accountable in getting assistance to homeowners in a crisis. Treasury has not set a goal for a target homeowner admission rate for HHF Florida, and as a result: • According to Treasury’s data, only 20% (22,400 of 109,774) of homeowners who applied for help from HHF Florida received assistance. • HHF Florida has the lowest rate of admitting homeowners into HHF than any other HHF state. • HHF Florida’s 20% homeowner admission rate is far below the other 18 HHF states that average providing assistance to about half (48%) 204,111 of the 424,632 homeowners who applied. HHF Florida has not been as effective in reaching homeowners as other states and has not progressed effectively. By not measuring progress against a target homeowner admission rate, the low homeowner admission rate for Florida has been relatively constant throughout the five-year history of HHF (ranging from 18 to 23%). If Treasury continues to reject setting a goal of the right number of people to reach in Florida, Treasury should at least, publicly, set a goal specific for HHF Florida’s homeowner admission rate. This goal would target the particular needs of Florida homeowners, based on the five years of knowledge that Treasury has about HHF Florida, while ensuring that Florida homeowners have as much a chance in HHF as homeowners in other HHF states. HHF Florida consistently denied homeowners at higher rates (38-45%) than the national average, which improved this year, but is still slightly above the national SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 average. Treasury has not set a goal for a target homeowner denial rate for HHF Florida, and as a result, through the history of the five years of HHF, HHF Florida has denied a higher percentage of homeowners for assistance than the national average in HHF, which showed some improvement this year. After the first year in HHF, according to Treasury’s data, as of March 31, 2011, HHF Florida denied 45% of homeowners who applied, compared to the national HHF average of 21%. By the second year, HHF Florida denied 43% of homeowners, compared to the national HHF average of 31%. Treasury does not have insight into why these homeowners were denied because it does not publicly report on denial reasons. Treasury’s HPO Chief told SIGTARP that in 2011, Treasury looked very closely at the reasons why homeowners were denied in Florida. However, Treasury provides no transparency on why HHF Florida denied homeowners. After SIGTARP’s April 12, 2012 report, Florida’s HFA compiled the reasons homeowners were denied, which gave insight that led to the board of Florida’s HFA voting on April 27, 2012, to eliminate four homeowner eligibility requirements that had led to HHF Florida denying half of all homeowners. This led to some improvement (HHF Florida denied 38% of homeowners for the two following years), but was still high compared to the national HHF average of 28%. For the first time this year ended March 31, 2015, there was improvement. HHF Florida reported denying 29,554 (27%) of the 109,774 homeowners who applied, which is slightly over the national average of 26%. However, during this same reporting period, HHF Florida had very high rates of homeowners whose HHF applications were withdrawn (39% compared to the national HHF average of 27%), and 14,800 homeowners whose HHF applications were in process (13% compared to the 5% national HHF average), which requires further Treasury review. According to Treasury’s data, nearly 40% of all homeowners who applied to HHF Florida either withdrew their application or had their application withdrawn by Florida’s HFA, which is far higher than the national average. According to Treasury’s data, 43,030 of the 109,774 homeowners who applied for HHF Florida either withdrew their application after being approved, or Florida’s HFA withdrew their application because the homeowner did not respond to requests for information. Treasury lumps both of these very different situations into one reporting category, not broken down. The rate has escalated from 35% in 2012. The national HHF average is 27% withdrawn applications, but HHF Florida drags the national average up. The average of the other HHF states is 24% withdrawn applications. Neither Treasury nor Florida’s HFA follow up with the homeowner to ask why they withdrew their application. Treasury has not set a goal for HHF Florida for the number of applications withdrawn by Florida’s HFA. High numbers of applications that Florida’s HFA, or their advisor agencies in counties around Florida, withdraws for homeowners who are not responding to requests for information, raises questions about whether HHF Florida is operating in the most effective way. Treasury also has no goal for how long it takes Florida’s HFA to process homeowner applications. According to 17 18 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Treasury’s data as of March 31, 2015, HHF Florida takes a median of 167 days (nearly 6 months) to get a homeowner assistance. SIGTARP found several factors contributed to the Hardest Hit Fund Florida’s slowness in getting assistance to homeowners and lack of effectiveness during the height of the crisis when Florida homeowners needed it most: • HHF Florida lacked comprehensive planning by Treasury, who waited for Florida’s HFA to get large servicers to participate. According to a senior Florida HFA official, the lack of big servicer participation was the primary challenge of implementing HHF. That official told SIGTARP in 2011, “The one billion dollars has been a nice carrot to use for servicers in Florida, but there is no stick with the carrot to force servicers to participate,” and that if Treasury had a stick to use on servicers, they had not used it. Unemployed homeowners would have to wait more than one year before the statewide rollout of HHF assistance in Florida. A senior Florida HFA official told SIGTARP that there was no hint of big servicer participation until the Fannie and Freddie (the GSEs) put out guidance, and that the Federal Housing Finance Agency (FHFA), the GSEs, the big servicers, and the first 10 states looked to Treasury to instigate improvement. Treasury expected states to talk to servicers, and “wanted to let that process work out,” according to Treasury’s HPO Chief. Treasury would later intervene to “change the game” according to Treasury’s HPO Chief, holding a servicer summit in September 2010, after which the program started to gain traction. Treasury’s servicer summit was “the first big step” according to a senior Florida HFA official, and only after that did Fannie Mae and Freddie Mac issue guidance directing servicers to accept HHF funds (in November 2010). Florida started 2010 with an 11.8% unemployment rate, and by the time the HHF program rolled out, Florida’s unemployment rate, although still high at 10.1%, had already started to improve. • SIGTARP found that despite choosing Florida for HHF because it had the third highest home price decline in the nation, the Hardest Hit Fund in Florida suffered from a lack of comprehensive planning by Treasury to provide assistance to underwater homeowners when home price declines were at their highest. There was no HHF Florida program targeted to underwater homeowners for the first three years (2010 – September 2013). Treasury left it to Florida HFA, acting deferentially, only taking action in response to a state’s request. Treasury could have intervened to change the game, by proposing and pressuring Florida’s HFA to start a program targeting underwater homeowners, but Treasury did not do so until November 2012, after SIGTARP’s report. By September 2013, when HHF Florida started principal reduction, home values had already increased by more than 22% from second quarter 2011 lows. • The first two years of HHF Florida were plagued by the fact that nearly half of all homeowners were denied as ineligible. By April 1, 2012, Florida’s HFA denied 12,516 of 27,541 homeowners (45%) as ineligible. Treasury’s HPO Chief told SIGTARP that Treasury looked closely at the reasons why homeowners were denied, and that Florida’s HFA had rejected a large number of borrowers SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 because they could not be more than some number of months in arrears, and that because Florida has a long foreclosure timeline, there was an abnormal number of people in that bucket. Treasury’s HPO Chief told SIGTARP, “as long as they have…state a justification, you know, we’re trying to basically help people who can still be helped.” Two weeks after SIGTARP’s April 12, 2012 report, the board of Florida’s HFA voted to eliminate the eligibility requirement that a homeowner not be more than 180 days delinquent (the reason why 2,929 homeowners were denied) and three other eligibility requirements that had led to HHF Florida denying half of all homeowners who had applied. • The effectiveness of HHF assistance to unemployed/underemployed Florida homeowners suffered early on due to a lack of comprehensive planning to ensure that the assistance lasted long enough for a homeowner to become reemployed at a level where they could afford to pay their mortgage – the measure of effectiveness stated in Treasury’s term sheet for HHF Florida. Although in July 2010, Treasury extended unemployment assistance in HAMP from 6 months to 12 based on SIGTARP’s warning that nearly 43% of unemployed workers have been out of work for 27 weeks or longer, months later (in December 2010), Treasury allowed Florida’s HFA to drop the duration of HHF unemployment assistance from 18 months to 6 months. Treasury knew that six months was the shortest duration of unemployment assistance provided in HHF. Treasury’s HPO Chief told SIGTARP that Treasury “leaves it to the states that are closer to the situation to decide,” and that the state had a rationale. In October 2011, California and Nevada, who also had six months of assistance, would extend their assistance, leaving HHF Florida as the only state at six months. But still, Treasury took no action. Two weeks after SIGTARP’s 2012 report, Florida’s HFA found that 6 months was not sufficient time for 88% of HHF-assisted homeowners to achieve a successful outcome, and they would extend to 12 months. They would make the change retroactive, which according to Treasury HPO Chief, “totally froze up their operations.” Treasury also took strong action to increase the effectiveness of HHF Florida after SIGTARP’s 2012 report and recommendations, by issuing an Action Memorandum to Florida’s HFA in November 2012, instructing them to increase the low number of homeowners assisted, raise the ratio of approved homeowners to denied homeowners, increase inadequate staffing levels, and create a program to address negative equity. Treasury asked for a written plan and set a minimum target of an average of 750 funded homeowners a month, warning, “If Florida Housing fails to achieve these goals, Treasury will consider additional steps, including possible remedial actions, to improve performance.” Treasury told Florida’s HFA to lengthen assistance, to “widen the net,” according to Treasury’s HPO Chief. The improvements made after Treasury intervened to change the game by taking a stronger role after SIGTARP’s 2012 report prove that the action SIGTARP recommended can make a difference over whether a state flourishes or flounders. Treasury described its action as “pressure” or “pushing.” Treasury’s HPO Chief told SIGTARP that Florida “made dramatic changes under pressure.” Treasury would 19 20 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM not issue any Action Memorandums after 2012, and would return to deference to the states, no goals for effectiveness, and no measurement of progress against goals aimed at effectiveness. Despite the improvements made in 2013, from Treasury’s intervention, HHF Florida continues to lag behind other HHF states. Treasury missed an opportunity to apply what it had learned about the delays and other obstacles HHF Florida faced in its first two programs when Treasury left it to the state to design and implement the programs. Treasury lost opportunities with new programs to get involved in the planning stage to identify obstacles that could drag the effectiveness of the new programs down. SIGTARP found several factors contribute to this lag. • HHF Florida struggled with implementation issues that delayed homeowners from getting principal reduction assistance when Florida’s HFA stopped receiving applications for eight months after receiving a flood of in the first week (September 2013). According to Treasury’s guidelines issued to the HHF states at the start of the program, Treasury intended to be involved in identifying and mitigating obstacles to program effectiveness, but Treasury did not anticipate the flood despite knowing the need and that this was the first HHF program for underwater homeowners. Treasury did not mitigate the obstacle that Florida’s HFA was unable to handle the volume of applications. At that time the program reopened, only 1,756 homeowners had received assistance. Treasury has set no goals for this program. Underwater Florida homeowners do not have time for Treasury to defer to Florida for the effectiveness of this program. With such a great demand, HHF Florida principal reduction can address a great need for Florida homeowners with underwater homes, but only if it operates effectively. Only 14% of homeowners who applied have received assistance, and more than one-third of homeowners were denied. Already, fewer homeowners have received assistance in the last two quarters compared to earlier quarters, and it is taking longer (210 days) for a homeowner to get assistance than it took in the past (154 days). Treasury should reconsider which eligibility requirements it really needs to see if it can widen the net to target the typical underwater Florida homeowner. • In the HHF program for senior citizens with reverse mortgages that began in November 2013, Treasury and Florida lacked comprehensive planning to identify and mitigate obstacles that senior citizens faced applying to the program and providing supporting documents. As a result, Treasury’s data shows that 46% of all seniors who applied had their application withdrawn, and it takes a median 280 days (9 to 10 months) for a senior citizen to obtain approval for this HHF assistance. Flexibility and innovation does not excuse Treasury planning for obstacles. Comprehensive planning to identify obstacles unique to seniors should not take so long that it delays assistance, but does require critical thinking. Florida’s HFA told Treasury that they were having issues trying to reach seniors who are not sophisticated in applying and submitting documents online. HHF Florida now works with a state agency on aging to help go into seniors’ homes to help gather documents, and Treasury has streamlined the SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 underwriting process. Treasury will need to be actively involved to ensure this program moves as fast as it can to get help to Florida seniors who need the money now, not in 9 to 10 months. Treasury has no goal for the length of time Florida’s HFA takes to process an application. Senior citizens do not have the time for marginal improvements in application processing times each quarter. Seniors deserve extraordinary effort and care to ensure that the program is effective, and that effort and care should come from Florida’s HFA and Treasury. • SIGTARP found that Treasury and Florida’s HFA lacked comprehensive planning in a program for a non-profit to buy mortgages on underwater homes and use HHF funds to modify those mortgages by not identifying the obstacle that the non-profit might not be the successful bidder at Department of Housing and Urban Development (“HUD”) sales. After a 2-year pilot program, only 92 homeowners have been helped. Rather than take action to hold HHF Florida accountable or setting performance targets, Treasury’s HHF Program Director told SIGTARP that Treasury is not at a point to shut the program down, and that the state “has a tremendous amount of latitude to design and fund their own programs.” The states are not funding these programs, TARP is. In the meantime, the $50 million in TARP funds is not being used for other programs effectively reaching homeowners. SIGTARP also found that although the Dodd-Frank Act precludes anyone convicted of a mortgage-related crime within the last 10 years from receiving HHF funds, Treasury shifts the burden of complying with the Dodd-Frank Act to homeowners to self-report, not conducting any due diligence to check readily available public databases for convictions. The Dodd-Frank Act precludes HHF for those convicted of a mortgage-related crime, not those who say they were convicted. This makes HHF vulnerable to fraud and thwarts the intent of the Dodd-Frank Act. Treasury can strengthen HHF even further against fraud by searching for arrests, as well as convictions for non-mortgage related crimes of dishonesty that could make HHF vulnerable to fraud such as misrepresented income and assets. Treasury should also require regular background checks of those who work on HHF programs. Despite HHF announced as a TARP program to “help address urgent problems facing homeowners at the center of the housing crisis,” SIGTARP found that Treasury has not conducted oversight with a sense of urgency to ensure that HHF Florida is effective. Instead, Treasury looks for either a change to HHF Florida or steady growth quarter-to-quarter – “one or the other” – according to Treasury’s HPO Chief. Treasury only tracks and measures against the goal of HHF Florida spending their allocated $1 billion in TARP funds by the end of the program in December 31, 2017. Treasury HPO Chief McArdle told SIGTARP in 2013, “I believe they’re going to utilize their funds with [the HHF principal reduction program].” Some HHF states have already reached that capacity. After five years, HHF Florida still has half of their HHF funds, despite Florida’s homeowners experiencing a critical need. 21 22 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Rather than bring strict accountability by measuring program effectiveness as promised, Treasury has allowed HHF Florida to underperform compared to other HHF states, consistently. Although there has been some improvement, it is not enough to address the urgent needs of Florida homeowners. Underperforming numbers show areas for Treasury to set goals specific to HHF Florida, rather than hope for marginal improvement each quarter. The lowest homeowner admission rate, the highest withdrawn application rate, failure to meet Treasury’s only minimum benchmark to help 750 homeowners a month, an eight-month stop in accepting applications for principal reduction assistance, a two-year pilot program with only 92 homeowners helped, 280 days to get assistance to senior citizens, are all areas where Treasury has allowed HHF Florida to proceed without accountability. Treasury’s HHF Program Director told SIGTARP that if it’s not working, the state HFAs “tweak it.” She said Treasury’s role is to support them in those efforts. However, Treasury’s role is to conduct oversight and ensure the effectiveness of HHF in each state by intervening to change the game when a program underperforms. That is what Treasury promised to do at the start of the program, and what has driven any improvement in HHF Florida. Treasury allowing HHF Florida to underperform is not because of a lack of communication or close contact with Florida’s HFA. Treasury’s HHF Program Director told SIGTARP that she talks to the HHF states every day. Treasury officials told SIGTARP that they seek insight behind the quarterly performance numbers by asking Florida’s HFA questions. Treasury’s HHF Program Director has described how Treasury communicates constantly with “stakeholders” in HHF to share best practices, refine programs, and identify obstacles, among other things. She described how Treasury holds a monthly conference call with all HHF states, and an annual in- person summit with all states, large servicers, and the GSEs, to understand their issues and concerns. Despite Treasury’s constant contact, collaboration, and sharing, Treasury has allowed HHF Florida to lag behind other HHF states in program effectiveness, consistently, according to Treasury’s own performance numbers. Treasury’s HHF Program Director told SIGTARP, “there is so much going on that we just can’t see based on a quarterly performance report.” If Treasury cannot see what is going on, then neither can the public. There should be greater transparency as to the specific improvement (goal) that Treasury wants HHF Florida to meet and how Treasury will measure the state HFA getting there. To the extent those discussions happen between Treasury and state HFAs, they are not memorialized, which allows the HHF states to escape accountability from Treasury, Congress, and the American taxpayers that fund TARP. There is one significant stakeholder that Treasury did not mention – Florida homeowners. As times have improved for most, it can be tough for those with a job, an income sufficient to pay their mortgage, and who do not owe more than their home is worth, to understand the struggles and frustration of a homeowner still going through tough times looking to the TARP bailout for help. Without regular contact and communication with those homeowners, it can be hard for Treasury officials to put a face to a HHF performance statistic, hard to understand how an unsophisticated homeowner can get confused about all the documents SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 required, hard to understand the desperation of a homeowner who could not wait months while their application was “in process” and had to go elsewhere for help or entered into foreclosure, and hard to understand what it is like for a senior citizen to face a world that has gone online, and face their own forgetfulness about where documents are to be found. To make HHF Florida as effective as possible, Treasury should increase its contact and communication with the stakeholders that matter the most – Florida homeowners who take part in the HHF application process, who can give Treasury the best insight into areas that need improvement. Treasury should not just communicate with those who received assistance, but homeowners who were denied or had their application withdrawn. Only regular communication and contact with Florida homeowners who have been part of the HHF Florida application process will give Treasury a true picture of what lies behind the performance numbers, what Florida’s HFA might not be able to tell them, and what obstacles stand in the way of HHF Florida being as effective as possible. It can be natural with such close contact with a state HFA for Treasury to not want to come down hard on them. Oversight is not easy or comfortable. There is a natural tension with holding someone accountable. It is more comfortable to give deference – “leave it to the states” as Treasury officials told SIGTARP, to be satisfied with some steady improvement and a state HFA justification for worse performance than other states. It can be easier for Treasury’s program staff to leave oversight to Treasury compliance staff, but Treasury’s compliance staff responsibility relates to following program rules, not the effectiveness of program performance. Treasury’s approach to oversight has led to HHF Florida not being as effective as it could be, or as effective as other HHF states. Otherwise, HHF Florida’s performance numbers would not be lagging behind HHF national averages. If not Treasury, then who will bring that accountability that was promised, accountability that could help more Florida homeowners? The people who have gotten help from HHF Florida have received real assistance in a critical time of need, and while no program will assist all struggling homeowners, Treasury should strive for a program that will help the typical struggling Florida homeowner. As HHF Florida lags behind other HHF states, with only two years left for HHF, the time for Treasury giving tremendous latitude and deference to Florida’s HFA without the “strict accountability” Treasury promised must be over. HHF is not designed to be so dynamic and give such latitude and deference to the states that state HFAs are allowed to administer a program that lags well behind other HHF states in providing effective assistance to Florida homeowners. Florida homeowners in distress need help now, not by the end of 2017. According to RealtyTrac, Florida had the nation’s highest foreclosure rate at 2.3% in 2014. Five years into the program, these are not homeowners who have time for Treasury and Florida’s HFA to watch for steady improvement that while needed, is not enough to stop HHF Florida from lagging behind other HHF states. Even with improvements made in HHF, Florida homeowners still need Treasury to push and pressure and demand that HHF Florida is the most effective it can be right now, by 23 24 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM setting targets and measuring progress against those targets, rather than measuring against the prior quarter. That is the role Treasury signed up for. Treasury should go back to its roots – how it described HHF – state flexibility with strict Treasury accountability through goals for effectiveness and measuring progress against those goals. To change a future outcome for the underperforming HHF Florida, it is time for Treasury to change the game. Otherwise, HHF Florida may spend the $1 billion by December 2017, but it risks not being as effective as it can be to help the urgent needs of Florida homeowners now. All TARP programs are emergency programs designed to help during times of crisis. That includes HHF Florida. SIGTARP Investigations Results SIGTARP is a white-collar law enforcement agency. For SIGTARP’s ongoing criminal and civil investigations, SIGTARP partners with other agencies in order to leverage resources. SIGTARP takes its law enforcement mandate seriously, working hard to deliver the accountability the American people demand and deserve. SIGTARP’s investigations have delivered substantial results, including: • criminal chargesi against 294 individuals, including 186 senior officers (CEOs, owners, founders, or senior executives) of their organizations • criminal convictions of 215 defendants (others are awaiting trial) • prison sentences for 125 defendants (others are awaiting sentencing) • civil cases and other actions against 63 individuals (including 49 senior officers) and 59 entities (in some instances an individual will face both criminal and civil charges) • deferred prosecution agreements, nonprosecution agreements, and DOJ actions for cases with elements of criminal conduct against four individuals (including three senior officers) and 10 entities • orders temporarily suspending or permanently banning 101 individuals from working in the banking or financial industry, working as a contractor with the Federal Government, working as a licensed attorney, or other types of businesses • savings of $553 million in TARP funds that SIGTARP prevented from going to the now-failed Colonial Bank • orders of restitution and forfeiture and civil judgments and other orders entered for $8.45 billion. This includes restitution orders entered for $4.34 billion, forfeiture orders entered for $265.2 million, DOJ actions based on criminal conduct for $2.5 billion, and civil judgments and other orders entered for $1.33 billion. Although the ultimate recovery of these amounts is not known, SIGTARP has escalated its efforts to recover funds lost to TARP-crime or civil violations of the law, a crucial component of long-term recovery from the crisis. As of September 30, 2015, SIGTARP has helped recover $2.48 billion to the Government and other victims, increasing nearly tenfold since 2012.These orders happen only after conviction and sentencing or civil resolution and many i Criminal charges are not evidence of guilt. A defendant is presumed innocent until proven guilty. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 SIGTARP cases have not yet reached that stage; accordingly, any recoveries that may come in these cases would serve to increase the $2.48 billion. FIGURE 1.1 SIGTARP ESCALATED CRIMINAL CHARGES (CUMULATIVE) WHITE COLLAR CRIMES RELATED TO FINANCIAL CRISIS 300 294 Individuals Charged 250 • More than double (167% increase) in nearly three years • 37% increase in criminal charges from FY14 to FY15 200 212 154 150 109 100 51 50 2 0 +14 2009 16 +35 2010 +58 2011 +45 2012 +58 2013 +82 2014 Sept 2015 Fiscal Year Note: Criminal charges are not evidence of guilt. A defendant is presumed innocent until proven guilty. FIGURE 1.2 MILESTONE: MORE THAN 200 SIGTARP-INVESTIGATED DEFENDANTS CONVICTED (CUMULATIVE) Defendants Convicted 250 215 • Tripled (202% increase) in nearly three years • 50% increase from FY14 to FY15 200 150 143 112 100 71 50 28 0 2 2009 +7 9 2010 +19 +43 2011 +41 2012 Fiscal Year +31 2013 +72 2014 Sept 2015 25 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 1.3 TENFOLD INCREASE IN MONEY RECOVERED FROM DEFENDANTS INVESTIGATED BY SIGTARP (CUMULATIVE) $2.48B 2,500 Asset Recovery (Millions) 26 2,000 1,500 $1.468B 1,000 500 0 $0 2009 +$151M $151M 2010 +$0 $151M 2011 +$10M $161M 2012 $186M +$25 +$1.283B 2013 +$1.02B 2014 Sept 2015 Fiscal Year SIGTARP anticipates even more financial recovery for the Government and other victims over the next few years. Court-ordered penalties and agreements with the Government resulting from a SIGTARP investigation total approximately $8.45 billion. Having already assisted in the recovery of $2.48 billion of these funds, we will continue to pursue additional recoveries from the rest of the $8.45 billion where assets are available. SIGTARP’s investigations concern a wide range of possible violations of the law, and result in charges including: bank fraud, conspiracy to commit fraud or to defraud the United States, wire fraud, mail fraud, making false statements to the Government (including to SIGTARP agents), securities fraud, money laundering, and bankruptcy fraud, among others.ii These investigations have resulted in charges against defendants holding a variety of jobs, including 70 bank employees, and 68 mortgage modification scammers. 63% of those charged are senior officials. Figure 1.4 represents a breakdown of criminal charges from SIGTARP investigations resulting in prison sentences. Figure 1.5 represents a breakdown of defendants convicted in cases filed as a result of SIGTARP investigations, by employment or position of the individual. Although the majority of SIGTARP’s investigative activity remains confidential, over the past quarter there have been significant public developments in several SIGTARP investigations, described below. SIGTARP will ensure that TARP crime does not pay, and that those responsible pay for their crimes through prison time and returning money back to victims, including the Government. These escalating criminal results tell a story of how SIGTARP’s ability to make a difference for justice and accountability gets deeper each year. ii The prosecutors partnered with SIGTARP ultimately decided which criminal charges to bring resulting from SIGTARP’s investigations. 27 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 1.4 FIGURE 1.5 CRIMINAL CHARGES FROM SIGTARP INVESTIGATIONS RESULTING IN PRISON SENTENCES DEFENDANTS CONVICTED IN CASES FILED AS A RESULT OF SIGTARP INVESTIGATIONS, BY EMPLOYEE TYPE 3% 3% 1% 1% 5% 5% 5% 6% 3% 2% 7% 9% 35% 7% 14% 13% 19% Wire & Mail Fraud Conspiracy to Commit Fraud Bank Fraud False Statements & Entries State Charges (Conspiracy to collect upfront fees/commit grand theft) Securities Fraud Money Laundering Loan Fraud Bankruptcy Fraud Alteration of records Other 62% Senior Executive Housing Scam Bank Employee Straw Borrower/Investor Individual Other Attorney Note: Numbers may not total due to rounding. Note: Numbers may not total due to rounding. Because TARP fraud is complex, SIGTARP criminal investigations take time; trials take time; sentencings take time. But holding criminals accountable and deterring future crime is worth it. Sentences in SIGTARP cases average 60 months, compared to the 36 month average for white-collar crime—indicating the complexity, damage, reach, and sophistication of the criminal schemes SIGTARP uncovers. Significantly, 15% (19 of 125) of the defendants sentenced to prison following a SIGTARP investigation received sentences lasting 10 years or more. Criminal Convictions Resulting from SIGTARP Investigations Already, 215 defendants investigated by SIGTARP have been convicted of TARP-related crime, and 125 have been sentenced to prison (some still await sentencing). These convictions and prison sentences are important measures of justice, accountability, and deterrence that SIGTARP has brought in its oversight over the TARP bailout. SIGTARP works to protect TARP and taxpayers, first by recommending a fix to Treasury of vulnerabilities to fraud, waste, and abuse in TARP, and second, by enforcing the law where crime seeped into the financial industry related to TARP, leaving the industry safer than we found it during the crisis. TABLE 1.1 RESULTS FROM RAMP UP OF SIGTARP INVESTIGATIONS (CUMULATIVE) September 2015 Criminal charges* 294 Convictions (others await trial) 215 Prison Sentences (others await sentencing) 125 Civil charges 122 Banned from Industry 101 *Criminal charges are not evidence of guilt. 28 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TARP bailout-related crime must be stopped. Every time. Without exception. Without regard to the TARP institution’s size. SIGTARP is the investigative agency who works with our prosecuting law enforcement partners, to bring cases of TARPrelated crime to satisfy four foundations of our justice system: 1. A ccountability— No one is above the law. SIGTARP and our law enforcement partners held every one of the 215 convicted defendants accountable for their crimes. In addition to the 125 of these convicted defendants who have already been sentenced to prison, 90 convicted defendants investigated by SIGTARP await sentencing. SIGTARP and our law enforcement partners will hold others accountable in the future. There are an additional 79 defendants SIGTARP investigated who have been charged with a crime and await trial (294 defendants SIGTARP investigated have been charged with a crime including the 215 defendants already convicted). SIGTARP is conducting investigations that are not yet at the stage of criminal charges, and we continue to find crime and open new investigations. 2. Taking the Profit Out of Crime— Crime must not pay. SIGTARP’s investigations have already resulted in $2.48 billion in real dollars returned to the Government and victims. SIGTARP works to increase that amount by assisting in recovering money from an additional $6 billion in court orders and Government agreements resulting from SIGTARP investigations that have not yet been recovered. 3. Deterrence— Breaking the banking laws must not be tolerated. Crimes against banks deserve significant general deterrence efforts. In some cases, the crime jeopardized the safety and soundness of a bank that applied for or received TARP. In other cases, the crime did not on its own jeopardize the safety and soundness of the bank, but multiple loses must be deterred to avoid creating a risk to a bank’s safety and soundness. Putting a TARP bank’s assets at risk also puts Treasury’s TARP investment and FDIC-insured bank deposits at risk. 4. Justice and Crisis Recovery— Justice must be brought to victims hurt by these crimes, such as communities, employees, homeowners, small businesses, the Government, and others. Additionally, those defendants willing to commit crime related to the bailout must be removed from the financial system that underpins the economy on which we all rely on so that they are never in a position again to put a bank or TARP program at risk. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 1.6 LOCATIONS OF CRIMINAL CONVICTIONS AS A RESULT OF SIGTARP INVESTIGATIONS Tacoma Fargo Concord Boise Madison Rockford Sacramento Oakland San Francisco Fresno Las Vegas Chicago Omaha Lincoln Salt Lake City Denver Kansas City (KS) Wichita Kansas City (MO) East St. Louis Jefferson City St. Louis Knoxville Nashville Los Angeles Santa Ana Riverside San Diego Boston Hartford Brooklyn New Haven White Plains Bridgeport New York Central Islip Newark Philadelphia Wilmington Upper Marlboro Washington, DC Alexandria Norfolk Buffalo Little Rock Rome Birmingham San Antonio Gainesville Atlanta Macon Valdosta Pensacola New Orleans Fort Myers Northern District of Alabama Birmingham Eastern District of Arkansas Little Rock Central District of California Los Angeles Riverside Santa Ana Eastern District of California Fresno Sacramento Northern District of California Oakland San Francisco Southern District of California San Diego Superior Court of California Sacramento Santa Ana Middle District of Georgia Macon Valdosta Northern District of Georgia Atlanta Gainesville Rome District of Idaho Boise Northern District of Illinois Chicago Rockford Southern District of Illinois East St. Louis District of Kansas Kansas City Wichita Eastern District of Louisiana New Orleans Orange County District Attoney Santa Ana Prince George’s District Court Upper Marlboro District of Colorado Denver District of Massachusetts Boston District of Connecticut Bridgeport Hartford New Haven Eastern District of Missouri St. Louis District of Delaware Wilmington Western District of Missouri Jefferson City Kansas City District of Columbia Washington, DC District of Nebraska Lincoln Omaha Middle District of Florida Fort Myers District of Nevada Las Vegas Northern District of Florida Pensacola District of New Hampshire Concord Note: Italics denote state cases. District of New Jersey Newark Eastern District of New York Brooklyn Central Islip Southern District of New York New York White Plains Western District of New York Buffalo District of North Dakota Fargo Eastern District of Pennsylvania Philadelphia Eastern District of Tennessee Knoxville Middle District of Tennessee Nashville Western District of Texas San Antonio District of Utah Salt Lake City Eastern District of Virginia Alexandria Norfolk Western District of Washington Tacoma Western District of Wisconsin Madison 29 30 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Prison Sentences Resulting From SIGTARP Criminal Investigations Of the 215 defendants convicted as a result of a SIGTARP investigation, 125 defendants have already been sentenced to prison for TARP-related crimes, 31 were sentenced to probation, and the remainder await sentencing. The consequences for TARP-related crime are severe. The average prison sentence imposed by courts for TARP-related crime investigated by SIGTARP is 60 months, which is nearly double the national average length of prison sentences involving white collar fraud of 36 months.iii Nineteen defendants investigated by SIGTARP were sentenced to 10 years or more in Federal prison, including Lee Farkas, former chairman of mortgage company Taylor, Bean and Whitaker Mortgage Corporation LLC (“TBW”), who is serving a 30-year prison sentence, and Edward Woodard, former chairman of the Bank of the Commonwealth, who is serving a 23-year prison sentence. Many of the criminal schemes uncovered by SIGTARP had been ongoing for years, and involved millions of dollars and complicated conspiracies with multiple co-conspirators. On average, as a result of SIGTARP investigations, criminals convicted of crimes related to TARP’s banking programs have been sentenced to serve 67 months in prison. Criminals convicted for mortgage modification fraud schemes or other mortgage fraud related investigations by SIGTARP were sentenced to serve an average of 59 months in prison. Criminals investigated by SIGTARP and convicted of investment schemes such as Ponzi schemes and sales of fake TARP-backed securities were sentenced to serve an average of 45 months in prison. Figure 1.7 shows the people sentenced to prison, the sentences they received, and their affiliations. iii See the U.S. Sentencing Commission’s 2013 Sourcebook of Federal Sentencing Statistics for additional information. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 1.7 INDIVIDUALS SENTENCED TO PRISON Lee Bentley Farkas 360 months 3 years supervised release Chairman Taylor, Bean and Whitaker Alan Tikal 288 months 5 years supervised release Principal KATN Trust Edward Woodard 276 months 5 years supervised release President & CEO Bank of the Commonwealth Christopher George 240 months 5 years supervised release Co-Owner 21st Century Legal Services Stephen Fields 204 months 5 years supervised release Executive Vice President Bank of the Commonwealth David McMaster 188 months 5 years supervised release Vice President American Mortgage Specialists, Inc. Mark Anthony McBride [deceased] 170 months 5 years supervised release Omni National Bank Delroy Davy 168 months 5 years supervised release Omni National Bank George Hranowskyj 168 months 3 years supervised release Owner/Operator 345 Granby, LLC Mark A. Conner 144 months 5 years supervised release President FirstCity Bank Wilbur Anthony Huff 144 months 4 years supervised release Owner Oxygen Entities Jonathan L. Herbert 140 months 5 years supervised release Owner Federal Dept Commission Eric Menden 138 months 3 years supervised release Owner/Operator 345 Granby, LLC Glen Alan Ward 132 months 3 years supervised release Partner Timelender Mark Farhood 132 months 3 years supervised release Owner Home Advocate Trustees Robert Egan 132 months 3 years supervised release President Mount Vernon Money Center Gordon Grigg 120 months 3 years supervised release Financial Advisor and Owner ProTrust Management, Inc. John Farahi 120 months 3 years supervised release Investment Fund Manager and Operator New Point Financial Services, Inc. Shawn Portmann 120 months 5 years supervised release Senior Vice President Pierce Commercial Bank Isaak Khafizov 108 months 3 years supervised release Principal American Home Recovery Ebrahim Shabudin 97 months 3 years supervised release Vice President United Commercial Bank (UCBH) Troy Brandon Woodard 96 months 5 years supervised release Vice President Bank of the Commonwealth Subsidiary Scott Powers 96 months 5 years supervised release CEO American Mortgage Specialists, Inc. Catherine Kissick 96 months 3 years supervised release Senior Vice President Colonial Bank Robin Bruhjell Brass 96 months 3 years supervised release Owner/Operator BBR Group, LLC Howard Shmuckler 90 months 3 years supervised release Owner/Operator The Shmuckler Group, LLC Clayton A. Coe 87 months 5 years supervised release Vice President/ Senior Commercial Loan Officer FirstCity Bank Christopher Godfrey 84 months 3 years supervised release President H.O.P.E. David Tamman 84 months 3 years supervised release Attorney Nixon Peabody LLP Dennis Fischer 84 months 3 years supervised release Vice President H.O.P.E. Lawrence Allen Wright 75 months 5 years supervised release Owner Wright & Associates Desiree Brown 72 months 3 years supervised release Treasurer Taylor, Bean and Whitaker Jerry J. Williams 72 months 3 years supervised release President, CEO, and Chairman Orion Bank Lori Macakanja 72 months 3 years supervised release Housing Counselor HomeFront, Inc. (a HUD-approved company) Jason Sant 72 months 2 years supervised release Co-owner Home Advocate Trustees 31 32 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Edward Shannon Polen 71 months 5 years supervised release Owner Polen Lawn Care and Maintenance/F&M Adam Teague 70 months 5 years supervised release Vice President Appalachian Community Bank Francesco Mileto 65 months 5 years supervised release Glenn Steven Rosofsky [deceased] 63 months 3 years supervised release Owner Federal Housing Modification Department Xue Heu 63 months 3 years supervised release Owner Liquid Assets & Land Investments Inc. and Capital Land Investments LLC Frederic Gladle 61 months 3 years supervised release Operator Timelender Albert DiRoberto 60 months 5 years supervised release Sales/Marketing 21st Century Legal Services Jeffrey Levine 60 months 5 years supervised release Executive Vice President Omni National Bank Crystal Taiwana Buck 60 months 5 years supervised release Sales Closer 21st Century Legal Services Richard Pinto [deceased] 60 months 5 years supervised release Chairman Oxford Collection Agency William Cody 60 months 5 years supervised release Owner/Operator C&C Holdings, LLC Ray Kornfeld 60 months 3 years supervised release Employee KATN Trust Bernard McGarry 60 months 3 years supervised release Chief Operatiing Officer Mount Vernon Money Center Delton de Armas 60 months 3 years supervised release CFO Taylor, Bean and Whitaker Steven Pitchersky 51 months 5 years supervised release Owner/Operator Nationwide Mortgage Concepts Dwight Etheridge 50 months 5 years supervised release President Tivest Development & Construction, LLC Yadira Garcia Padilla 48 months 5 years supervised release Client Complaints 21st Century Legal Services Peter Pinto 48 months 3 years supervised release President/COO Oxford Collection Agency Winston Shillingford 48 months 3 years supervised release Co-owner Waikele Properties Corp. Iris Pelayo 48 months 3 years supervised release Manager 21st Century Legal Services Michael Edward Filmore 48 months 3 years supervised release Straw Borrower Julius Blackwelder 46 months 3 years supervised release Manager Friends Investment Group Tamara Teresa Tikal 45 months 3 years supervised release Co-owner/Manager KATN Trust William R. Beamon, Jr. 42 months 5 years supervised release Vice President Appalachian Community Bank Paul Allen 40 months 2 years supervised release CEO Taylor, Bean and Whitaker Brent Merriell 39 months 5 years supervised release Robert E. Maloney, Jr. 39 months 3 years supervised release In-house Counsel FirstCity Bank Leigh Farrington Fiske 37 months 3 years supervised release External Owner Salvador Management, LLC dba Corporate Funding Solutions S.A. Cheri Fu 36 months 5 years supervised release Owner/President Galleria USA, Inc. Brian Headle 36 months 4 years supervised release Borrower Colorado East Bank and Trust Christopher Tumbaga 36 months 4 years supervised release Loan Officer Colorado East Bank and Trust Delio Coutinho 36 months 3 years supervised release Loan Officer [Mortgage Company Name Withheld] Marleen Shillingford 36 months 3 years supervised release Co-owner Waikele Properties Corp. Roger Jones 33 months 3 years supervised release Federal Housing Modification Department Michael Trap 30 months 3 years supervised release Owner Federal Housing Modification Department SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Thomas Hebble 30 months 3 years supervised release Executive Vice President Orion Bank Raymond Bowman 30 months 2 years supervised release President Taylor, Bean and Whitaker Charles Antonucci 30 months 2 years supervised release CEO Park Avenue Bank Carmine Fusco 27 months 3 years supervised release Outside Appraiser Blue and White Management, Ameridream Marvin Solis 27 months 3 years supervised release Owner Hawk Ridge Investments, LLC Tommy Arney 27 months 3 years supervised release Owner Residential Development Company Clint Dukes 24 months 5 years supervised release Owner Dukes Auto Collision Repair Joseph D. Wheliss, Jr. 24 months 5 years supervised release Owner/Operator National Embroidery Works Inc James Ladio 24 months 3 years supervised release President/CEO MidCoast Community Bank, Inc. Jesse Litvak 24 months 3 years supervised release Managing Director Jefferies LLC Angel Guerzon 24 months 3 years supervised release Senior Vice President Orion Bank Kenneth Sweetman 24 months 3 years supervised release Blue and White Management, Ameridream Reginald Harper 24 months 3 years supervised release President and CEO First Community Bank Thomas Fu 21 months 5 years supervised release Owner/CFO Galleria USA, Inc. Karim Lawrence 21 months 5 years supervised release Officer Omni National Bank Michael Ramdat 21 months 3 years supervised release Steven J. Moorhouse 21 months 3 years supervised release Owner/President Jefsco Manufacturing Co., Inc. Ziad Nabil Mohammed Al Saffar 21 months 3 years supervised release Operator Compliance Audit Solutions, Inc. Alan Reichman 21 months 2 years supervised release Executive Director Of Investments Unspecified Investment Firm Grady Fricks 18 months 5 years supervised release Borrower Gateway Bancshares Christopher Woods 18 months 3 years supervised release Owner Blue and White Management, Ameridream David Weimert 18 months 3 years supervised release Senior Vice President Anchor Bank Mark Steven Thompson 18 months 3 years supervised release Partner Greenfield Advisors, LLC; Escrow Professionals, Inc. Matthew Amento 18 months 3 years supervised release Owner Blue and White Management, Ameridream Robert Ilunga 18 months 3 years supervised release Manager Waikele Properties Corp. Troy A. Fouquet 18 months 3 years supervised release Owner Team Management, LLC TRISA, LLC Walter Bruce Harrell 18 months 3 years supervised release Owner Robert Wertheim 18 months 2 years supervised release Co-Owner Premium Finance Group Abraham Kirschenbaum 18 months 2 years supervised release Andrew M. Phalen 12 months 5 years probation Operator CSFA Home Solutions Duy Nguyen 12 months 5 years probation Owner HAMP Resources Lynn Nunes 12 months 5 years supervised release Owner Network Funding Brian M. Kelly 12 months 3 years supervised release Employee H.O.P.E. Carlos Peralta 12 months 3 years supervised release Park Avenue Bank Gregory Flahive 12 months 3 years probation Owner/Attorney Flahive Law Corporation 33 34 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Sara Beth Bushore Rosengrant 12 months 3 years supervised release Operator Compliance Audit Solutions, Inc. Matthew L. Morris 12 months 2 years supervised release Senior Vice President Park Avenue Bank Vernell Burris 12 months 2 years supervised release Employee H.O.P.E. Christopher Ju 10 months 2 years probation Justin D. Koelle 9 months 5 years probation CEO CSFA Home Solutions Jacob J. Cunningham 8 months 5 years probation CEO CSFA Home Solutions John D. Silva 8 months 5 years probation Senior Official CSFA Home Solutions Carla Lee Miller 8 months 3 years supervised release Employee Escrow Professionals, Inc. Jeanette R. Salsi 7 months 3 years supervised release Senior Underwriter Pierce Commercial Bank Brian W. Harrison 6 months 6 months home detention Vice President/Loan Officer Farmer’s Bank and Trust Dominic A. Nolan 6 months 5 years probation Owner CSFA Home Solutions Phillip Alan Owen 6 months 5 years supervised release Branch Manager Superior Financial Services, LLC Daniel Al Saffar 6 months 3 years supervised release Sales Representative Compliance Audit Solutions, Inc. Sean Ragland 3 months 3 years supervised release Senior Financial Analyst Taylor, Bean and Whitaker Teresa Kelly 3 months 3 years supervised release Operations Supervisor Colonial Bank Eduardo Garcia Sabag 3 months Deported Borrower Alice Lorrraine Barney 2 months 3 years supervised release Marketing & Administrative Assistant Pierce Commercial Bank Sonja Lightfoot 1 month 3 years supervised release Senior Vice President Pierce Commercial Bank Mark W. Shoemaker 1 day (with credit for time served) 5 years supervised release Michael Bradley Bowen 1 day (with credit for time served) 5 years supervised release SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Location of TARP-Related Crimes SIGTARP has found, investigated, and supported the prosecution of TARP-related crime throughout the nation. Our investigations have led to criminal charges against 294 defendants (215 of whom have been convicted as of September 30, 2015, while others await trial).iv These defendants were charged in courts in 30 states and Washington, DC. SIGTARP investigations have identified victims of TARP-related crimes in all 50 states and Washington, DC. Victims of TARP-related crimes include taxpayers, the Federal Government, including Treasury and Federal Deposit Insurance Corporation (“FDIC”), TARP recipient banks, and homeowners targeted by mortgage modification scams. Figure 1.8 shows locations where criminal charges were filed by Federal or State prosecutors as a result of SIGTARP investigations.v iv Criminal charges are not evidence of guilt. A defendant is presumed innocent until and unless proven guilty. v The prosecutors partnered with SIGTARP ultimately decide the venue in which to bring criminal charges resulting from SIGTARP’s investigations. 35 36 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 1.8 LOCATIONS WHERE CRIMINAL CHARGES WERE FILED AS A RESULT OF SIGTARP INVESTIGATIONS Tacoma Fargo Concord Boise Boston Hartford Brooklyn New Haven Madison White Plains Bridgeport New York Central Islip Rockford Chicago Newark Wheaton Philadelphia Omaha Columbus Wilmington Upper Marlboro Lincoln Washington, DC Denver Alexandria Kansas City (KS) Kansas City (MO) Norfolk Louisville East St. Louis Wichita Jefferson City St. Louis Buffalo Sacramento Salt Lake City Oakland San Francisco Fresno Las Vegas Knoxville Nashville Los Angeles Santa Ana Riverside San Diego Little Rock Rome Birmingham San Antonio Gainesville Atlanta Macon Valdosta Pensacola New Orleans Fort Myers Northern District of Alabama Birmingham Eastern District of Arkansas Little Rock Central District of California Los Angeles Riverside Santa Ana Eastern District of California Fresno Sacramento Northern District of Georgia Atlanta Gainesville Rome District of New Hampshire Concord District of Idaho Boise District Court of Clark County, Nevada Las Vegas Northern District of Illinois Chicago Rockford Southern District of Illinois East St. Louis Northern District of California Oakland San Francisco Circuit Court of Cook County, Illinois Chicago Southern District of California San Diego Circuit Court of DuPage County, Illinois Wheaton Superior Court of California Sacramento Santa Ana Orange County District Attoney Santa Ana District of Colorado Denver District of Connecticut Bridgeport Hartford New Haven District of Delaware Wilmington District of Columbia Washington, DC Middle District of Florida Fort Myers Northern District of Florida Pensacola Middle District of Georgia Macon Valdosta Note: Italics denote state cases. District of Kansas Kansas City Wichita Western District of Kentucky Louisville Eastern District of Louisiana New Orleans Prince George’s District Court Upper Marlboro District of Massachusetts Boston Eastern District of Missouri St. Louis Western District of Missouri Jefferson City Kansas City District of Nebraska Lincoln Omaha District of Nevada Las Vegas District of New Jersey Newark Eastern District of New York Brooklyn Central Islip Southern District of New York New York White Plains Western District of New York Buffalo District of North Dakota Fargo Southern District of Ohio Columbus Eastern District of Pennsylvania Philadelphia Eastern District of Tennessee Knoxville Middle District of Tennessee Nashville Western District of Texas San Antonio District of Utah Salt Lake City Eastern District of Virginia Alexandria Norfolk Western District of Washington Tacoma Western District of Wisconsin Madison SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 SIGTARP Helping to Bring Money Back to Victims and the Government As of September 30, 2015, investigations conducted by SIGTARP have resulted in more than $8.45 billion in court orders and Government agreements for the return of money to victims or the Government. These orders happen only after conviction and sentencing or civil resolution and many SIGTARP cases have not yet reached that stage; therefore, any additional court orders would serve to increase this amount. Two cases in particular that SIGTARP investigated have resulted in not only lengthy prison sentences for a number of individuals in each case but also significant orders of forfeiture and restitution. In the Colonial Bank/Taylor, Bean and Whitaker Mortgage Corporation LLC (“TBW”) case, former TBW chairman Lee Bentley Farkas spearheaded a $2.9 billion fraud scheme that contributed to the failure of Colonial Bank, the sixth largest bank failure in U.S. history. The case resulted in not only prison time for eight people including Farkas but also courtordered restitution of $3.5 billion and forfeiture of $38.5 million. In the Bank of the Commonwealth case (“BOC”), where former chairman Edward J. Woodard led a $41 million bank fraud scheme that masked non-performing assets at BOC and contributed to the failure of BOC in 2011, the court entered a restitution order of $333 million and a forfeiture order of $65 million against nine defendants, each responsible for at least a portion. Other SIGTARP investigations result in Government agreements. For example, SunTrust, in order to resolve the criminal investigation into its administration of the HAMP program, agreed to pay $320 million. The agreement includes: $179 million in restitution to compensate borrowers; $16 million in forfeiture; and an additional $20 million to establish a fund for distribution to organizations providing counseling and other services to distressed homeowners. Overall in SIGTARP cases, orders of restitution and forfeiture to victims and the Government of numerous assets, as well as seized assets pending final order, include dozens of vehicles, more than 25 properties (including businesses and waterfront homes), more than 35 bank accounts (including a bank account located in the Cayman Islands), bags of silver, U.S. currency, antique and collector coins (including gold, silver, and copper coins), artwork, antique furniture, Civil War memorabilia, NetSpend Visa and CashPass MasterCard debit cards, Western Union money orders with the “Pay To” line blank, and the entry of money judgments by courts against more than 30 defendants. Of the vehicles ordered to be forfeited (including automobiles, a tractor, water craft, recreational and commercial vehicles) several are antique and expensive cars, including a 1969 Shelby Mustang, a 1932 Ford Model A, a 1954 Cadillac Eldorado convertible, a 1963 Rolls Royce, and a 1965 Shelby Cobra. As part of the Bank of the Commonwealth case, Thomas Arney, who pleaded guilty for his role in the bank fraud scheme, agreed to forfeit the proceeds from the sale of two antique cars to the Government: a 1948 Pontiac Silver Streak and a 1957 Cadillac Coup de Ville. Figure 1.9 includes pictures of the cars that have been ordered forfeited, as well as other examples of assets seized by the Government in SIGTARP investigations. 37 38 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 1.9 ORDERED SEIZED 1957 Cadillac Coupe de Ville. 1948 Pontiac Silver Streak. 2010 Mercedes-Benz GLK 350 4Matic. Estimated value in 2013: $29,000. (Source Kelley Blue Book) 2005 Hummer H2. Estimated value in 2013: $24,000. (Source Kelley Blue Book) Property located in Norfolk, Virginia. (Photo courtesy of Bill Tiernan, The Virginian-Pilot) 1958 Mercedes-Benz Cabriolet 220. Estimated value in 2013: $185,000. (Source Hagerty.com) SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Property located in Chesapeake, Virginia. (Photo courtesy of Bill Tiernan, The Virginian-Pilot) French-style gilt, bronze, and green malachite columnar 16-light torchères with bronze candelabra arms. Estimated appraised value: $8,000. 2005 Scout Dorado. (Sold for $1,800) Cash seized from safe, $158,000. Alabama property ordered forfeited. Kubota tractor. Artwork with a total value of $71,525, including paintings worth up to $10,000 each. 19th century English painting of “Royal Family,” oil on canvas. Estimated appraised value: $6,000. 39 40 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Industry Bans Resulting from SIGTARP Criminal Investigations SIGTARP investigations not only have led to convictions, lengthy prison terms, restitution and forfeiture orders and civil judgments for TARP-related offenses, but also have resulted in senior executives being suspended or permanently banned from working in certain industries. As of September 30, 2015, SIGTARP investigations have resulted in orders temporarily suspending or permanently banning 101 individuals from working in the banking or financial industry, working as a contractor with the Federal Government, or working as a licensed attorney. Many of these people were at the highest levels of companies that applied for or received a TARP bailout. They were trusted to exercise good judgment and make sound decisions The suspensions and bans remove these senior executives from the banking and financial industries in which many practiced for years. A violation of the removal, in some instances, could be a basis for further prosecution. These high-level executives, some of whom were chief executive officers, chief financial officers, or licensed attorneys, have been sanctioned in a variety of ways, many by more than one authority: (i) by a sentencing court as part of the terms of supervised release after a prison term has been served; (ii) by the executive branch of the Federal Government as a bar from engaging in a Government contract; (iii) by a Federal banking regulator, which has the authority to ban an individual from working in the banking industry; (iv) by the Securities and Exchange Commission (“SEC”), which has the authority to issue certain bans relating to working in the securities industry; (v) by a Federal court in enforcing a Federal Trade Commission (“FTC”) request to order a ban against advertising, marketing, promoting, or selling mortgage assistance or mortgage relief; and (vi) by a state bar association, which has the authority to suspend or disbar a licensed attorney. Of the 101 individuals, 56 were heads or owners of companies, including those who were chairmen, chief executive officers, and presidents of financial institutions. Most of the remaining 45 individuals were chief financial officers, senior vice presidents, chief operating officers, chief credit officers, licensed attorneys, and other senior executives. This quarter, SIGTARP investigations resulted in five industry prohibitions as special conditions of supervised release. First, in addition to his five year and three month prison sentence in connection with his role in two investment fraud schemes including one designed to sell government-owned properties as official “TARP partners,” when, in reality, and as he and his co-defendants knew, no such designation existed, and more than $762,000 restitution ordered, Xue Hue has been prohibited from accepting any employment which requires him to possess or exercise control of any third party’s monetary assets or their equivalent. Second, on top of their prison sentences and multi-million dollar restitution awards in connection with a massive mortgage fraud scheme based in New Jersey, Delio Coutinho (sentenced to 36 months in prison and ordered to pay $1.3 million), Kenneth Sweetman (sentenced to 24 months in prison and ordered to pay $2.2 million), and Carmine Fusco (sentenced to 27 months in prison and ordered to pay $2.2 million) are each prohibited from holding, seeking, or obtaining employment in the mortgage and/or real estate industries. Sweetman and Fusco also can not SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 provide services related mortgage origination, processing, and or closing. Finally, in addition to her four year prison sentence for her role in the wide-ranging 21st Century mortgage refinance fraud scam, Iris Pelayo is prevented from engaging, as an owner, employee, or otherwise, in any business involving mortgage loan programs, telemarketing activities, investment programs or any other business involving the solicitation of funds or cold-calls to customers. TARP-Related Investigations Activity Since the July 2015 Quarterly Report Criminal Charges Filed Against $50 Billion TARP-Recipient General Motors; GM Agrees to $900 Million Financial Penalty for Failing to Disclose Deadly Safety Defect in Its Cars to Consumers and U.S. Regulator On September 17, 2015, criminal charges were filed in the United States District Court for the Southern District of New York against General Motors Company (“GM”), a $50 billion dollar TARP recipient, charging GM with concealing a potentially deadly safety defect from its U.S. regulator, the National Highway Traffic Safety Administration (“NHTSA”), from the spring of 2012 through February 2014, and, in the process, misleading consumers concerning the safety of certain of its cars. According to the criminal complaint and related documents, the defect consisted of a faulty ignition switch that could move easily out of the “Run” position into “Accessory” or “Off.” When the switch moved out of the Run position, it could disable the affected car’s frontal airbags—increasing the risk of death and serious injury in certain types of crashes in which airbags were otherwise designed to deploy. To date, GM has acknowledged a total of 15 deaths, as well as a number of serious injuries, caused by the defective switch. Also on September 17, 2015, GM reached a deferred prosecution agreement (“DPA”) with federal prosecutors under which the company admitted both its failure to disclose the safety defect to the NHTSA and that it misled U.S. consumers about that same defect. As part of the DPA, GM paid a $900 million financial penalty and has an independent monitor to review and assess policies, practices and procedures relating to GM’s safety-related public statements, sharing of engineering data, and recall processes. The criminal charges are contained in an Information alleging one count of engaging in a scheme to conceal material facts from NHTSA and one count of wire fraud. SIGTARP conducted this investigation together with the United States Attorney’s Office for the Southern District of New York, the Department of Transportation Office of Inspector General, the NHTSA, and the Federal Bureau of Investigation. 41 42 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Former United Commercial Bank Chief Credit Officer Sentenced to Over Eight Years in Federal Prison for Felony Fraud Conviction; Securities Fraud Resulted in over $300 Million TARP Loss to Taxpayers – Ebrahim Shabudin On September 1, 2015, Ebrahim Shabudin, of Moraga, California, the former Chief Operating and Chief Credit Officer at United Commercial Bank (“UCB”) was sentenced to 97 months in federal prison and ordered to forfeit $348,000 by the United States District Court for the Northern District of California for his role in a securities fraud scheme and other corporate fraud offenses stemming from the failure of UCB. The sentence follows Shabudin’s March 25, 2015, conviction following a six-week jury trial and brings to a close one of the most significant prosecutions to arise out of the 2008 financial crisis. Shabudin—the second most senior officer in executive management at UCB— was charged with and convicted of conspiring with others within the bank to falsify key bank records as part of a scheme to conceal millions of dollars in losses and falsely inflate the bank’s financial statements. Among the records Shabudin falsified were those filed with the United States Securities and Exchange Commission (“SEC”) and the Federal Deposit Insurance Corporation (“FDIC”) related to the third and fourth quarters of 2008 describing UCB’s so-called Allowance for Loan Losses. Also falsified were documents relating to UCB’s quarterly and year-end earnings per share as announced by the bank to the investing public. More specifically, testimony at trial revealed that in an effort to have the bank “break even” in the third quarter 2008, Shabudin and his co-conspirators delayed downgrading loans despite knowing that collateral had declined in value or was missing, hoping that something would change. However, based on what they knew, that hope was unfounded. For instance they knew that: new appraisals showed collateral value that had declined significantly; there was a third-party offer to buy one loan for far less than what was owed; the bank did not have proper documentation for collateral; and one borrower was in receivership. Furthermore, Shabudin and his co-conspirators were so concerned that inventory securing one loan was either missing or non-existent, that they thought the bank had been defrauded and referred it to law enforcement. Indeed, according to trial testimony, the warehouse that was supposed to contain the inventory securing that loan looked like a staged set. Shabudin and his co-conspirators continued this “delay-and-pray” scheme the following quarter all while the bank applied for and received $298 million in TARP funds on November 14, 2008. Dividends on the TARP investment grew to over three million before the bank failed less than a year later, bringing the total loss to taxpayers to over $300 million. On November 6, 2009, UCB was closed by the California Department of Financial Institutions and taken over by the FDIC. Until 2009, the bank’s holding company, United Commercial Bank Holdings, Inc., was publicly traded on the NASDAQ. With over $10.9 billion in assets, UCB’s failure was the ninth largest failure of a bank insured by the FDIC’s Deposit Insurance fund since 2007, according to the FDIC. The FDIC now estimates the loss to the Deposit Insurance Fund to be approximately $677 million. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 As previously reported, on December 9, 2014, UCB’s Chief Financial Officer, Craig S. On, pled guilty to one count of conspiracy to make a materially false and misleading statement to an accountant. Additionally, on October 7, 2014, the bank’s Senior Vice President, Thomas Yu, pled guilty to one count of conspiracy to make false bank entries, reports and transactions related to his role in preparing the false and misleading reports. Both On and Yu await sentencing. This case is being investigated by SIGTARP, the U.S. Attorney’s Office for the Northern District of California, the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation Office of Inspector General, and the OIG for Board of Governors of FRB. Former Chief Financial Officer, President, Chief Credit Officer and Controller at TARP Recipient Bank Indicted for Securities Fraud, Conspiracy and False Statements to Regulators – David Gibson, Robert Harra, William North & Kevyn Rakowski, Wilmington Trust Company On August 5, 2015, David Gibson, of Wilmington, Delaware, Robert V.A. Harra, of Wilmington, Delaware, William North, of Bryn Mawr, Pennsylvania, and Kevyn Rakowski, of Lakewood, Florida, the former Chief Financial Officer, President, Chief Credit Officer and Controller of TARP recipient, Wilmington Trust Company (“Wilmington Trust”), respectively, were charged in the United States District Court for the District of Delaware in a nineteen-count indictment for their respective roles in concealing from the Federal Reserve, the Securities and Exchange Commission (“SEC”) and the investing public the total quantity of past due loans on Wilmington Trust’s books from October 2009 until November 2010. All defendants were charged with conspiracy to defraud the United States, to commit fraud in connection with the purchase and sale of securities, and making false statements to regulators. All defendants were charged with one count of false statements in connection with the purchase or sale of securities, four counts of making false entries in banking records, seven counts of making false statements to agencies of the United States government, and two counts of making false statements in SEC reports. Harra and Gibson were also charged with two additional counts of making false statements in SEC reports, and Gibson was charged with three counts of falsely certifying financial reports. Additionally, in May, 2015, North and Rakowski were previously charged with two counts of making false statements to an agency of the United States, relating to the concealment from the market and the Federal Reserve the total quantity of past due loans on the bank’s books during the months of October and November 2009. According to the indictment, Wilmington Trust was required to report in its quarterly filings with both the SEC and the Federal Reserve the quantity of its loans for which payment was past due for 90 days or more. Investors and banking regulators consider the 90-day number in evaluating the health of a bank’s loan portfolio. Harra, Gibson, North, and Rakowski helped conceal the truth about the health of Wilmington Trust’s loan portfolio from the SEC, the investing public and from the bank’s regulators. The indictment further alleges that Harra, Gibson, North, and Rakowski participated in Wilmington Trust’s failure to include in its 43 44 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM reporting a material quantity of past due loans, despite the reporting requirements and knowing the significance of past due loan volume to investors and regulators. Specifically: • North, as the bank’s Chief Credit Officer, approved the exclusion or “waiver” of such loans from internal reports that he knew would be used to generate the bank’s external financial reports. • As the bank’s President and Head of Regional Banking, Harra encouraged the “waiver” of past due loans. He served as a primary point of contact with the bank’s regulators during 2009 and 2010, signed bank regulatory filings, participated in quarterly earnings calls with investors, and did not disclose the bank’s failure to report “waived” loans. • The Chief Financial Officer, Gibson, also knew the bank had “waived” loans from public reporting and failed to disclose this. Despite this knowledge, Gibson helped to draft and approved SEC filings and certified that those same filings fairly presented the financial condition of Wilmington Trust. • Rakowski, as Controller, approved the bank’s filings with the SEC and the Federal Reserve knowing that those reports did not include past due loans that had been “waived.” Each defendant faces up to: • Five years in federal prison for each count of conspiracy to defraud the United States, conspiracy to make false statements, and false statements to agencies of the United States government; • 20 years in federal prison and a $5 million fine for each count of making false statements in SEC reports; 25 years in federal prison for conspiracy to commit securities fraud; and • 30 years in federal prison and a $1 million fine for each count of false entries in banking records. Additionally, Harra and Gibson each face up to 20 years in federal prison and a $5 million fine for each of the two additional counts of making false statements in SEC reports, and Gibson faces up to 20 years in federal prison and a $5 million fine on each of the three counts of falsely certifying financial reports. Wilmington Trust received $330 million in TARP funds in December 2008 which remained outstanding until 2011 when Wilmington Trust was acquired by TARP recipient bank, M&T Bank Corporation (“M&T”), at a steep discount of approximately 46 percent from the bank’s share price the prior trading day. M&T itself also received more than $750 million in TARP funds in 2008. This case is being investigated by SIGTARP, the U.S. Attorney’s Office for the District of Delaware, the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, and the Office of Inspector General for the Board of Governors of the Federal Reserve System. The prosecution is brought in SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. Four Sentenced to Federal Prison for 21st Century Mortgage Refinance Fraud Scheme, Ringerleader Imprisoned for 20 Years; Defendants Bilked Over 4,000 Homeowners out of More than $7 Million – Christopher Paul George, Crystal Taiwana Buck, Albert DiRoberto, Yadira Padilla & 21st Century Legal Services On September 28, 2015, four defendants who worked for a Rancho Cucamonga, California-based business that offered bogus loan modifications to struggling homeowners were sentenced in the United States District Court for the Central District of California to federal prison, with one of the leaders of the scheme, Christopher George, a co-owner of 21st Century Legal Services, Inc. (“21st Century”) receiving 20 years in federal prison, and being ordered to pay $7,065,117 in restitution to victims of the scam. The defendants were convicted on federal fraud charges for their roles in a telemarketing operation known under a series of names – including 21st Century – that bilked more than 4,000 homeowners across the nation, many of whom lost their homes to foreclosure. 45 46 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 1.2 21ST CENTURY MORTGAGE REFINANCE FRAUD SCHEME VICTIMS, BY LOCATION Rank State Number of Homeowners Rank State Number of Homeowners 1 CA 611 27 OR 47 2 FL 349 28 OK 42 3 TX 281 29 UT 40 4 OH 206 30 MN 36 5 NC 196 31 MA 33 6 IN 191 32 ID 30 7 MI 181 33 AR 28 8 GA 173 34 IA 28 9 PA 172 35 NM 24 10 NY 148 36 CT 22 11 VA 139 37 KS 20 12 MD 118 38 DE 19 13 NJ 117 39 WV 19 14 IL 115 40 NH 12 15 AL 112 41 RI 12 16 WI 112 42 WY 10 17 AZ 111 43 NE 9 18 WA 102 44 DC 7 19 LA 100 45 MT 7 20 MO 90 46 VT 6 21 TN 89 47 HI 5 22 SC 77 48 ME 5 23 CO 76 49 AK 3 24 NV 52 50 ND 3 25 KY 50 51 SD 1 26 MS 50 Total Number of Homeowners 4,486 In addition to George, Crystal Buck, a sales “closer” who persuaded numerous victims to pay fees to 21st Century, received a sentence of five years imprisonment; Albert DiRoberto who handled sales and marketing—which included making a commercial for the company and preparing talking points to respond to negative publicity—also received five years imprisonment; and Yadira Padilla, who handled client complaints and refund requests, and who posted bogus reviews of the company on the internet, was sentenced to four years in federal prison. As previously reported, George, Buck and DiRoberto were found guilty by a federal jury on various fraud charges in June 2015 following a three-week trial in SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 the United States District Court for the Central District of California. Padilla pled guilty in July 2013. During a 15-month period that began in the middle of 2008, Andrea Ramirez, who previously plead guilty to fraud charges and is scheduled to be sentenced November 15, 2015, operated 21st Century, which defrauded financially distressed homeowners by making false promises and guarantees regarding 21st Century’s ability to negotiate loan modifications for homeowners. Employees of 21st Century made numerous misrepresentations to victims during the course of the scheme, including falsely telling victims that 21st Century was operating a loan modification program sponsored by the United States Government, including as part of the “Obama Plan.” Victims were generally instructed to stop communicating with their mortgage lenders and to cease making their mortgage payments. In addition to Ramirez, George, Buck, DiRoberto, Padilla, and Pelayo, five other California-based defendants previously pled guilty and are scheduled to be sentenced in the coming weeks. They are: • • • • • Michael Bruce Bates, of Moreno Valley; Michael Lewis Parker, of Pomona; Catalina Deleon, of Glendora; Hamid Reza Shalviri, of Montebello; and Mindy Sue Holt, of San Bernardino. This case is being investigated by SIGTARP, the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation Division, the United States Postal Inspection Service, and the Federal Housing Finance Agency, Office of Inspector General. The prosecution was brought by the United States Attorney’s Office for the Central District of California in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. Former Nomura RMBS Traders Charged with Multiple Fraud and Conspiracy Offenses; TARP Public-Private Investment Program Securities Involved in Alleged Overcharging—Ross Shapiro, Michael Gramins, Tyler Peters & Nomura Securities International On September 3, 2015, a federal grand jury in New Haven, Connecticut, returned a ten-count indictment by the United States District Court for the District of Connecticut, charging three former New York-based bond traders for Nomura Securities International, Ross Shapiro, Michael Gramins, and Tyler Peters, with conspiracy and fraud offenses. As alleged in the indictment, Shapiro, Gramins and Peters—all former Lehman Brothers employees—supervised the Residential Mortgage Backed Securities (“RMBS”) Desk at Nomura Securities International (“Nomura”) in New York. Shapiro was the Managing Director who oversaw all of Nomura’s trading in RMBS, Gramins was the Executive Director of the RMBS Desk and principally oversaw Nomura’s trading of bonds composed of sub-prime and option ARM loans, and 47 48 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Peters was the senior-most Vice President of the RMBS Desk and focused primarily on Nomura’s trading of bonds comprised of prime and alt-A loans. The indictment further alleges that Shapiro, Gramins, and Peters engaged in a conspiracy to defraud customers of Nomura by fraudulently inflating the purchase price at which Nomura could buy a RMBS bond to induce their victim-customers to pay a higher price for the bond, and by fraudulently deflating the price at which Nomura could sell a RMBS bond to induce their victim-customers to sell bonds at cheaper prices, each causing Nomura and the three defendants to profit illegally. According to the indictment, the three co-conspirators also trained their subordinates to lie to customers, provided the subordinates with the language to use in deceiving customers, and encouraged them to engage in the practice. In one instance, one of the defendants’ subordinate traders told a salesperson that he had “lied” about the price of bond and “marked up 2 pts,” to which the salesperson responded “haha sick . . . well played.” Further, in an effort to make an unearned and extra profit at the victimcustomers’ expense, the defendants allegedly created fictitious third-party sellers when the RMBS at issue, in actuality, sat in Nomura’s inventory. The defendants also allegedly colluded with at least one outside client to deceptively broker trades on their behalf. In one instance, an investment advisor for another firm concocted a false story with Shapiro to tell to customers. According to the indictment, he wrote to Shapiro asking, “when did I buy [the bond] and at what price.” The victims of this scheme include funds from around the world, retirement plan providers and a TARP investment firm which was managing taxpayer funds in an effort to buy and sell “troubled assets” in order to unlock frozen credit markets during the financial crisis under the Treasury Department’s Public Private Investment Program (“PPIP”). The indictment charges Shapiro, Gramins, and Peters with one count of conspiracy, which carries up to five years’ imprisonment; two counts of securities fraud, each of which carry up to 20 years imprisonment; and seven counts of wire fraud, which carry a maximum term of imprisonment of 20 years on each count. In a parallel action also on September 8, 2015, the Securities and Exchange Commission announced related civil fraud charges against Shapiro, Gramins, and Peters. This case is being investigated by SIGTARP; the Federal Bureau of Investigation; the United States Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and the Federal Housing Finance Agency Office of Inspector General. The case is being prosecuted by the United States Attorney’s Office for the District of Connecticut and is brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Former President and CEO of Park Avenue Bank Sentenced to Federal Prison – Charles Antonnuci, Sr., was the First Defendant Convicted of Fraud Against the TARP Program; Coconspirators Matthew Morris, former Park Avenue Senior Vice President, and Businessman Allen Reichman also Sentenced to Prison On August 20, 2015, Charles Antonucci, Sr., of Woodside, New York, the former President and Chief Executive Officer (“CEO”) of TARP Recipient Park Avenue Bank (the “Bank”)—and the first defendant convicted of fraud against the TARP program—was sentenced in the United States District Court for the Southern District of New York to 30 months imprisonment for his involvement in a massive fraud involving self-dealing, bank bribery, embezzlement of bank funds, attempting to fraudulently obtain more than $11 million worth of taxpayer rescue funds from TARP, and participating in a $37.5 million fraud scheme that left an Oklahoma insurance company in receivership. Antonucci was also ordered to forfeit $11.2 million to the United States and to provide more than $54 million in restitution to victims of his crimes, including, among others, the FDIC. Previously, in October 2010, Antonucci pled guilty pursuant to a cooperation agreement with the government. Additionally, on August 19, 2015, Matthew L. Morris, a former Senior Vice President of the Bank, who also pled guilty pursuant to a cooperation agreement with the government, was sentenced in the United States District Court for the Southern District of New York to one year and one day in prison. On August 6, 2015, following his February 2015 guilty plea, Allen Reichman, an executive at an investment bank and financial services company (the “Investment Firm”), was sentenced in the United States District Court for the Southern District of New York to twenty-one months in federal prison and ordered to pay $10 million in restitution for his role in the scheme that defrauded insurance regulators and the Investment Firm. As previously reported, on June 4, 2015, Wilbur Anthony Huff was sentenced in the United States District Court for the Southern District of New York to 12 years in federal prison and ordered to pay more than $108 million in restitution for committing various tax crimes that caused more than $50 million in losses to the Internal Revenue Service and more than $4.8 million in losses to the Federal Deposit Insurance Corporation; and for a massive fraud that involved bribery of bank officials, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators and an investment bank. The sentence followed Huff’s guilty plea to related charges in December 2014. According to court documents and statements made during court proceedings Antonucci, Morris, and Huff engaged in a massive multifaceted conspiracy from 2006 through 2010 in which they schemed to (i) receive and pay bank bribes, (ii) engage in self-dealing, (iii) defraud bank regulators and the board and shareholders of a publicly traded company, and (iv) fraudulently purchase an Oklahoma insurance company. The case was investigated by SIGTARP, the Federal Bureau of Investigation, the IRS, the New York State Department of Financial Services, Immigration and Customs Enforcement’s Homeland Security Investigations, and the Office of 49 50 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Inspector General of the FDIC, with assistance provided by the Department of Justice’s Tax Division and the United States Attorney’s Office for the Southern District of Florida. The case was prosecuted by the United States Attorney’s Office for the Southern District of New York in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. Bank Officer of Failed TARP Applicant Bank Sentenced to 3.5 Years in Federal Prison for Bank Fraud following Jury Trial – William R. Beamon, Jr., Appalachian Community Bank On September 30, 2015, the United States District Court for the Northern District of Georgia finalized a judgment against William R. Beamon, Jr., aka “Rusty,” of Dekalb County, Georgia, a former Vice President of TARP applicant Appalachian Community Bank (“Appalachian”), sentencing Beamon to 3.5 years in federal prison in connection with Beamon’s December 2014 conviction after a five-day jury trial on five counts of bank fraud related to his scheme to defraud Appalachian. Beamon was also ordered to pay more than $540,000 in restitution to his victims and forfeit real property involved in the offense. According to court filings, as vice president at Appalachian, Beamon was in charge of the bank’s foreclosure liquidation department. Beamon was also the sole owner of a shell company, Newmon Properties, LLC (“Newmon Properties”). Beamon and his co-conspirators devised and executed a fraudulent scheme in which they diverted funds from the bank. For example, in October 2009, Beamon lied to a real estate agent by stating that Beamon owned a property that, as Beamon knew, was actually owned by Appalachian as a foreclosed property. Beamon directed the real estate agent to market and lease that property as if Beamon were the owner. From April 2009 through December 2009, Beamon then collected and deposited more than $23,000 in illegal rent payments and security deposits into his personal bank account. Additionally, Beamon also fraudulently caused Appalachian to issue Newmon Properties a Platinum credit card which he used to obtain a cash advance from Appalachian for more than $91,000. Beamon further used the cash to purchase from Appalachian a cashier’s check for the same amount with which he purchased another property in the bank’s foreclosure inventory at below the fair market value. Less than two weeks later, Beamon sold the property for more than $148,000. In October 2008, Appalachian applied for, but did not receive, $27 million in TARP funding. On March 19, 2010, Appalachian was closed by the Georgia Department of Banking and Finance, which appointed the FDIC as receiver. The FDIC estimated that Appalachian’s failure would cost the deposit insurance fund more than $419 million. As previously reported, on April 5, 2013, Adam Teague, former Senior Vice President and senior loan officer of Appalachian was sentenced to 70 months in Federal prison, ordered to pay $5.8 million in restitution to the FDIC, and ordered to forfeit $7 million and certain real property in connection with his conviction for conspiracy to commit bank fraud for his participation in a scheme to defraud Appalachian of millions of dollars and hide past-due loans from FDIC. In February SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 2012, FDIC issued a lifetime ban against Teague from working in the banking industry. This case was investigated by SIGTARP, the United States Attorney’s Office for the Northern District of Georgia, the Federal Deposit Insurance Corporation Office of Inspector General, and the Federal Bureau of Investigation. This case was prosecuted in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. Senior TARP Bank Executive Pleads Guilty to Embezzlement, Stealing More than $90,000 From Client Accounts - Candice L. White, Front Range Bank On August 12, 2015, Candice L. White of Centennial, Colorado, a former Senior Vice President of TARP recipient Front Range Bank (“Front Range”), also of Centennial, Colorado pled guilty in the United States District Court for the District of Colorado to two counts of embezzlement by a bank officer in connection with her scheme to take money from client accounts and cover her tracks in the process. At sentencing, which is scheduled for November 2015, White faces up to 30 years in federal prison on each count. According to the plea agreement, from at least as early as July 2009 through March 2011, White embezzled more than $92,000 from client accounts at Front Range by requesting cashier’s checks and withdrawing cash from the client escrow accounts and other accounts that were not closely monitored by the victim account holders. White would then use the embezzled money for her own personal use. White was familiar with the victim accounts because she was the bank representative assigned to the accounts. To carry out her embezzlement, White approached a teller at the bank with a type of withdrawal slip and falsely informed the teller that she needed the cashier’s check or cash for the client or to pay a bill on the client’s behalf. Due to her status as a Senior Vice President at the Bank, the tellers trusted that White was telling the truth and had the required supporting documentation for the transactions. As part of her plea agreement, White agreed to pay $92,789.27 in restitution, reflecting the full amount of the victims’ loss, to Front Range, which reimbursed its clients for their losses. Omega Capital Corporation (“Omega”), of Centennial, Colorado, the holding company for Front Range Bank, received $2,816,000 in TARP funds in April 2009. During its time in TARP, Omega missed fifteen dividend payments totaling more than $575,000 owed to Treasury. Ultimately, in July 2013, Treasury sold its stake in Omega at auction at a loss and Omega’s missed payments were not repaid, resulting in a total taxpayer loss of more than $600,000. The case is being investigated by SIGTARP, the United States Attorney’s Office for the District of Colorado, and the Federal Bureau of Investigation and is brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. 51 52 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Executives of TARP Recipient Bank Admit Guilt in $13 Million False Invoice “Factoring” Scheme – Jeffrey Bell, Carolyn Passey & Stearns Bank, N.A. On September 15, 2015, Jeffrey Bell, the head of the Factoring Division at TARP recipient Stearns Bank, N.A. (“Stearns Bank”), of St. Cloud, Minnesota, pled guilty in the United States District Court for the District of Utah to one count of false bank entries for his role in a $13 million scheme to “purchase” nonexistent invoices (or “receivables”) from two student loan companies. In addition, on August 17, 2015, Carolyn Passey, the head of operations for Stearns Bank’s Factoring Division, also pled guilty in the United States District Court for the District of Utah to one count of making false bank entries for her role in the scheme. At sentencing, which is scheduled for December 2015, Bell and Passey each face up to 30 years in prison. According to court documents and statements made in court, from 2008 through March 2010, Bell and Passey caused Stearns to “purchase” nonexistent receivables from student loan companies, NextStudent and Cology. As part of the Factoring Division, Bell and Passey used a computer program called “FactorSoft,” which allowed bank factoring customers to submit their accounts receivables through not-yet-paid invoices, and have Stearns Bank “buy” the invoices at a discount. Without informing Stearns Bank’s directors, Bell and Passey submitted (or caused to be submitted) through Stearns Bank’s FactorSoft program invoices that were false and had inflated values. As a result, Stearns Bank provided significant funds to NextStudent and Cology without actual accounts receivable or collateral. Ultimately, Stearns Bank sold the portfolio of accounts receivable to another bank, without that bank’s knowledge of the fraudulent accounts receivable invoices for NextStudent and Cology. Stearns Financial Services, Inc., parent of Stearns Bank received $24.9 million in TARP funds in June 2009. The investigation is being conducted by SIGTARP, the United States Attorney’s Office for the District of Utah, the United States Postal Inspection Service, the United States Department of Housing and Urban Development – Office of Inspector General, and the Federal Bureau of Investigation. Estate of TARP Bank President Sued To Recover $17.3 Million Investment in TARP Bank Related to Concealment of Serial Frauds by President and Other Executives – Layton P. Stuart, One Financial Corporation & Onebanc & Trust, N.A. On July 1, 2015, the United States Department of Justice sued the estate and trusts of the late Layton P. Stuart, former owner and president of TARP recipient One Financial Corporation (“OneFinancial”), and its wholly-owned subsidiary, Onebanc & Trust, N.A. (“Onebanc”), both based in Little Rock, Arkansas, alleging that Stuart made misrepresentations to induce the United States Department of the Treasury to invest $17.3 million in TARP funds as part of the Treasury’s CPP program in June 2009. According to the complaint, which was brought under the False Claims Act and filed in the United States District Court for the District of Columbia, Stuart, SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 on behalf of One Financial, applied in late 2008 for a TARP investment totaling $17.3 million. Stuart is alleged to have knowingly made false statements about Onebanc’s financial condition as well as its intentions for the use of the TARP funds. In particular, the statements and TARP application allegedly concealed serial frauds that Stuart and other One Financial directors and bank executives had been committing and intended to continue committing on Onebanc. Specifically, as set forth in the complaint, the schemes involved Stuart’s diversion of funds from Onebanc for personal use including, within 30 days of receiving the $17.3 million in TARP funds, the diversion of more than $2 million into personal accounts for his own use. Stuart was terminated from Onebanc in September 2012. During the time it held TARP funds, OneFinancial missed thirteen dividend payments totaling more than $5.5 million owed to taxpayers. As previously reported, on March 3, 2015, the United States District Court for the Eastern District of Arkansas unsealed an indictment charging a number of Stuart’s conspirators which included four of Onebanc’s former senior executives, Tom Monroe Whitehead (former Chief Financial Officer); Michael Francis Heald (former Chief Operating Officer); Gary Alan Rickenbach (former Senior Executive Vice President); and Bradley Stephen Paul (former Executive Vice President) with conspiracy to commit bank fraud, misapplication of loan proceeds, making false entries in Onebanc’s books and records, making false statements to influence Onebanc, and obstructing a federal bank examination in connection with a longrunning scheme to deceive Onebanc’s regulators. A trial is scheduled to begin on December 14, 2015, and, if convicted, each defendant faces up to 30 years in federal prison on the bank fraud, misapplication, and false entries counts; up to 20 years on the money laundering count and up to five years on the conspiracy count. In addition, as previously reported, on April 28, 2015, Matthew D. Sweet, of Timbo, Arkansas, a Onebanc former Vice President and Controller, and another of Stuart’s conspirators, was sentenced in the United States District Court for the Eastern District of Arkansas to one year of probation, including six months of home detention, following his guilty plea to one count of money laundering in connection with his embezzlement of almost $75,000 from Onebanc. This investigation was conducted by SIGTARP, the Internal Revenue Service – Criminal Investigation, the Justice Department Civil Division’s Commercial Litigation Branch, and the United States Attorney’s Office for the Eastern District of Arkansas. Three Sentenced to Prison in TARP-related Scheme to Sell Properties from Federal Government’s HomePath Program – Carla Lee Miller, Xue Heu, Mark Steven Thompson & Greenfield Advisors, LLC. On July 20, 2015, Xue Heu, of Modesto, California, was sentenced in the United States Eastern District of California to five years and three months in federal prison and ordered to pay more than $762,000 in restitution in connection with his role in two investment fraud schemes including one designed to sell government-owned properties as official “TARP partners,” when, in reality, and as Hue and his codefendants knew, no such designation existed (the “TARP scheme”). In addition, 53 54 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM as a special condition of his supervised release, Hue is prohibited from seeking or obtaining employment that would involve acting in a fiduciary capacity. On July 29, 2015, Mark Steven Thompson, of Inverness, Florida, was sentenced in the United States District Court for the Western District Texas to 18 months in federal prison and ordered to pay $634,433 in restitution for his role in the TARP scheme following his December 2014 guilty plea to two counts of aiding and abetting and wire fraud. Thompson was further ordered to forfeit more than $250,000 seized from bank accounts Thompson held at TARP recipient banks as well as jewelry and two televisions. On August 5, 2015, Carla Lee Miller was sentenced in the United States District Court for the Western District of Texas to time-served (which amounted to eight months imprisonment after her January 2015 pre-trial detention) and ordered to pay $51,800 in restitution following her April 2015 guilty plea to conspiracy to commit wire fraud in connection with her role in the TARP scheme. According to court documents, between October 1, 2013, and December 31, 2013, Hue, Miller, and Price created fake identities in order to contact real estate investment firms and misrepresent that the defendants’ affiliated companies, Greenfield Advisors, LLC, and Escrow Professionals, Inc., were authorized by TARP to sell U.S. Government-held properties through a legitimate federal government program called HomePath. Through Greenfield Advisors, the defendants entered into contracts purporting to purchase properties from the HomePath program when, in fact, defendants had no authority to enter such contracts. Defendants further lured investors into placing funds into escrow accounts, and then pocketed the money for their own use. To advance the scheme, a real estate closing would allegedly occur, and, if pressed, Hue would create documents falsely purporting to be the deeds. In reality, however, no actual transfer of properties took place because none of the defendants had the actual authority to sell the property. As previously reported, on September 11, 2014, co-defendant Thomas Dickey Price pled guilty in the United States District Court for the Western District of Texas to one count of conspiracy to commit wire fraud in connection with his role in the scheme, and faces up to 20 years imprisonment when sentenced. This case is being investigated by SIGTARP, the United States Attorney’s Office for the Western District of Texas, the United States Attorney’s Office for the Eastern District of California, the Federal Bureau of Investigation, and the San Antonio, Texas, and the Stanislaus County (California) District Attorney’s Offices. California Man Admits to Bank Fraud Scheme, Paying Kickbacks to Loan Officer at TARP Recipient Bank – Chester Peggese & Broadway Federal Bank On September 25, 2015, Chester Peggese, pleaded guilty in the United States District Court for the Central District of California to bank fraud and filing a false income tax return in connection with a mortgage fraud scheme in which he paid kickbacks to Paul Ryan, a loan officer of TARP recipient, Broadway Federal Bank (“Broadway Federal”), to process loan applications of various Los Angeles-area SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 churches. At sentencing, Peggese faces up to 30 years in prison on the bank fraud count and up to three years in prison on the false tax return count. According to the plea agreement, Peggese held himself out to Los Angelesbased churches as a consultant who could obtain mortgage loans or loans to refinance existing mortgages from Broadway Federal. Between 2007 and 2009, defendant and others would meet with churches to obtain financial information, alter the information to make it appear as if the churches were more financially sound than they were, and then submit the false financial information to Broadway Federal. Based on these false financial statements, Broadway Federal would issue mortgages to the churches. Ryan, an insider at Broadway Federal, provided a template for presenting the financial information for the churches to ensure that the church loan applications containing the inflated financial information would be approved. Peggese would be paid out of escrow on the loans at closing, and kept the funds for himself in addition to giving Ryan kickbacks. The total actual loss to Broadway Federal resulting from Peggese’s conduct was more than $4,268,000. Additionally, Peggese falsely reported his income to the Internal Revenue Service, understating it by hundreds of thousands of dollars from 2007 to 2009. As previously reported, Ryan pled guilty in July 2014 to one count of bank bribery, admitting that he demanded and accepted more than $350,000 in illicit payments in relation to the scheme. Ryan faces up to 30 years in prison at sentencing which is scheduled for May 2016. In November 2008, Broadway Financial Corporation, of Los Angeles, California, the holding company for Broadway Federal, received $9 million in TARP funds, and, in December 2009, it received another $6 million. This case is being investigated by SIGTARP, the United States Attorney’s Office for the Central District of California, the Internal Revenue Service – Criminal Investigation, Federal Deposit Insurance Corporation Office of the Inspector General, and the Federal Bureau of Investigation. California Fraudster Sentenced to 45 Months Imprisonment for Massive Foreclosure Rescue Scam; Helped Already-Imprisoned Spouse Execute Scheme – Tamara Tikal & KATN Trust On July 16, 2015, Tamara Tikal, of Rio Vista, California, was sentenced in the United States District Court for the Eastern District of California to three years and nine months and ordered to pay more than $3,671,000 million in restitution for her role in a massive foreclosure rescue scam that victimized more than one thousand struggling homeowners out of millions of dollars. Even after Tamara Tikal’s husband, Alan David Tikal, the scam’s ringleader was twice jailed for his role in the scheme, Tamara Tikal continued operating the scam on his behalf. The sentence followed Tamara Tikal’s August 2014 guilty plea to conspiracy to commit mail fraud in relation to the scheme. As previously reported in March 2015, Alan Tikal, formerly of Brentwood, California, was sentenced to 24 years in federal in the United States District Court for the Eastern District of California, following his conviction after a bench trail before United States Judge Troy L. Nunley. Additionally on February 19, 2015, 55 56 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM co-defendant, Ray Jan Kornfeld, of Las Vegas, Nevada, was sentenced in the same court to five years in federal prison for his role in the scam after pleading guilty to one count of conspiracy. According to Tamara Tikal’s plea agreement and evidence presented at Alan Tikal’s trial, between January 2010 and August 2013, Alan Tikal, the principal behind a business known as “KATN Trust,” targeted distressed homeowners experiencing difficulties making their existing monthly mortgage payments. Alan Tikal promised to reduce victims’—many of whom did not speak English— outstanding mortgage debt by 75 percent, falsely claiming he was a registered private banker with access to an enormous line of credit and the ability to pay off homeowners’ mortgage debts in full. Homeowners were told that in return for various fees and payments, their existing loan obligations would be extinguished, and the homeowners would then owe new loans to Alan Tikal in an amount equaling 25 percent of their original obligation. In fact, however, the Tikals never made any payments to financial institutions on behalf of homeowners in satisfaction of their pre-existing mortgage debt obligations; the purported “loan” payments homeowners paid to Tikal were deposited into accounts at, among others, TARP recipient bank, JPMorgan Chase, and simply spent by Tikal, his family, and his associates for personal use; and there was not a single instance in which a homeowner’s debt was paid, forgiven or otherwise extinguished as a result of the mortgage relief program. In all, the defendants convinced more than one thousand homeowners in California and other states to participate in the program. As a result of their participation, many homeowners became delinquent on their loans and ultimately had their homes foreclosed upon. Collectively, those homeowners paid more than $5,800,000 in fees and monthly payments into the program. Of that, $2,500,000 or more was paid into accounts controlled by the Tikals. In addition to doing Alan Tikal’s bidding while he was incarcerated, Tamara Tikal played a variety of roles at KATN, including communicating with individual homeowners and falsely assuring them of the legitimacy of the program. The case is being investigated by SIGTARP, the Internal Revenue Service – Criminal Investigation, the California Department of Justice, and the Stanislaus County District Attorney’s Office. It is being prosecuted by the United States Attorney’s Office for the Eastern District of California and the California Attorney General’s Office, in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. Two Plead Guilty in Massive $18.5 Million Mortgage Modification Scheme; More than 8,000 Homeowners Victimized Nationwide – Ped Abghari & Justin Romano, Esq. On September 14 and 15, 2015, respectively, Justin Romano, of Blue Point, New York, and Ped Abghari, aka “Ted Allen,” of Irvine, California, pled guilty in the United States District Court for the Southern District of New York for their roles in orchestrating a massive mortgage modification scheme that collectively defrauded over 8,000 desperate homeowners out of over $18.5 million. Abghari and SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Romano collected upfront fees from homeowners, falsely claiming homes could be saved through TARP’s foreclosure prevention program, the Home Affordable Modification Program (“HAMP”). In reality, however, Abghari and Romano did no more than complete the free HAMP application available online and instead pocketed money homeowners thought were being paid to their lenders on their mortgage. Abghari and Romano each pled guilty to wire fraud and conspiracy to commit wire fraud charges and, at sentencing which has been set for January 14, 2016, face up to 20 years in federal prison on each count. Abghari also pled guilty to misprision of a felony, for which faces up to three years in federal prison. According to the indictment and statements made at the plea proceedings: Abghari was a president and owner of an Irvine, California, company that offered purported mortgage modification services (the “Telemarketing Firm”). Justin Romano held himself out as the president of two purported law firms (the “Purported Law Firms”), based in Holbrook, New York, and Sayville, New York, which offered purported mortgage modification services in conjunction with the Telemarketing Firm. From at least January 2011 through May 2014, through the Telemarketing Firm and the Purported Law Firms, Abghari and Romano, among others, perpetrated a scheme to defraud homeowners in dire financial straits who were seeking relief through HAMP and other mortgage relief programs. Through a series of false and fraudulent representations, the defendants duped thousands of homeowners into paying thousands of dollars each in up-front fees in exchange for little or no service from the defendants or their companies. In total, through their scheme, the defendants obtained over $18.5 million from more than 8,000 victim-homeowners throughout the United States. Through the Telemarketing Firm, Abghari and others purchased thousands of “leads,” consisting of the name, address, and other contact information of homeowners who had fallen behind in making mortgage payments on their homes. Abghari and others then caused the Telemarketing Firm to send, by e-mail, false and fraudulent solicitation letters to the homeowners they identified through the “leads,” misleading these homeowners into believing that their mortgages were already under review and that new, modified rates had already been contemplated and approved by the homeowners’ lenders. At the direction of Abghari and Romano, among others, the Telemarketing Firm’s telemarketer and sales people (the “Sales Staff”) called homeowners and/ or answered telephone calls from homeowners who received the Telemarketing Firm’s fraudulent solicitations. During these calls, in an effort to convince the homeowners to pay up-front fees, the defendants, through the Sales Staff, regularly caused various false and fraudulent representations to be made to homeowners, including that: • the homeowners were retaining a “law firm” and an “attorney” who would complete the HAMP application and negotiate aggressively on the homeowners’ behalf with banks to modify the terms of the homeowners’ mortgages; 57 58 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM • the defendants would “pre-approve” the homeowners for a guaranteed modification through HAMP; • the defendants employed underwriters who would calculate and guarantee the homeowners a new, modified rate and monthly mortgage payment; and • the defendants’ mortgage modification services were free, and the up-front fees paid by the homeowners would be paid directly to the homeowners’ lenders. In fact, as Abghari and Romano well knew, all of these representations were false and fraudulent. As previously reported, co-defendant Dionysius Fiumano, a/k/a “D,” who was charged in August 2014 together with Abghari and Romano, is scheduled to begin trial in December 2015 before the Honorable John F. Keenan, in the United States District Court for the Southern District of New York. This case is being investigated by SIGTARP. It is being prosecuted by the United States Attorney’s Office for the Southern District of New York and is brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. Westchester Businessman Pleads Guilty to Conspiring to Make False Statements to a TARP Recipient Bank and Filing False Federal Tax Returns – Selim “Sam” Zherka. On August 27, 2015, Selim “Sam” Zherka, of Somers, New York, pled guilty in the United States District Court for the Southern District of New York to conspiring to make false statements to a bank in order to receive millions of dollars in loans and to filing materially false tax returns with the Internal Revenue Service (“IRS”). As part of his plea agreement, Zherka agreed to forfeit $5.23 million. At sentencing, scheduled for December 2015, Zherka faces up to five years in federal prison. According to court documents, from December 2005 through the present, Zherka conspired with others to obtain $63.5 million in loans from TARP-recipient Sovereign Bank (now Santander), for the purchase and/or refinancing of apartment house complexes in Tennessee by lying about the purchase price of the real estate he was acquiring and the amount of the down payment he was making toward the purchase. Additionally, Zherka admitted to having repeatedly submitted fraudulent tax returns to the IRS that overstated depreciation expenses and understated Zherka’s capital gains for the real estate holding companies in which he was a partner and which, in turn, owned apartment housing complexes, thereby reducing the real estate companies’ tax liabilities. Four other individuals, Genaro Morales, Mark Pagani, Pasquale Scarpa, and Kevin Sisti previously pled guilty to conspiring with Zherka in connection with these real estate schemes, including obtaining loans from TARP recipient Sovereign Bank. At sentencing, each faces up to 35 years in federal prison. This case is being investigated by SIGTARP, the United States Attorney’s Office for the Southern District of New York (White Plains Division), the Federal Bureau of Investigation, and the Internal Revenue Service – Criminal Investigation. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Three from New Jersey Sentenced for Roles in Massive Mortgage Fraud Scheme – Delio Coutinho, Kenneth Sweetman, Carmine Fusco On August 11, 2015, Delio Coutinho, of Woodbridge, New Jersey, a former loan officer at a northern New Jersey mortgage brokerage company, was sentenced in the United States District Court for the District of New Jersey to 36 months in prison and ordered to pay more than $1.3 million in restitution in connection with his role in a large-scale mortgage fraud scheme that caused millions of dollars in losses. As a special condition of his supervised release, Coutinho also is prohibited from holding, seeking, or obtaining employment in the mortgage and/or real estate industries. The sentence follows Coutinho’s April 2014 guilty plea to conspiracy to commit wire fraud. On July 27, 2015, Kenneth Sweetman, of Nutley, New Jersey, was sentenced in the United States District Court for the District of New Jersey to 24 months in federal prison for his role in the scheme following his April 2014 guilty plea to one count of conspiring to commit wire fraud affecting a financial institution and was ordered to pay more than $2.2 million in restitution. On July 13, 2015, Carmine Fusco, of East Hanover, New Jersey, who also previously pled guilty to conspiring to commit wire fraud affecting a financial institution, was sentenced to 27 months in prison and also ordered, together with Sweetman, to pay more than $2.2 million in restitution. As a special condition of supervised release, Sweetman and Fusco are each prohibited from holding, seeking, or obtaining employment in the mortgage and/or real estate industries, and from providing services related mortgage origination, processing, and or closing. According to documents filed in this case and statements made in court: From March 2008 through June 2012, Coutinho and others conspired to release liens on encumbered properties through fraudulently arranged short sales, allowing Coutinho and others to profit from new, fraudulent mortgage loans obtained on the properties. To complete the short sales, Coutinho and others submitted materially false closing and other documents to mortgage lenders, as well as fraudulent mortgage loan applications to lenders to obtain new loans on multiple properties in Elizabeth, New Jersey, totaling around $2 million in illegal mortgage proceeds. For their part, from March 2011 through July 2012, Sweetman and Fusco formed shell limited liability companies with names similar to licensed title companies. They then opened bank accounts in the shell companies’ names to conceal their identity and control the receipt and distribution of fraudulently obtained mortgage loan proceeds. Sweetman and Fusco also conducted real estate closings even though they were neither licensed attorneys nor title agents. In addition, like Coutinho, Sweetman, Fusco, and other conspirators submitted false and fraudulent loan applications, supporting documents, and closing documents to mortgage lenders. Among other things, these documents included and reflected fraudulent gift loans, false appraisals, and documents that misrepresented the owner of properties and the intended disposition of loan proceeds. Using these methods, Sweetman, Fusco, and others conducted 16 fraudulent real estate 59 60 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM transactions, including 11 Elizabeth properties, and obtained more than $5 million in illegitimate proceeds. As previously reported, on January 23, 2013, as part of a wide-scale mortgage fraud investigation in New Jersey, Coutinho, Sweetman, Fusco, and eight other individuals were arrested by SIGTARP agents and its law enforcement partners and charged related to their roles in fraudulent mortgage schemes. In addition to Coutinho, Sweetman, and Fusco, those arrested were: Joseph DiValli, Christopher Woods, Matthew Amento, Jose Luis Salguero Bedoya, Paul Chemidlin, Jr., Christopher Ju, Yazmin Soto-Cruz, and Jose Martins. • In 2012, Woods and Amento each pled guilty to conspiracy to commit wire fraud and wire fraud, and each were sentenced in 2013 to 18 months imprisonment and ordered to pay $1,267,851 in restitution to, among others, the Ggovernment and TARP recipients Bank of America and PNC Bank. • On June 8, 2015, Ju was sentenced to ten months in prison and ordered to pay $256,511.07 in restitution, also having pled guilty in 2014 to conspiracy to commit wire fraud affecting a financial institution. • In May 2015, DiValli pled guilty to conspiracy to commit wire fraud affecting a financial institution, wire fraud, and tax evasion, and is scheduled to be sentenced on November 24, 2015. • In 2014, Soto-Cruz, Martins, Chemidlin, and Salguero each pleaded guilty to conspiracy to commit wire fraud affecting a financing institution and each is scheduled to be sentenced in the coming weeks. The case is being investigated by SIGTARP, the United States Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, the United States Postal Inspection Service, the United States Department of Housing and Urban Development Office of Inspector General, Federal Housing Finance Agency Office of Inspector General, Internal Revenue Service–Criminal Investigation, and the Hudson County (N.J.) Prosecutor’s Office. The case is being prosecuted in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. Las Vegas Couple Guilty of Defrauding Over 400 Vulnerable Homeowners in $3.8 Million Mortgage Scam—Kristen Michelle Ayala, Joshua Manuel Sanchez & “Equity Restoration Group” On July 28, 2015, Kristen Michelle Ayala, aka “Amber Lynch,” aka “Olivia Benet,” aka “Grace Williams,” and Joshua Manuel Sanchez, aka “Nelson Cruz,” aka “Chris Ward,” aka “Daniel Mora,” both formerly of Las Vegas, Nevada, pled guilty in the United States District Court for the Eastern District of Virginia to conspiracy to commit wire fraud for their roles in a $3.8 million dollar mortgage modification scam, in which they pretended to be part of the United States Government’s Home Affordable Modification Program (“HAMP”). The guilty pleas follow the defendants’ indictments and arrests by law enforcement earlier this year. At SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 sentencing, scheduled in the coming weeks, each faces up to 20 years in federal prison. According to the statement of facts filed with the plea agreement: from in and around October 2012 through September 2014, Ayala, Sanchez, and others executed a scheme to defraud vulnerable victim homeowners who were at risk of foreclosure. Ayala and Sanchez developed fraudulent documents, telephone scripts, and aliases in an effort to defraud the victim homeowners. The scheme lulled victim homeowners into believing that the defendants were part of HAMP, a legitimate U.S. Government program funded by taxpayer dollars through TARP. During the execution of the ruse, the Ayala and Sanchez used documents containing fraudulent Government seals, made false statements regarding modification of the victims’ mortgages through the HAMP program, and pocketed the victims’ mortgage payments rather than directing the payments to the victims’ lenders. To date, the scheme has defrauded more than 400 victims, caused losses of over $3.8 million dollars, and resulted in many victims losing their homes despite the victims’ efforts to modify their mortgages and continue to make payments on their loans. The case is being investigated by SIGTARP and the United States Attorney’s Office for the Eastern District of Virginia. Owner of Media Agency, Lead Generator That Advertised Government Mortgage Assistance, Pleads Guilty to False Advertising—Matthew Goldreich & National Mortgage Help Center LLC On August 13, 2014, Matthew Goldreich, of East Lyme, Connecticut, the owner of a media agency, pled guilty in the United States District Court for the District of Connecticut, to a false advertising offense stemming from his production and dissemination of false advertisements for mortgage modification services, including ones that claimed affiliation with the United States Government. Goldreich faces up to one year in federal prison and a fine of up to $100,000 when sentenced on November 5, 2015. According to court documents and statements made in court, Goldreich used his New London-based media agency, National Media Connection, LLC, to produce and air television, radio, and internet advertisements for the National Mortgage Help Center, LLC (“NMHC”), a shell company incorporated by Goldreich. The advertisements falsely claimed that NMHC could help struggling homeowners obtain home mortgage loan modifications. For example, one advertisement that aired in 2010 stated: “Attention homeowners. We know it’s tough out there. And while America’s homeowners are facing more challenges than ever before, the National Mortgage Help Center is ready to help.” The same advertisement also stated: “We may be able to lower your rate to as low as 1% and cut your mortgage payment in half. Our trained specialists know all the new regulations to get you quick relief. We help thousands of homeowners every day.” In addition, seeking to capitalize on the United States Treasury Department’s mortgage assistance program, the Home Affordable Modification Program or “HAMP,” many of the advertisements falsely depicted NMHC as being affiliated 61 62 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM with the federal Government, including through references to Government stimulus programs and the use of President Barack Obama’s image and also included toll-free telephone numbers for mortgage borrowers to call for help modifying their mortgages. In truth, NMHC was not affiliated with the federal Government, did not provide mortgage modification services for any homeowners, and operated only as a front. Homeowners who called the toll-free telephone numbers advertised by NMHC were instead routed to National Media Connection’s clients. Those clients, in turn, paid National Media Connection for these “leads.” Under the pretense of helping homeowners modify their mortgages, certain National Media Connection clients then charged the homeowners fees and provided no services whatsoever in return. The investigation is being conducted by SIGTARP, the United States Attorney’s Office for the District of Connecticut, the United States Postal Inspection Service, the United States Department of Housing and Urban Development – Office of Inspector General, and the Federal Bureau of Investigation. President of Oregon Onion Farming Company Sentenced After Pleading Guilty to Bankruptcy Fraud by Concealing Assets From Creditors, Including TARP Recipient Bank – Farrell Larson & Zions Bancorporation On September 8, 2015, Farrell Larson, of Meadow, Utah, was sentenced in the United States District Court for the District of Idaho to five years probation and ordered to pay $47,000 in restitution to his victim-creditor, TARP recipient, Zions Bank, of Salt Lake City, Utah, following Larson’s June 2015 guilty plea to one count of bankruptcy fraud. As previously reported, according to court documents, Larson was the President and co-owner of Select Onion and Larson Land Company, which operated an onion farm and onion processing plant in Ontario, Oregon. In connection with a 2012 Chapter 11 bankruptcy Larson filed as the debtor in the United States Bankruptcy Court for the District of Idaho, Larson Land Company merged with Select Onion. On April 19, 2012, the Chief Bankruptcy Judge for the District of Idaho ruled that Larson could not use cash collateral of the Larson Land Company or Select Onion. But, in the days following the ruling, on April 20 and 23, 2012, Larson caused a total of $56,000 in cash to be withdrawn from Select Onion bank accounts, which reflected assets obtained by Select Onion after the bankruptcy filing. These withdrawals and subsequent money transfers—made to Larson himself, Larson’s family members, and companies Larson controlled—were done without the knowledge or authorization of the bankruptcy court or bankruptcy trustee, and Larson admitted to knowingly concealing assets from the trustee, his creditors and the bankruptcy court with the intent to defraud. In November 2008, Zions Bancorporation, of Salt Lake City, Utah, parent of Zions Bank, received $1.4 billion in TARP funds. This case was investigated by SIGTARP, the United States Attorney’s Office for the District of Idaho, and the Internal Revenue Service-Criminal Investigation. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Five Charged with Mortgage Fraud and Racketeering in Massive Short Sale Scam; False Promises included TARP’s Home Affordable Foreclosure Alternatives Program—Christopher Nelson, Niket Kulkarni, Thomas J. Adams, Robyn Reese, James Reese & American Equity Foundation On September 18, 2015, Christopher Nelson, of Henderson, Nevada (president, director, chairman and chief executive officer of American Equity Foundation (“AEF”); Niket Kulkarni, of Los Angeles, California (AEF’s treasurer and secretary), as well as Thomas J. Adams, Robyn Reese (both AEF employees) and James Reese (AEF’s realtor) were charged in Clark County District Court for the State of Nevada with pattern mortgage lending fraud, racketeering, and theft, among others, in connection with the operation of their scam short sale business, AEF. According to the indictment, around August 2012 to April 2014, the defendants solicited customers to participate in a short sale program purportedly associated with the federal government called the Neighborhood Stabilization Plan in exchange for an upfront fee of between $299 and $2,000. The defendants falsely represented to their clients, however, that AEF could facilitate short sales of customers’ homes to investors and that AEF was a nonprofit organization with a primary office located on Pennsylvania Avenue in Washington, D.C. Then, the customers were told that they could lease their homes back from the purported investors for a period of time, after which they would have the opportunity to repurchase their homes at 90 to 100 percent of the home’s market value. The indictment further alleges that, between May and August 2013, Adams, together with Robyn and James Reese, lied to clients about their ability to qualify for a short sale through the TARP-funded Home Affordable Foreclosure Alternatives program (“HAFA”). In total, the defendants are alleged to have scammed customers out of more than $133,000. The case is being investigated by SIGTARP, the Nevada Attorney General’s Office, and the Department of Housing and Urban Development – Office of Inspector General. Chief Accountant for Nationwide Mortgage Modification Scam Company Pleads Guilty; Company Feigned Affiliation with Government, including TARP’s Making Home Affordable Program – Louis Saggiani & U.S. Homeowners Relief On August 31, 2015, Louis Saggiani of Los Angeles, California, manager and chief accountant for U.S. Homeowner’s Relief, of Orange County, California, and related entities, pled guilty in the United States District Court for the Central District of California, to conspiracy to commit mail and wire fraud in connection with a fraudulent mortgage modification scam offering bogus loan modification programs to hundreds of financially distressed homeowners while feigning affiliation with federal Government programs, including TARP’s Making Home Affordable Program. Saggiani faces up to five years in prison when sentenced. As previously reported, on July 22, 2014, Saggiani and co-defendants Aminullah Sarpas, Samuel Paul Bain (the company’s co-owners and principals), and Damon Grant Carriger (the company’s principal sales manager) were charged with 63 64 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM conspiracy and mail and wire fraud in connection with the scam. Bain was also charged with money-laundering. Saggiani, Sarpas, and Carriger were arrested by SIGTARP agents and law enforcement partners while Bain was in state custody at the time of the indictment. If convicted after trial (scheduled for December 2015), Sarpas, Bain, and Carriger each face up to five years in Federal prison for the conspiracy count, as well as 20 years in prison for each of the mail fraud, wire fraud, and (with respect to Bain) money laundering counts. According to the court documents, Saggiani admitted he (and his co-defendants are alleged to have) operated a series of telemarketing “boiler rooms” that, in exchange for substantial up-front fees, purportedly offered home loan modification services to distressed homeowners in the wake of the 2008 financial crisis and housing market collapse. From late 2008 to early 2010, the defendants operated multiple offices in California under a series of company names. When pressure from growing customer complaints about the purported scam mounted at the Better Business Bureau or attracted attention from state regulators such as the California Department of Justice, the defendants would shut down, and change each company name. Further, when served with a cease and desist order from the California Department of Real Estate prohibiting the defendants from collecting advance fees, the defendants deliberately ignored the order and continued collecting advanced fees from struggling homeowners in exchange for purported loan modification services. Furthermore, according to court documents, defendants and their associates used a consistent sales pitch throughout the scheme. Their advertising materials and telemarketers convinced struggling homeowners to pay upfront fees ranging from approximately $1,450 to around $4,200 by falsely: (i) promising that the homeowners were highly likely to secure mortgage modification, including a reduced interest rate as low as two percent and/or a reduction of principal; (ii) touting a 97% success rate in securing modifications; and (iii) advertising a complete money-back guarantee, as well as an affiliation with Federal housing support programs. For example, the companies’ marketing materials falsely implied that they were affiliated either with a Government entity or a Government program designed to offer homeowners mortgage debt relief, and sometimes made specific references to actual Government websites such as the U.S. Treasury Department’s www.MakingHomeAffordable.gov website and displayed official Government logos. According to court documents, however, as the defendants well knew, all of these claims were false and/or materially misleading. Despite their promises that homeowners would receive better loan terms, the vast majority of the hundreds of victims received no favorable loan modifications. In fact, several of the victims learned from their mortgage lenders that the defendants’ companies had never made any contact on the homeowners’ behalf. Furthermore, the defendants’ companies were neither affiliated with any Government program, nor were they licensed real estate brokers. In addition, the customers’ funds were generally spent on defendants themselves, payments to sales people, and other business expenses, and were not placed in trust accounts as was promised. Attorneys did not give personal attention to individual victims and instead were paid by defendants SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 to write substantially identical form letters to some lenders. With respect to the purported money-back guarantee, the defendants routinely used stalling tactics or just ignored homeowners’ repeated demands for refunds after the homeowners did not receive the promised loan modifications. This case is being investigated by SIGTARP and the U.S. Attorney’s Office for the Central District of California, the United States Postal Inspection Service, and the Internal Revenue Service – Criminal Investigation. This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. Massachusetts Woman Charged with Mortgage Fraud, Victimized TARP Recipient Banks – Denise Bruce On September 30, 2015, Denise Bruce, of Hingham, Massachusetts, was charged in the United States District Court for the District of Massachusetts with five counts of bank fraud for defrauding mortgage companies, including subsidiaries of three TARP recipient banks (JPMorgan Chase, Wells Fargo, and Goldman Sachs), with multiple mortgages she obtained on a single residence. If convicted, Bruce faces up to 30 years in prison on each count. According to the indictment, in the run-up to the financial crisis, from no later than September 2005 until at least March 2008, Bruce fraudulently obtained five mortgage loans from different banks in amounts ranging from $325,000 to $487,500 and totaling more than $2.1 million on her residence by submitting false information regarding her employment history, income, assets, and debt. In addition, Bruce allegedly filed fraudulent discharges of mortgages with the Plymouth County Registry of Deeds to create the appearance that the earlier loans had been paid in full when, in fact, none of them had. Wells Fargo & Co. and JPMorgan Chase each received $25 billion in TARP funds, and Goldman Sachs received $10 billion. The case is being investigated by SIGTARP, the United States Attorney’s Office for the District of Massachusetts, and the Federal Housing Finance Agency – Office of Inspector General. Two Massachusetts Women Charged with Short Sale Scam that Victimized TARP Banks – Hyacinth Bellerose & Dahianara Moran On September 25, 2015, Hyacinth Bellerose, of Dunstable, Massachusetts, and Dahianara Moran, of Methuen, Massachusetts, were charged in the United States District Court for the District of Massachusetts with conspiracy to commit bank fraud in connection with a long-running short sale scam that victimized TARP recipient banks, Bank of America, JPMorgan Chase, and First Horizon National Corporation (“First Horizon”). If convicted, Bellerose and Moran each face up to thirty years in prison. According to the indictment, between August 2007 and June 2010, Bellerose, Moran, and others conspired to engage in sham short sales of homes on dozens of residential properties throughout Massachusetts. Specifically, the defendants agreed to falsely represent to short-selling banks that the sales were arms-length 65 66 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM transactions between unrelated parties, when, in fact, as the defendants knew, the transactions were not arms-length and the sellers retained control of (and frequently continued to live in) the properties after the sale. Defendants also conspired to submit misleading and false documents to banks in order to induce the short-selling banks to permit the sales and to release the sellers from their unpaid mortgage debts, while also inducing the purported buyers’ banks to provide financing for the deals. To accomplish the scheme, Bellerose, Moran, and others used straw buyers which included Moran’s family members, including her mother and brother-in-law. Additionally, Bellerose served as the closing attorney on some of the sham short sales while other co-conspirators served as the real estate agent and mortgage broker or loan officer. Bellerose and a co-conspirator also operated an entity called “Foreclosure 911” that marketed itself as a short sale negotiation firm and negotiated with the selling banks. For her part, Moran, at the direction of a co-conspirator, prepared fake earnings statements to submit to the banks in support of some of the false loan applications on behalf of straw buyers. In one example, in July 2008, Moran’s brother-in-law acting as a straw buyer completed and submitted to First Horizon Home Loans a loan application which stated falsely that the brother-in-law was employed as a maintenance engineer at the not-for-profit organization where Moran was, in actuality, the director of human resources and interim Chief Executive Officer. In support of the application, Moran personally prepared phony earnings statements indicating that her brother-in-law was employed by and received wages from the non-profit organization. In reality however, as Moran and the others knew, her brother-in-law was not—and had never been—so employed. First Horizon, of Memphis, Tennessee, parent of First Horizon Home Loans received $866.5 in TARP funds in November 2008. Bank of America and JPMorgan each received $25 billion in TARP funds in 2008. This case is being investigated by SIGTARP, the United States Attorney’s Office for the District of Massachusetts, and the Department of Housing and Urban Development – Office of Inspector General. S ECT I O N 2 SIGTARP RECOMMENDATIONS 68 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 SIGTARP has a responsibility to conduct oversight over everything and everyone in TARP programs, not just Treasury. Making recommendations to improve the effectiveness and efficiency of Government, and prevent fraud, waste, and abuse, is the traditional role of an office of inspector general. Given that SIGTARP is a Special OIG, our role is not to improve the effectiveness of Treasury, but to improve the effectiveness and efficiency of Government TARP programs, and protect TARP from fraud, waste, and abuse. Within that role, SIGTARP has issued reports raising concerns over TARP programs that others have not raised before. SIGTARP’s reports and recommendations raise awareness to obstacles that could stand in the way of TARP program effectiveness. Improvements in TARP programs can come from Treasury and other Federal agencies with a role in TARP, as well as others who Treasury has chosen to administer TARP programs, such as mortgage servicers in HAMP, and state housing finance agencies in the Hardest Hit Fund. RECOMMENDATIONS CONCERNING TARP’S HARDEST HIT FUND IN FLORIDA After five years, HHF in Florida has helped only 22,400 homeowners—far less than expected—using only about half the $1 billion in TARP funds available. On October 6, 2015, SIGTARP reported on the “Factors Impacting the Effectiveness of Hardest Hit Fund Florida,” the findings of which are set forth in detail in Section 1 of this report. SIGTARP found that Treasury abandoned its announced intent to bring strict accountability by measuring Hardest Hit Fund program effectiveness, and as a result, Treasury has allowed the Hardest Hit Fund in Florida to underperform compared to other HHF states, consistently. At the beginning of the program, Treasury told participating state housing finance agencies (“HFAs”) that Treasury required specific goals for each HHF program and that state HFAs measure program progress against those goals. In April 2012, SIGTARP published an audit report finding that Treasury has no goals or targets to measure program effectiveness due to fear of impacting the “dynamic nature” of this TARP program. In SIGTARP’s October 2015 report on HHF Florida, SIGTARP found that Treasury’s lack of goals or targets has led to a lack of accountability and effectiveness of both Treasury and Florida’s HFA. HHF Florida has the lowest homeowner admission rate of any HHF state, one of the highest withdrawn application rates, and has consistently denied homeowners at higher rates than the national average. No TARP program is dynamic if it is not effective in actually providing assistance. The history of HHF Florida has shown that when Treasury focuses its oversight on measuring program effectiveness (as originally announced) rather than mere compliance, the result is improvement in TARP program performance. Treasury took strong action to increase the effectiveness of HHF Florida after SIGTARP’s 2012 report and recommendations, by issuing an Action Memorandum to Florida’s 69 70 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM HFA in November 2012. Treasury instructed Florida’s HFA to increase the low number of homeowners assisted, raise the ratio of approved homeowners to denied homeowners, increase inadequate staffing levels, and create a program to address negative equity. Treasury also asked for a written plan and set a minimum target of an average of 750 funded homeowners a month, warning, “If [HHF Florida] fails to achieve these goals, Treasury will consider additional steps, including possible remedial actions, to improve performance.” Treasury told Florida’s HFA to lengthen assistance, to “widen the net.” The improvements made after Treasury intervened to change the game by taking a stronger role after SIGTARP’s 2012 report prove that the action SIGTARP recommended in 2012 can make a difference over whether a state flourishes or flounders. Treasury issued similar HHF action memoranda to Arizona, Georgia, and New Jersey in 2012. After publishing our October 6, 2015 HHF report, SIGTARP learned that in July 2015, Treasury did exactly what SIGTARP recommended. On July 10, 2015, Treasury sent an action memorandum holding HHF Alabama accountable to targeted numbers of homeowners to be assisted in each of four HHF programs. Treasury measured HHF Alabama’s performance against those targets, and found performance lacking and that HHF Alabama has fallen behind other states. Treasury requested a formal written plan identifying measurable targets for homeowners assisted (and blighted structures removed) over the next four quarters and specific action to reach those targets. Treasury also set a goal for the amount of HHF funds to be committed each month. Treasury even suggested some urgency in its July 2015 letter, recommending HHF Alabama take “immediate action to improve its performance,” stressing that it “must show substantial progress over the next two quarters and clearly demonstrate that it can effectively utilize these funds and reach its target for the number of households served.” Treasury’s strong action to bring accountability by measuring HHF Alabama’s effectiveness demonstrates that conducting the type of strong action that SIGTARP recommended is in keeping with the “dynamic” nature of HHF, and is necessary to ensure that the program is effective in providing assistance to homeowners. However, Treasury must continue to follow up in measuring HHF Alabama’s effectiveness in order for performance to improve. Despite improvements made in 2013 from Treasury’s intervention, HHF Florida continues to lag behind other HHF states. In its evaluation report this month, SIGTARP made 20 new recommendations to improve HHF Florida to provide Florida homeowners the same opportunity for HHF assistance as homeowners in other states, and to protect HHF against fraud. Treasury said they would review each one in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. To improve the effectiveness of the Hardest Hit Fund Florida on an urgent basis, and to ensure that Florida homeowners have the same chance of Hardest Hit Fund assistance as homeowners in other HHF states, Treasury should improve the homeowner admission rate in HHF Florida to a targeted SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 level that would bring it closer to the average homeowner admission rate of the other HHF states. Treasury should set numeric targets that HHF Florida must meet each quarter to reach the targeted homeowner admission rate and include those targets in an action memorandum to Florida’s housing finance agency. Treasury’s data shows that only 20% of homeowners (22,400 of 109,774) who applied for help from HHF Florida received assistance, as of March 31, 2015. HHF Florida has the lowest rate of admitting homeowners into HHF than any other HHF state. HHF Florida is far below the other 18 HHF states that average providing assistance to about half of homeowners who applied (204,111 of 426,632, or 48%). By not measuring progress against a target homeowner admission rate, the low homeowner admission rate for HHF Florida has been relatively constant (18% to 23%). Treasury sent HHF Florida an action memorandum in 2012, just like the one Treasury recently sent to HHF Alabama. It is time for Treasury to take this kind of strong action again. Treasury should go back to its roots—how it described HHF—of combining state flexibility with strict Treasury accountability, through goals for effectiveness and measuring progress against those goals. To change a future outcome for the underperforming HHF Florida, it is time for Treasury to change the game. Otherwise HHF Florida may spend the $1 billion by December 2017, but it risks not being as effective as it can be to help the urgent needs of Florida homeowners now. All TARP programs are emergency programs designed to help during times of crisis. That includes HHF Florida. To improve the effectiveness of the Hardest Hit Fund in all states on an urgent basis, Treasury should form a HHF performance committee to meet each quarter to assess performance by each state housing finance agency in comparison to other state HHF programs, identify obstacles and risks, and develop strategies to mitigate those obstacles and risks. Treasury should memorialize the work of that committee through meeting minutes, and report on those obstacles and risks, as well as mitigation strategies to the Treasury Deputy Secretary twice a year. It can be natural with such close contact with a state HFA for Treasury to not want to come down hard on them. Oversight is not easy or comfortable. There is a natural tension with holding someone accountable. It is more comfortable to give deference—to “leave it to the states,” as Treasury officials told SIGTARP, to be satisfied with some steady performance and a state HFA justification for worse performance than other states. The Administration and Treasury announced that HHF would give states flexibility to tailor local solutions, but that flexibility would come with strict accountability by Treasury—that program effectiveness would be measured. A performance committee that is made up of others who do not stay in close contact with state HFAs can bring objectivity to Treasury’s measurement of program performance. That committee can ensure that flexibility and innovation 71 72 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM does not come in a Federal program without accountability that can be measured against targets. It can be easier for Treasury’s program staff to leave oversight to Treasury compliance staff, but Treasury’s compliance staff’s responsibility relates to following program rules, not the effectiveness of program performance. Given the importance of HHF, this performance committee should elevate its findings to the highest levels of Treasury. To improve the effectiveness of the Hardest Hit Fund Florida in reaching homeowners in Florida on an urgent basis, Treasury should, within 60 days, reassess eligibility requirements of each HHF Florida program to ensure that programs target the typical Florida homeowner, keep only those requirements that are absolutely necessary, and eliminate those that are not. Treasury should memorialize the findings of this reassessment. With the lowest homeowner admission rate and with homeowner denial rates consistently above the national average, Treasury should reassess eligibility requirements. In other words, can Treasury “widen the net,” as was its desire in its 2012 action memorandum? Treasury does not have insight into why Florida homeowners were denied for HHF because it does not publicly report on denial reasons, or why so many homeowners had their applications withdrawn. Even though Florida’s HFA includes in a letter to the homeowner the reason for denial, Treasury does not require reporting on those reasons. After SIGTARP’s 2012 report, Florida’s HFA compiled the reasons homeowners were denied. This gave insight that led to the board of Florida’s HFA voting two weeks after SIGTARP’s report to eliminate the four homeowner eligibility requirements that had led to HHF Florida denying half of all homeowners. A similar review now could lead to similar results. It would also be consistent with Treasury’s action in HAMP to create a new “Streamline HAMP” that eliminates certain eligibility requirements. To give Treasury insight into areas to improve the effectiveness of the Hardest Hit Fund on an urgent basis, Treasury should require all participating state housing finance agencies to report on an overall state HHF level as well as individual HHF program level: the reasons why homeowners were denied assistance along with the corresponding number of homeowners denied for that reason. Treasury should require this reporting on a quarterly and cumulative basis and post that information on its website for transparency and accountability. Knowing the top reasons why homeowners are denied for HHF will bring insight to Treasury and every participating state HFA that could lead to improvements in denial rates and homeowner admission rates. SIGTARP designed this recommendation to apply to HHF in all 19 participating states. To give Treasury insight into areas to improve the effectiveness of the Hardest Hit Fund on an urgent basis, Treasury should require each state SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 housing finance agency to report county-level data for all HHF programs and each individual state HHF program on: the number of homeowners who have applied for HHF, the number of homeowners denied, the number of homeowners who withdrew their application after being approved for assistance, the number of homeowners who the state housing finance agency withdrew their application, the number of homeowners whose applications are in process, and the median number of days to process homeowner applications. Treasury should require this reporting on a quarterly and cumulative basis and post this information on its website for transparency and accountability. Transparency in reporting to Treasury at a county level in HHF can be significantly improved to give insight into the effectiveness of HHF Florida, and in other states. The number of homeowners who received assistance is the only county-level data that Treasury requires to be reported. Because Treasury does not require HHF in any state to report the number of homeowners who applied for HHF in each county, Treasury and the public have no insight into each county’s homeowner admission rate. Treasury also does not require state HFAs to report, by county, the number of homeowners denied for HHF, whose applications were withdrawn, or whose applications are in process, which would provide greater transparency and insight into each county’s performance. Treasury also does not require HHF in any state to report on a county-level the performance of each category of assistance (such as principal reduction or unemployment). Countylevel HHF performance data is particularly important for a state like HHF Florida that uses advisor agents in counties to review applications and make decisions on homeowners. To improve the effectiveness of the Hardest Hit Fund Florida on an urgent basis, and ensure that homeowners throughout Florida have the same chance of HHF assistance as homeowners in other counties within the state, Treasury should assess whether HHF Florida is operating in the most effective manner in each county. This should include, at a minimum, Treasury analyzing, within 60 days, which Florida counties have the lowest homeowner admission rates, the highest homeowner denial rates, the highest rate of homeowner applications withdrawn by an advisor agent for Florida’s housing finance agency, the longest application processing times, and Treasury setting targets and milestones for improvement in an action memorandum to Florida’s housing finance agency. Treasury program staff should, within six months, visit with advisor agents of Florida’s housing finance agency in counties hit the hardest but where HHF Florida is least effective, not for a compliance review, but to get an understanding of eligibility requirements that may be too strict to target the typical Florida homeowner seeking HHF assistance, and the challenges and obstacles the advisor agents face in making a decision to deny or withdraw a homeowner. 73 74 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Given the various steps and players involved in the homeowner application process for HHF Florida, measuring county-level performance could bring transparency and insight to see where there might be delays or other obstacles. Treasury’s performance staff along with a new performance committee (recommended by SIGTARP) should meet with advisor agents who make decisions on Florida homeowner HHF applications to understand the obstacles they face in getting assistance to homeowners. Treasury’s HHF Program Director told SIGTARP, “There is so much going on that we just can’t see based on a quarterly performance report.” Intake agencies for HHF bring that different vantage point to get behind the numbers. Once aware of homeowner obstacles to getting HHF assistance, Treasury can work to mitigate those obstacles. To give Treasury insight into areas to improve the effectiveness of the Hardest Hit Fund on an urgent basis, Treasury should require that state housing finance agencies report separately the number of homeowners who withdrew their HHF application from the number of homeowners whose HHF application was withdrawn by the state housing finance agency. Treasury should require that reporting on a quarterly and cumulative basis and post that reporting on its website for transparency and accountability. With 40% of all homeowners in Florida with withdrawn applications, it is difficult to gain insight into the meaning of that data because Treasury lumps two very different situations into one category. HHF in other states also have high withdrawn application rates as detailed in Section 3 of this report. Treasury treats the same both a withdrawal of the HHF application initiated by the homeowner and a withdrawal initiated by HHF in each state for homeowners who do not respond to requests for information. Treasury does not know how many homeowners withdrew their application themselves versus how many homeowners saw their application withdrawn by an HFA because Treasury does not require that reporting. Greater reporting will lead to greater insight, in HHF Florida and in HHF in other states. To improve the effectiveness of the Hardest Hit Fund on an urgent basis, Treasury should reduce to a targeted level the length of time to process a senior citizen’s application and give assistance in the Hardest Hit Fund Florida’s senior citizen program known as ELMORE. Florida’s housing finance agency should view a targeted length of time to process an application under ELMORE not as an excuse to deny a homeowner, but instead as a target for their own improvement in helping homeowners make it through the approval process. Treasury should set numeric targets that HHF Florida must meet each quarter to reach the targeted processing time, and include those targets in an action memorandum to Florida’s housing finance agency, and measure progress quarterly. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 It takes a median of 9-10 months (280 days) for senior citizens with reverse mortgages who have suffered a hardship to receive help from HHF Florida to avoid foreclosure due to their inability to pay taxes, insurance or homeowner association fee. By that time, the taxes, insurance, or homeowner association fees may be past due. Treasury has no goal for the length of time Florida’s HFA takes to process an application. With a median 280 days to obtain approval for this HHF assistance, Treasury will need to be more actively involved to ensure that the program is moving as fast as it can to get help to Florida seniors who need the money now, not in 9 to 10 months. To improve the effectiveness of the Hardest Hit Fund Florida on an urgent basis, including the median 280 days to process a homeowner’s application and the fact that 46% of applications have been withdrawn, Treasury should identify with more detail the obstacle to senior citizens getting assistance from the Hardest Hit Fund Florida’s program known as ELMORE by determining which documents senior citizens are having trouble providing. To assist in identifying these documents, Treasury should, within 60 days, separately meet with Florida’s Department of Elderly Affairs, and advisor agencies for Florida’s housing finance agency in targeted counties with low ELMORE participation in comparison to the number of senior citizens in those counties with reverse mortgages. After identifying the documents that are causing obstacles to homeowner participation, Treasury should determine whether those documents are essential for HHF Florida to provide assistance, and mitigate that obstacle by further reducing required documents (beyond what Treasury and Florida’s housing finance agency have already reduced) to only those documents that are essential. According to Treasury and Florida’s HFA, senior citizens are having trouble providing documentation to support their HHF applications. Treasury has already asked Florida’s HFA to streamline their guidelines to what was necessary and the Department of Elderly Affairs to go into the home of a senior citizen and help them gather the documents, but delays still exist. Treasury has recently announced a new Streamline HAMP with limited eligibility requirements and no application required. To be consistent with HAMP, Treasury should streamline this assistance. The assistance being provided here to senior citizens is limited to taxes, insurance, and homeowners association fees. Given the limited amounts of dollars in assistance being provided, and the fact that 9 to 10 months median processing times may put the homeowner in a past-due status even if they are approved for help, it is difficult to see why the bill for those taxes, the insurance, or HOA fee is not sufficient documentation. To improve the effectiveness of the Hardest Hit Fund Florida on an urgent basis, Treasury should preclude Florida’s housing finance agency from withdrawing a senior citizen’s application to the HHF program known as ELMORE based on homeowner non-responsiveness unless Florida’s 75 76 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Department of Elderly Affairs has stated in writing that it has done all it can to help the homeowner complete the application and find the required documents. The obstacles that senior citizens are having trouble applying and submitting required documents may be one explanation to Treasury’s data showing that 46% of those homeowners had their applications withdrawn. Rather than withdraw a homeowner’s application or have the homeowner give up because of lengthy delays to receive assistance, Treasury should require a streamlined application process and not withdraw a homeowner’s application until the homeowner has received all of the help needed. To identify obstacles to the effectiveness of the Hardest Hit Fund Florida on an urgent basis, Treasury should increase its contact and communication with Florida homeowners, particularly those who have gone through HHF Florida’s application process by: (1) within 90 days, Treasury beginning communications with Florida homeowners who withdrew their application or had their application withdrawn to understand the reasons why; (2) inviting homeowner advocacy groups representing homeowners who have applied for HHF to an annual summit with Treasury officials similar to Treasury’s servicer summit; (3) holding targeted Treasury-sponsored outreach events, for example, at Florida senior citizen centers, and in areas of high underwater Florida homeowners with limited participation in the principal reduction program; and (4) having the new HHF performance committee review and discuss homeowner complaints about HHF Florida at each meeting. Treasury’s HHF Program Director told SIGTARP that she talks to HHF states every day. Treasury officials told SIGTARP that they seek insight behind the quarterly performance numbers by asking Florida’s HFA questions. Treasury’s HHF Program Director described how Treasury communicates constantly with stakeholders, discussing all states, large servicers, and the GSEs. There is one significant stakeholder that Treasury did not mention—Florida homeowners. As times have improved for most, it can be tough for those with a job, an income sufficient to pay their mortgage, and who do not owe more than their home is worth, to understand the struggles and frustration of a homeowner still going through tough times looking to the TARP bailout for help. Without regular contact and communication with those homeowners, it can be hard for Treasury officials to put a face to a HHF performance statistic, hard to understand how an unsophisticated homeowner can get confused about all the documents required, hard to understand the desperation of a homeowner who could not wait months while their application was “in process” and had to go elsewhere for help or entered into foreclosure, and hard to understand what it is like for a senior citizen to face a world that has gone online, and face their own forgetfulness about where documents are to be found. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 To make HHF Florida as effective as possible, Treasury should increase its contact and communication with the stakeholders that matter the most— Florida homeowners who take part in the HHF application process, who can give Treasury the best insight into areas that need improvement. Treasury should not just communicate with those who received assistance, but homeowners who were denied or had their application withdrawn. Only regular communication and contact with Florida homeowners who have been part of the HHF Florida application process will give Treasury a true picture of what lies behind the performance numbers, what Florida’s HFA might not be able to tell them, and what obstacles stand in the way of HHF Florida being as effective as possible. To ensure that HHF Florida is effective and ensure that homeowners throughout Florida have the same chance of HHF assistance as homeowners in other counties within the state, Treasury should hold HHF Florida accountable to maintaining its improvement in homeowner denial rates, by setting a targeted homeowner denial rate that keeps HHF Florida in line with the national average for HHF. Treasury should provide that targeted rate in an action memorandum to Florida’s housing finance agency and each quarter ensure that it meets that target. HHF Florida consistently denied homeowners at higher rates (38-45%) than the national average, and, although it improved this year, is still slightly above the national average. Treasury has not set a goal for a target homeowner denial rate for HHF Florida. Treasury should at least set a target rate that does not allow HHF Florida to slip back into its consistently high rates of denying homeowners for HHF assistance. To improve the efficiency of the Hardest Hit Fund Florida on an urgent basis, Treasury should reduce the length of time HHF Florida takes to process an application from the median of 167 days to a targeted length of time. Treasury should provide that target in an action memorandum to Florida’s housing finance agency and each quarter measure progress against that target. SIGTARP found that Treasury has no goal for how long it takes Florida’s HFA (or their county-level advisor agents) to process homeowner applications. According to Treasury’s data as of March 31, 2015, HHF Florida takes a median of nearly six months (167 days) for a homeowner to get assistance. The prior quarter’s median was 174 days. HHF Florida takes a median of 226 days to get reinstatement assistance. To improve the effectiveness of the Hardest Hit Fund Florida on an urgent basis, Treasury should reduce the rate of homeowner applications withdrawn by the state housing finance agency to a targeted level. Treasury should provide that target in an action memorandum to Florida’s housing finance agency and each quarter measure progress against that target. 77 78 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM According to Treasury’s data, nearly 40% of all homeowners who applied to HHF Florida (43,030 of 109,774) had their application withdrawn, either initiated by themselves of by Florida’s HFA. This has been an escalating issue with HHF in Florida, growing from 2012 reporting of 35% of homeowners who applied. One possible reason for a homeowner to not timely respond to Florida’s HFA could be that the homeowner does not have six months to wait to hear on their HHF application and may have been forced to move to other foreclosure prevention measures, or may have already become the subject of foreclosure proceedings. Treasury should isolate the number of homeowners whose applications are withdrawn by the state HFA to gain insight into areas for improvement, and then take action to bring improvement. To improve the effectiveness and efficiency of the Hardest Hit Fund Florida on an urgent basis, Treasury should, within 90 days, determine to either convert the Hardest Hit Fund pilot program known as the Modification Enabling Project to a full program or close it and put the funds to better use in existing HHF Florida programs. SIGTARP found that Treasury and Florida’s HFA lacked comprehensive planning in a program for a non-profit to buy mortgages on underwater homes and use HHF funds to modify these mortgages by not identifying the obstacle that the non-profit might not be the successful bidder when those mortgages are auctioned at HUD sales. Treasury’s term sheet with Florida’s HFA estimated that the HHF money for this program would be spent over two years. But after two years, the program still remains in its pilot phase and has helped only 92 homeowners—6% of the 1,500 homeowners estimated. In the meantime, the $50 million in TARP funds set aside for this program are not being used for other programs that have a better chance of reaching homeowners. To increase nationwide stakeholder communication and address obstacles on an urgent need basis, Treasury should hold its servicer summit with the 19 Hardest Hit Fund states on a bi-annual instead of an annual basis to keep proactively apprised of the obstacles and limitations the HHF states are experiencing, and to make timely interventions to better the performance and increase effectiveness in every HHF state in getting assistance to homeowners. With Treasury ending HHF funding in December 2017, an annual servicer summit is not sufficient to identify and mitigate obstacles to homeowners receiving help from HHF on an urgent basis. To prevent fraud, waste, and abuse in the Hardest Hit Fund and noncompliance with the Dodd-Frank Act, Treasury should ensure HHF funds do not go to felons convicted of mortgage-related crimes by searching or requiring state housing finance agencies to search federal, state, and SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 county databases for an applicant homeowner’s criminal history, prior to the release of any funds to the applicant, given the fact that convictions are public records. Treasury should make efforts to gain access to other criminal databases. SIGTARP also found that HHF Florida has vulnerabilities to fraud that Treasury should strengthen. Although the Dodd-Frank Act precludes anyone convicted of a mortgage-related or real estate-related crime from getting TARP funds, Treasury is not doing enough to ensure that HHF complies with the DoddFrank Act. Rather than conduct due diligence to ensure compliance with the Dodd-Frank Act, Treasury has shifted the burden to the homeowner to self-report in an affidavit affirming no mortgage fraud conviction within the past 10 years. The Dodd-Frank Act precludes HHF assistance for persons convicted of mortgagerelated crimes, not persons who say they were convicted of those crimes. It is not the homeowner’s duty to comply with the Dodd-Frank Act, it is Treasury’s duty. However, SIGTARP found that neither Treasury nor Florida’s HFA does any due diligence to determine whether a homeowner applying for HHF has been convicted of a mortgage-related crime in the last 10 years, instead relying entirely on homeowner self-reporting. The language in the self-certification makes clear that a Treasury background check is routine, saying, “Treasury, or their agents may investigate the accuracy of my statements by performing routine background checks, including automated searches of federal, state and county databases, to conform that I have not been convicted of such crimes.” However, Treasury does not check or require Florida’s HFA to check any database. While self-certifications serve an important function, they are not on their own sufficient to protect a TARP program from being vulnerable to fraud, if discovered at all, the misrepresentations may not be found until after the applicant spent the funds. Treasury should inquire into gaining access to criminal databases; however, even if they do not receive access, or before they gain access, convictions are public records, typically readily available to search on the Internet or at least to request records that could come in the days while the state HFA processes the application. Treasury’s lack of any due diligence to ensure that HHF funds do not go to ineligible homeowners (those convicted of mortgage-related fraud) makes HHF vulnerable to potential fraud, and thwarts the intent of the Dodd-Frank Act. Taxpayers who funded HHF deserve more than reliance on a self-certification to protect TARP from fraud. To prevent fraud, waste, and abuse in the Hardest Hit Fund and noncompliance with the Dodd-Frank Act, Treasury should monitor applicants (and existing recipients) for subsequent mortgage-related convictions that would disqualify the homeowner from receiving HHF funds (or additional HHF funds). If an applicant has been arrested but not yet convicted of a crime that falls within the Dodd-Frank Act exclusion, Treasury should ensure that the state housing finance agency checks to see if the applicant (or existing 79 80 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM recipient) has been convicted as a final underwriting step prior to releasing any funds (or further funds) to the homeowner. To strengthen HHF even stronger against fraud, Treasury should also search not just for convictions, but also for arrests. Many county sheriffs maintain online records of arrest searches by name. Treasury could put a notation with the homeowner’s application if they have been criminally charged for mortgage-related crimes and are awaiting trial. HHF Florida (and some other states as set forth in Section 3 of this report) has such long application processing times that trials could happen prior to a decision to provide HHF assistance. A notation in the system reminds the HFA to go back and check to see whether the person has been convicted prior to HHF advancing the funds. For example, an employee at a Florida advisor agency for HHF read an article in a local newspaper about criminal charges brought against an applicant who was being processed for HHF funds. Florida HFA’s Office of Inspector General conducted an investigation that revealed that the applicant had failed to disclose his subsequent arrest for fraud charges related to a more than $4 million investment fraud scheme involving more than 50 victims including many active or retired Florida school teachers and administrators. The scheme included conduct that could preclude his eligibility as it alleged that proceeds from the fraud had been used for personal gain to purchase commercial and residential properties. The applicant received his first HHF assistance just months after the indictment, and subsequently pled guilty to four felony fraud counts. To prevent fraud, waste, and abuse in the Hardest Hit Fund, Treasury should ensure that state housing finance agencies conduct regular criminal history background checks on staff or contractors who are paid, either directly or indirectly, with HHF funds by searching federal, state, and county databases. Treasury should also ensure that companies that state HFAs contract with, who are paid with TARP funds, also are not run or staffed by felons convicted of mortgage-related crimes. For example, a Florida homeowner who applied for HHF and had not heard back became concerned. Her Internet search revealed that the director of the HHF advisor agency had been arrested and charged with organized fraud. An investigation by Florida HFA’s Office of Inspector General confirmed the pending organized fraud charges and also confirmed that a record search of the Department of Business and Professional Regulation and the Office of Finance Regulation showed that, in a 2009 final order, this director of the advisor agency had his real estate license and mortgage broker license revoked for committing fraud related to a residential mortgage transaction, and that the director admitted to the fraud. Florida’s HFA had no knowledge of this. Subsequently, it terminated the contract with this advisor agency. To prevent fraud, waste, and abuse in the Hardest Hit Fund, Treasury should conduct due diligence by searching public records for an SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 applicant’s conviction for non-mortgage related crimes of dishonesty (such as embezzlement, forgery, bank fraud, welfare fraud, unemployment compensation fraud, tax fraud, money laundering, and false statements), and, if found, conduct further due diligence, including looking into potential misrepresentations of assets and income based on the nature of the crimes. The exclusion in the Dodd-Frank Act is a minimum, and there could be other crimes for which a person is convicted that could make HHF vulnerable to fraud. Besides the Dodd-Frank Act exclusion for mortgage fraud, HHF Georgia precludes aid to individuals where the applicant has any federal or Georgia tax liens and the home must be unencumbered by federal or state tax liens. It is possible that individuals with other types of serious convictions could make HHF vulnerable to fraud. This could include persons convicted of a felony within the last 10 years for crimes of dishonesty unrelated to mortgages, such as embezzlement, forgery, bank fraud, welfare fraud, unemployment compensation fraud, and false statements. These types of crimes have the same concerns regarding integrity and truthfulness as the mortgage fraud exclusion, which should at a minimum require a more focused review to ensure the truth about statements of assets and income. For example, according to a 2014 Florida HFA Office of Inspector General investigative report, a homeowner who had applied for HHF in September 2012, claimed to be unemployed. A Google search of the applicant’s name reveals a July 23, 2012 press release by the Florida Chief Financial Officer, the Department of Education Commission, and the State Attorney announcing the arrest of the applicant for misappropriating state funds, Federal grant funds, and donations of almost $1 million to fund his extravagant lifestyle. These monies were supposed to fund his prior employer, a Florida non-profit for disabled persons that later shut down, where he served as executive director. He was cleared for HHF underwriting in November 2012, but did not receive HHF funds only because he listed the wrong servicer, which delayed funding. He would later be sentenced to 39 years in prison. The arrest and charges were publicly available on Lee County records, but were not searched. To prevent that type of crime of misappropriating federal and state dollars, Treasury should at a minimum require HHF Florida and other state HFAs to conduct greater due diligence to ensure the truth about assets and income. UPDATE TO PRIOR RECOMMENDATIONS SIGTARP MADE TO IMPROVE TARP Recommendations concerning HAMP redefaults In April 2013, SIGTARP released a report, the first report by anyone to raise concerns that high percentages of homeowners were falling out of HAMP 81 82 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM (which Treasury refers to as “redefaulting”). SIGTARP made the following two recommendations: • Treasury should conduct in-depth research and analysis to determine the causes of redefaults of HAMP permanent mortgage modifications and the characteristics of loans or the homeowner that may be more at risk for redefault. Treasury should require servicers to submit any additional information that Treasury needs to conduct this research and analysis. Treasury should make the results of this analysis public and issue findings based on this analysis, so that others can examine, build on, and learn from this research. • As a result of the findings of Treasury’s research and analysis into the causes of HAMP redefaults, and characteristics of redefaults, Treasury should modify aspects of HAMP and the other TARP housing programs in ways to reduce the number of redefaults. On April 7, 2014, with the percentage of homeowners redefaulting out of HAMP rising after these homeowners were unable to pay their mortgage payments under HAMP, without any action by Treasury, SIGTARP recommended: • Treasury should increase the amount of the annual incentive payment paid to each homeowner who remains in HAMP. Treasury should require the mortgage servicer to apply the annual incentive payment earned by the homeowner to reduce the amount of money that the homeowner must pay to the servicer for the next month’s mortgage payment (or monthly payments if the incentive exceeds the monthly mortgage payment), rather than to reduce the outstanding principal balance of the mortgage. As a result of SIGTARP’s recommendations, Treasury modified aspects of HAMP. Treasury officials told SIGTARP that they took the following action based on SIGTARP’s report and recommendations related to redefaulting homeowners. First, Treasury doubled the amount of TARP funding for incentives to be paid to homeowners by adding a $5,000 “Pay for Performance” homeowner incentive for those that remain in HAMP through the sixth anniversary of their trial modification. While Treasury still allows servicers to apply this to the principal balance of their mortgage, rather than pay it directly to homeowners, Treasury began requiring servicers to offer to recast (reamortize) the loan to reduce the homeowners’ monthly payment after applying TARP payments to the principal balance. Second, Treasury now requires mortgage servicers to consider homeowners that redefaulted in HAMP Tier 1 for HAMP Tier 2 before any other loss mitigation action. Third, Treasury allows servicers to remodify loans at risk of redefault under HAMP Tier 1 with HAMP Tier 2. Recently, Treasury created Streamline HAMP, SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 which can be used to remodify HAMP Tier 1 or HAMP Tier 2 modifications that redefaulted or are at risk of redefault. Although Treasury’s actions responding to SIGTARP’s recommendations demonstrate progress to curb the problem on homeowners falling out of HAMP, homeowners may still fall out of the program for other reasons that Treasury has not yet identified, including based on the conduct of their servicer. Therefore, Treasury should continue to analyze and assess the causes of redefaults including determining whether and to what extent mortgage servicers may contribute to this escalating problem, as SIGTARP recommended. Recommendations concerning lengthy delays in mortgage servicers’ review of homeowner HAMP applications In July 2014, SIGTARP released a report, the first report by anyone to raise concerns that homeowners may not be getting into HAMP in a timely manner because servicers are slow in reviewing HAMP applications taking many months or a year or more, leaving the homeowner in limbo and at risk of foreclosure. SIGTARP recommended: • Treasury should ensure that mortgage servicers who contract with Treasury have sufficient staffing and other resources to review the number of homeowner HAMP applications submitted each month, plus additional applications to decrease any backlog of homeowners who applied in prior months without a decision. After SIGTARP raised this important concern, and named specific large HAMP servicers and the time they take to review homeowner complaints, some servicers began decreasing the wait times homeowners experienced waiting for a decision on their HAMP application, but other servicers increased that delay. This still remains a serious problem. As of the most recent application processing rates reported (August 2015), it would take six of the top 10 HAMP servicers longer than three months to review the number of homeowner applications that had not yet received a decision, even were they to receive no additional applications. JP Morgan Chase, Bank of America, CitiMortgage, and Select Portfolio Services would all take over six months. This past quarter, Treasury began including in their assessment of the top seven HAMP servicers a metric for the percentage of completed HAMP applications not processed within 30 days of receipt, establishing a benchmark of 98% compliance. The seven mortgage servicers included in Treasury’s reporting accounted for approximately 87% of active TARP-funded HAMP modifications as of June 30, 2015. If Treasury finds that servicers are not timely reviewing homeowners HAMP applications, Treasury should take action to hold these servicers accountable, by ensuring that mortgage servicers who contract with Treasury have sufficient staffing and other resources to review the number of homeowner HAMP applications submitted, as SIGTARP recommended, and taking other enforcement action. 83 84 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Recommendations concerning HHF’s Blight Elimination Program In April 2015, SIGTARP first reported on Treasury’s new use of Hardest Hit Fund monies to demolish vacant homes. Among 9 recommendations, SIGTARP recommended: • Treasury should engage in comprehensive planning to ensure that blight elimination under HHF progresses in the most effective way by, within 60 days, requiring state HFAs participating in blight elimination activities under TARP to develop performance indicators such as decreases in default rates or foreclosure filings, or increases in home values through home sales and annual tax assessments to measure progress towards Treasury’s target reduction in foreclosures and target increase in home values. Treasury should use its expertise and resources to help the state HFAs develop performance indicators. Treasury should require reporting by state HFAs on a periodic basis no less than bi-annually on chosen performance indicators and use that reporting to monitor which cities and states are on track to achieve successfully Treasury’s goal and to identify improvements to increase effectiveness. Although Treasury is not requiring the state housing finance authorities to develop performance indicators, several state housing finance authorities are in the process of creating performance indicators. Given that TARP funds are limited to certain uses, including the prevention of foreclosure and the protection of home values, these performance indicators must show that specific demolition funded by TARP dollars results in prevented foreclosures and increased home prices. SIGTARP also recommended: • Treasury should require state HFAs to develop a system of internal controls targeted specifically at blight elimination. Although Treasury has not agreed to implement this important recommendation, in response to SIGTARP’s request, five state HFAs (Michigan, Ohio, Indiana, Alabama, and South Carolina) provided to SIGTARP internal control documentation relating to HHF blight elimination; another state HFA, Illinois, indicated it would provide such documentation, but has not yet done so. While this demonstrates a positive step, SIGTARP continues to evaluate the scope and effectiveness of the states’ internal controls. SIGTARP RECOMMENDATIONS TABLE The following chart summarizes SIGTARP’s recommendations to improve the effectiveness and efficiency of Government TARP programs, and protect TARP from fraud, waste, and abuse, and any resulting improvements. X 7 * In formulating the structure of TALF, Treasury should consider requiring, before committing TARP funds to the program, that certain minimum underwriting standards and/or other fraud prevention mechanisms be put in place with respect to the ABS and/ or the assets underlying the ABS used for collateral. X Implementation Status X X X X X Continued on next page The Federal Reserve announced that RMBS were ineligible for TALF loans, rendering this recommendation moot. On December 1, 2010, the Federal Reserve publicly disclosed the identities of all TALF borrowers and that there had been no surrender of collateral. SIGTARP will continue to monitor disclosures if a collateral surrender takes place. Treasury has formalized its valuation strategy and regularly publishes its estimates. This recommendation was implemented with respect to CMBS, and the Federal Reserve did not expand TALF to RMBS. This recommendation was implemented with respect to CMBS, and the Federal Reserve did not expand TALF to RMBS. The Federal Reserve adopted mechanisms that address this recommendation. While Treasury has required CDCI participants to report on their actual use of TARP funds, no other TARP recipients were required to do so. Treasury made the reporting by CPP recipients only voluntary. Although Treasury has made substantial efforts to comply with this recommendation in many of its agreements, there have been exceptions, including in its agreements with servicers in MHA. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. 13 * In TALF, Treasury should dispense with rating agency determinations and require a security-by-security screening for each legacy RMBS. Treasury should refuse to participate if the program is not designed so that RMBS, whether new or legacy, will be rejected as collateral if the loans backing particular RMBS do not meet certain baseline underwriting criteria or are in categories that have been proven to be riddled with fraud, including certain undocumented subprime residential mortgages. 12 * Treasury and the Federal Reserve should provide to SIGTARP, for public disclosure, the identity of the borrowers who surrender collateral in TALF. Treasury should formalize its valuation strategy and begin providing values of the TARP investments to the public. X 10 * Treasury should oppose any expansion of TALF to legacy MBS without significant modifications to the program to ensure a full assessment of risks associated with such an expansion. 11 X 9 * Treasury should give careful consideration before agreeing to the expansion of TALF to include MBS without a full review of risks that may be involved and without considering certain minimum fraud protections. 8 * Agreements with TALF participants should include an acknowledgment that: (1) they are subject to the oversight of OFS-Compliance and SIGTARP, (2) with respect to any condition imposed as part of TALF, that the party on which the condition is imposed is required to establish internal controls with respect to each condition, report periodically on such compliance, and provide a certification with respect to such compliance. X X X X Full 6 * Treasury begins to develop an overall investment strategy to address its portfolio of stocks and decide whether it intends to exercise warrants of common stock. 5 * Treasury quickly determines its going-forward valuation methodology. 4 * Treasury should require all TARP recipients to report on the actual use of TARP funds. 3 * All existing TARP agreements, as well as those governing new transactions, should be posted on the Treasury website as soon as possible. 2 * Treasury should include language in new TARP agreements to facilitate compliance and oversight. Specifically, SIGTARP recommends that each program participant should (1) acknowledge explicitly the jurisdiction and authority of SIGTARP and other oversight bodies, as relevant, to oversee compliance of the conditions contained in the agreement in question, (2) establish internal controls with respect to that condition, (3) report periodically to the Compliance department of the Office of Financial Stability (“OFSCompliance”) regarding the implementation of those controls and its compliance with the condition, and (4) provide a signed certification from an appropriate senior official to OFS-Compliance that such report is accurate. 1 * Treasury should include language in the automobile industry transaction term sheet acknowledging SIGTARP’s oversight role and expressly giving SIGTARP access to relevant documents and personnel. Recommendation SIGTARP RECOMMENDATIONS TABLE SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 85 X 19 * Treasury should address the confusion and uncertainty on executive compensation by immediately issuing the required regulations. Treasury should require servicers in MHA to submit third-party verified evidence that the applicant is residing in the subject property before funding a mortgage modification. X Note: * Indicates that Treasury considers the recommendation closed and will take no further action. 26 * In MHA, Treasury should require a closing-like procedure be conducted that would include (1) a closing warning sheet that would warn the applicant of the consequences of fraud; (2) the notarized signature and thumbprint of each participant; (3) mandatory collection, copying, and retention of copies of identification documents of all participants in the transaction; (4) verbal and written warnings regarding hidden fees and payments so that applicants are made fully aware of them; (5) the benefits to which they are entitled under the program (to prevent a corrupt servicer from collecting payments from the Government and not passing the full amount of the subsidies to the homeowners); and (6) the fact that no fee should be charged for the modification. 25 X X 23 * Treasury should require that all PPIF fund managers (1) have stringent investor-screening procedures, including comprehensive “Know Your Customer” requirements at least as rigorous as that of a commercial bank or retail brokerage operation to prevent money laundering and the participation of actors prone to abusing the system, and (2) be required to provide Treasury with the identities of all the beneficial owners of the private interests in the fund so that Treasury can do appropriate diligence to ensure that investors in the funds are legitimate. 24 * Treasury should require PPIP managers to provide most favored nation clauses to PPIF equity stakeholders, to acknowledge that they owe Treasury a fiduciary duty, and to adopt a robust ethics policy and compliance apparatus. X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury rejected SIGTARP’s recommendation for a closing-like procedure. However, since this recommendation was issued, Treasury has taken several actions to prevent fraud on the part of either MHA servicers or applicants. Treasury’s agreements with PPIF managers include investor-screening procedures such as “Know Your Customer” requirements. Treasury has agreed that it will have access to any information in a fund manager’s possession relating to beneficial owners. However, Treasury did not impose an affirmative requirement that managers obtain and maintain beneficial owner information. Treasury has adopted some significant conflict-of-interest rules related to this recommendation, but has failed to impose other significant safeguards. Treasury closed the program with no investments having been made, rendering this recommendation moot. According to Treasury, OFS-Compliance has increased its staffing level and has contracted with four private firms to provide additional assistance to OFS-Compliance. The Federal Reserve adopted mechanisms that address this recommendation with respect to CMBS, and did not expand TALF to RMBS. This recommendation was implemented with respect to CMBS, and the Federal Reserve did not expand TALF to RMBS. Partial In Process None TBD/NA Comments 22 * Treasury should impose strict conflict-of-interest rules upon PPIF managers across all programs that specifically address whether and to what extent the managers can (1) invest PPIF funds in legacy assets that they hold or manage on behalf of themselves or their clients or (2) conduct PPIF transactions with entities in which they have invested on behalf of themselves or others. 21 * Treasury should require CAP participants to (1) establish an internal control to monitor their actual use of TARP funds, (2) provide periodic reporting on their actual use of TARP funds, (3) certify to OFS-Compliance, under the penalty of criminal sanction, that the report is accurate, that the same criteria of internal controls and regular certified reports should be applied to all conditions imposed on CAP participants, and (4) acknowledge explicitly the jurisdiction and authority of SIGTARP and other oversight bodies, as appropriate, to oversee conditions contained in the agreement. X X 18 * All TALF modeling and decisions, whether on haircuts or any other credit or fraud loss mechanisms, should account for potential losses to Government interests broadly, including TARP funds, and not just potential losses to the Federal Reserve. 20 * Treasury should significantly increase the staffing levels of OFS-Compliance and ensure the timely development and implementation of an integrated risk management and compliance program. X 17 * Treasury should not allow Legacy Securities PPIFs to invest in TALF unless significant mitigating measures are included to address these dangers. 16 * Treasury should design a robust compliance protocol with complete access rights to all TALF transaction participants for itself, SIGTARP, and other relevant oversight bodies. X 15 * Treasury should require additional anti-fraud and credit protection provisions, specific to all MBS, before participating in an expanded TALF, including minimum underwriting standards and other fraud prevention measures. Full X Recommendation 14 * In TALF, Treasury should require significantly higher haircuts for all MBS, with particularly high haircuts for legacy RMBS, or other equally effective mitigation efforts. Implementation Status 86 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM X 31 * In MHA, Treasury should proactively educate homeowners about the nature of the program, warn them about modification rescue fraudsters, and publicize that no fee is necessary to participate in the program. Treasury should define appropriate metrics and an evaluation system should be put in place to monitor the effectiveness of the PPIF managers, both to ensure they are fulfilling the terms of their agreements and to measure performance. Treasury should require PPIF managers to obtain and maintain information about the beneficial ownership of all of the private equity interests, and Treasury should have the unilateral ability to prohibit participation of private equity investors. X X Note: * Indicates that Treasury considers the recommendation closed and will take no further action. 39 * Treasury and FRBNY should (1) examine Moody’s assertions that some credit rating agencies are using lower standards to give a potential TALF security the necessary AAA rating and (2) develop mechanisms to ensure that acceptance of collateral in TALF is not unduly influenced by the improper incentives to overrate that exist among the credit agencies. 38 37 * Treasury should require PPIF managers to disclose to Treasury, as part of the Watch List process, not only information about holdings in eligible assets but also holdings in related assets or exposures to related liabilities. 36 * The conditions that give Treasury “cause” to remove a PPIF manager should be expanded to include a manager’s performance below a certain standard benchmark, or if Treasury concludes that the manager has materially violated compliance or ethical rules. 35 X X X 34 * Treasury should periodically disclose PPIF trading activity and require PPIF managers to disclose to SIGTARP, within seven days of the close of the quarter, all trading activity, holdings, and valuations so that SIGTARP may disclose such information, subject to reasonable protections, in its quarterly reports. X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury and the Federal Reserve have discussed concerns about potential overrating or rating shopping with the rating agencies, and have agreed to continue to develop and enhance risk management tools and processes, where appropriate. Treasury has agreed that it can have access to any information in a fund manager’s possession relating to beneficial owners. However, Treasury is not making an affirmative requirement that managers obtain and maintain beneficial owner information. Treasury will not adopt the recommendation to give itself unilateral ability to deny access to or remove an investor, stating that such a right would deter participation. Treasury has refused to adopt this recommendation, relying solely on Treasury’s right to end the investment period after 12 months. That timeframe has already expired. Treasury’s failure to adopt this recommendation potentially puts significant Government funds at risk. Treasury has stated that it has developed risk and performance metrics. However, more than four years into the program, it is still not clear how Treasury will use these metrics to evaluate the PPIP managers and take appropriate action as recommended by SIGTARP. Treasury has committed to publish on a quarterly basis certain high-level information about aggregated purchases by the PPIFs, but not within seven days of the close of the quarter. Treasury has not committed to providing full transparency to show where public dollars are invested by requiring periodic disclosure of every trade in the PPIFs. Treasury has refused to adopt this significant anti-fraud measure designed to prevent conflicts of interest. This represents a material deficiency in the program. While Treasury’s program administrator, Fannie Mae, has developed a HAMP system of record that maintains servicers’ names, investor group (private, portfolio, GSE), and participating borrowers’ personally identifiable information, such as names and addresses, the database does not include the name of the investor. Treasury has rejected SIGTARP’s recommendation and does not require income reported on the modification application to be compared to income reported on the original loan application. Treasury has taken steps to implement policies and conduct compliance reviews to address this recommendation. However, it remains unclear if Treasury has an appropriate method to ensure the irregularities identified in the compliance reviews are resolved. Partial In Process None TBD/NA Comments 33 * Treasury should require the imposition of strict information barriers or “walls” between the PPIF managers making investment decisions on behalf of the PPIF and those employees of the fund management company who manage non-PPIF funds. X X 30 * In MHA, Treasury should defer payment of the $1,000 incentive to the servicer until after the homeowner has verifiably made a minimum number of payments under the mortgage modification program. 32 * In MHA, Treasury should require its agents to keep track of the names and identifying information for each participant in each mortgage modification transaction and to maintain a database of such information. X Full 29 * In MHA, Treasury should require that verifiable, third-party information be obtained to confirm an applicant’s income before any modification payments are made. 28 * In MHA, Treasury should require the servicer to compare the income reported on a mortgage modification application with the income reported on the original loan applications. 27 * Additional anti-fraud protections should be adopted in MHA to verify the identity of the participants in the transaction and to address the potential for servicers to steal from individuals receiving Government subsidies without applying them for the benefit of the homeowner. Recommendation Implementation Status SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 87 Treasury should develop other performance metrics and publicly report against them to measure over time the implementation and success of HAMP. For example, Treasury could set goals and publicly report against those goals for servicer processing times, modifications as a proportion of a servicer’s loans in default, modifications as a proportion of foreclosures generally, rates of how many borrowers fall out of the program prior to permanent modification, and re-default rates. Treasury should undertake a sustained public service campaign as soon as possible, both to reach additional borrowers who could benefit from the program and to arm the public with complete, accurate information — this will help to avoid confusion and delay, and prevent fraud and abuse. Treasury should reconsider its position that allows servicers to substitute alternative forms of income verification based on subjective determinations by the servicer. Treasury should re-examine HAMP’s structure to ensure that it is adequately minimizing the risk of re-default stemming from non-mortgage debt, second liens, partial interest rate resets after the five-year modifications end, and from many borrowers being underwater. Treasury should institute careful screening before putting additional capital through CDCI into an institution with insufficient capital to ensure that the TARP matching funds are not flowing into an institution that is on the verge of failure. Treasury should develop a robust procedure to audit and verify the bona fides of any purported capital raise in CDCI and to establish adequate controls to verify the source, amount and closing of all claimed private investments. Treasury should revise CDCI terms to clarify that Treasury inspection and copy rights continue until the entire CDCI investment is terminated. Additionally, consistent with recommendations made in connection with other TARP programs, the terms should be revised to provide expressly that SIGTARP shall have access to the CDFI’s records equal to that of Treasury. 46 47 48 49 50 51 52 X X X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury has adopted some programs to assist underwater mortgages to address concerns of negative equity but has not addressed other factors contained in this recommendation. Although Treasury has increased its reporting of servicer performance, it has not identified goals for each metric and measured performance against those goals. Treasury has not set an acceptable metric for redefaults. Despite SIGTARP’s repeated highlighting of this essential transparency and effectiveness measure, Treasury has refused to disclose clear and relevant goals and estimates for the program. Treasury has agreed to work closely with other Federal agencies that are involved in TARP. Treasury stated that it does not anticipate taking a substantial percentage ownership position in any other financial institution pursuant to EESA. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should rectify the confusion that its own statements have caused for HAMP by prominently disclosing its goals and estimates (updated over time, as necessary) of how many homeowners the program will help through permanent modifications and report monthly on its progress toward meeting that goal. 45 44 * Treasury should establish policies to guide decision making in determining whether it is appropriate to defer to another agency when making TARP programming decisions where more than one Federal agency is involved. X X 42 * The Secretary of the Treasury should direct the Special Master to work with FRBNY officials in understanding AIG compensation programs and retention challenges before developing future compensation decisions that may affect both institutions’ ability to get repaid by AIG for Federal assistance provided. 43 * Treasury should establish policies to guide any similar future decisions to take a substantial ownership position in financial institutions that would require an advance review so that Treasury can be reasonably aware of the obligations and challenges facing such institutions. X 41 * Treasury should improve existing control systems to document the occurrence and nature of external phone calls and in-person meetings about actual and potential recipients of funding under the CPP and other similar TARP-assistance programs to which they may be part of the decision making. Full X Recommendation 40 * Treasury should more explicitly document the vote of each Investment Committee member for all decisions related to the investment of TARP funds. Implementation Status 88 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Treasury should ensure that more detail is captured by the Warrant Committee meeting minutes. At a minimum, the minutes should include the members’ qualitative considerations regarding the reasons bids were accepted or rejected within fair market value ranges. Treasury should document in detail the substance of all communications with recipients concerning warrant repurchases. 54 55 For each HAMP-related program and subprogram, Treasury should publish the anticipated costs and expected participation in each and that, after each program is launched, it report monthly as to the program’s performance against these expectations. Treasury should adopt a uniform appraisal process across all HAMP and HAMP-related short-sale and principal reduction programs consistent with FHA’s procedures. When Treasury considers whether to accept an existing CPP participant into SBLF, because conditions for many of the relevant institutions have changed dramatically since they were approved for CPP, Treasury and the bank regulators should conduct a new analysis of whether the applying institution is sufficiently healthy and viable to warrant participation in SBLF. 64 X X X X Full X X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page For more than a year, Treasury refused to adopt this recommendation, even though average U.S. terms of unemployment were lengthening. However, in July 2011, the Administration announced a policy change, and Treasury has extended the minimum term of the unemployment program from three months to 12 months, effective October 1, 2011. Treasury plans to maintain the voluntary nature of the program, providing an explanation that on its face seems unpersuasive to SIGTARP. SIGTARP will continue to monitor performance. Treasury has provided anticipated costs, but not expected participation. Treasury states that it has developed guidance and provided that guidance to the exceptional assistance participants that were remaining in TARP as of June 30, 2011. Treasury has not addressed other factors contained in this recommendation, citing its belief that materiality should be subject to a fact and circumstances review. Although Treasury largely continues to rely on self-reporting, stating that it only plans to conduct testing where they have particular concerns as to a TARP recipient’s compliance procedures or testing results, it has conducted independent testing of compliance obligations during some compliance reviews. Treasury has adopted procedures designed to address this recommendation, including a policy to discuss only warrant valuation inputs and methodologies prior to receiving a bid, generally to limit discussion to valuation ranges after receiving approval from the Warrant Committee, and to note the provision of any added information in the Committee minutes. However, Treasury believes that its existing internal controls are sufficient to ensure adequate consistency in the negotiation process. Treasury has agreed to document the dates, participants, and subject line of calls. It has refused to document the substance of such conversations. Treasury has indicated that it has implemented this recommendation. Although the detail of the minutes has improved, Treasury is still not identifying how each member of the committee casts his or her vote. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should launch a broad-based information campaign, including public service announcements in target markets that focus on warnings about potential fraud, and include conspicuous fraud warnings whenever it makes broad public announcements about the HAMP program. 63 62 * Treasury should reconsider the length of the minimum term of HAMP’s unemployment forbearance program. 61 60 * Treasury should re-evaluate the voluntary nature of its principal reduction program and, irrespective of whether it is discretionary or mandatory, consider changes to better maximize its effectiveness, ensure to the greatest extent possible the consistent treatment of similarly situated borrowers, and address potential conflict of interest issues. 59 58 * Treasury should develop guidelines that apply consistently across TARP participants for when a violation is sufficiently material to merit reporting, or in the alternative require that all violations be reported. 57 * Treasury should promptly take steps to verify TARP participants’ conformance to their obligations, not only by ensuring that they have adequate compliance procedures but also by independently testing participants’ compliance. 56 * Treasury should develop and follow guidelines and internal controls concerning how warrant repurchase negotiations will be pursued, including the degree and nature of information to be shared with repurchasing institutions concerning Treasury’s valuation of the warrants. Treasury should consider more frequent surveys of a CDCI participant’s use of TARP funds than annually as currently contemplated. Quarterly surveys would more effectively emphasize the purpose of CDCI. 53 Recommendation Implementation Status SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 89 X 69 * OFS should adopt the legal fee bill submission standards contained in the FDIC’s Outside Counsel Deskbook, or establish similarly detailed requirements for how law firms should prepare legal fee bills and describe specific work performed in the bills, and which costs and fees are allowable and unallowable. X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Minutes of recent MHA Compliance Committee meetings contain brief explanations of servicer assessment rating decisions. However, these minutes do not explain the Committee’s deliberations in detail, do not indicate how members voted beyond a tally of the votes, and do not discuss follow-up actions or escalation. Treasury made important changes to its servicer assessments by including metrics for the ratings, including several quantitative metrics. However, qualitative metrics to assess the servicer’s internal controls in the three ratings categories remain, and guidelines or criteria for rating the effectiveness of internal controls are still necessary. Although Treasury previously agreed to implement this recommendation, Treasury only reviewed the legal fee bills for one of the five law firms that SIGTARP had already described as unreasonable. Treasury refuses to seek any reimbursement for those charges. See also Recommendation 81 concerning this issue. Treasury told SIGTARP that OFS has held training on its newly adopted guidance prescribing how legal fee bills should be prepared with OFS COTRs and other staff involved in the review of legal fee bills, and that the OFS COTRs will begin reviewing invoices in accordance with its new guidance for periods starting with March 2011. OFS also stated that it incorporated relevant portions of its training on the new legal fee bill review standards into written procedures. Treasury told SIGTARP that OFS has distributed its new guidance to all law firms currently under contract to OFS. Treasury further stated that OFS will work with Treasury’s Procurement Services Division to begin modifying base contracts for OFS legal services to include those standards as well. Treasury told SIGTARP that OFS has created new guidance using the FDIC’s Outside Counsel Deskbook and other resources. Treasury refused to adopt this recommendation, suggesting that its adoption would subvert the will of Congress and that SIGTARP’s recommendation “may not be helpful” because “it is unclear that using this statutorily mandated baseline will lead to anomalies.” Treasury refused to adopt this recommendation, citing its belief that current CPP participants may be unfairly disadvantaged in their SBLF applications if their existing CPP investments are not counted as part of their capital base, and that SBLF “already provides substantial hurdles that CPP recipients must overcome” that don’t apply to other applicants. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. 74 * Treasury should ensure that more detail is captured by the MHA Compliance Committee meeting minutes. At a minimum, the minutes should include MHA-C’s proposed rating for each servicer, the committee members’ qualitative and quantitative considerations regarding each servicer’s ratings, the votes of each committee member, the final rating for each servicer, justification for any difference in that rating with MHA-C’s proposed rating, and any follow-up including escalation to Treasury’s Office of General Counsel or the Assistant Secretary and the outcomes of that escalation. 73 * Treasury should establish detailed guidance and internal controls governing how the MHA Servicer Compliance Assessment will be conducted and how each compliance area will be weighted. 72 * OFS should review previously paid legal fee bills to identify unreasonable or unallowable charges, and seek reimbursement for those charges, as appropriate. 71 * OFS should adopt the legal fee bill review standards and procedures contained in the FDIC’s Outside Counsel Deskbook, or establish similarly specific instructions and guidance for OFS COTRs to use when reviewing legal fee bills, and incorporate those instructions and guidance into OFS written policies. X X 68 * When a CPP participant refinances into SBLF and seeks additional taxpayer funds, Treasury should provide to SIGTARP the identity of the institution and details of the proposed additional SBLF investment. 70 * OFS should include in its open legal service contracts detailed requirements for law firms on the preparation and submission of legal fee bills, or separately provide the instructions to law firms and modify its open contracts, making application of the instructions mandatory. X Treasury should take steps to prevent institutions that are refinancing into the SBLF from CPP from securing windfall dividend reductions without any relevant increase in lending. 66 Full 67 * Treasury, as part of its due diligence concerning any proposed restructuring, recapitalization, or sale of its CPP investment to a third party, should provide to SIGTARP the identity of the CPP institution and the details of the proposed transaction. When Treasury conducts the new analysis of an institution’s health and viability, the existing CPP preferred shares should not be counted as part of the institution’s capital base. Recommendation 65 Implementation Status 90 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM The Treasury contracting officer should disallow and seek recovery from Simpson Thacher & Bartlett LLP for $91,482 in questioned, ineligible fees and expenses paid that were not allowed under the OFS contract. Specifically, those are $68,936 for labor hours billed at rates in excess of the allowable maximums set in contract TOFS-09-0001, task order 1, and $22,546 in other direct costs not allowed under contract TOFS-09-007, task order 1. Treasury should promptly review all previously paid legal fee bills from all law firms with which it has a closed or open contract to identify unreasonable or unallowable charges and seek reimbursement for those charges, as appropriate. Treasury should require in any future solicitation for legal services multiple rate categories within the various partner, counsel, and associate labor categories. The additional labor rate categories should be based on the number of years the attorneys have practiced law. Treasury should pre-approve specified labor categories and rates of all contracted legal staff before they are allowed to work on and charge time to OFS projects. 80 81 82 83 Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should specifically determine the allowability of $7,980,215 in questioned, unsupported legal fees and expenses paid to the following law firms: Simpson Thacher & Bartlett LLP ($5,791,724); Cadwalader Wickersham & Taft LLP ($1,983,685); Locke Lord Bissell & Liddell LLP ($146,867); and Bingham McCutchen LLP (novated from McKee Nelson LLP, $57,939). X X X X X X 78 * Treasury must ensure that all servicers participating in MHA comply with program requirements by vigorously enforcing the terms of the servicer participation agreements, including using all financial remedies such as withholding, permanently reducing, and clawing back incentives for servicers who fail to perform at an acceptable level. Treasury should be transparent and make public all remedial actions taken against any servicer. 79 X 77 * Treasury should publicly assess the top 10 MHA servicers’ program performance against acceptable performance benchmarks in the areas of: the length of time it takes for trial modifications to be converted into permanent modifications, the conversion rate for trial modifications into permanent modifications, the length of time it takes to resolve escalated homeowner complaints, and the percentage of required modification status reports that are missing. X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury neither agreed nor disagreed with the recommendation. Treasury neither agreed nor disagreed with the recommendation. Treasury only reviewed the legal fee bills for one of the five law firms that SIGTARP had already described as unreasonable. Treasury refuses to seek any reimbursements for those charges. Treasury neither agreed nor disagreed with the recommendation. Treasury neither agreed nor disagreed with the recommendation. Treasury has rejected this important recommendation, stating that it believes that the remedies enacted have been appropriate and that appropriate transparency exists. Treasury has rejected this recommendation, saying only that it would “continue to develop and improve the process where appropriate.” Treasury told SIGTARP that it already established benchmarks in this area, including that trial periods should last three to four months, and escalated cases should be resolved in 30 days. If these are the benchmarks for acceptable performance, many servicers have missed the mark. Also, Treasury has yet to establish a benchmark for conversion rates from trial modifications to permanent modifications. Treasury has refused to adopt this recommendation, saying it already requires a loan servicer to communicate in writing with a borrower an average of 10 times. However, most written requirements apply to a HAMP application and Treasury’s response fails to address homeowners who receive miscommunication from servicers on important milestones or changes. More than two years after this recommendation was issued on August 31, 2011, CFPB began requiring servicers to provide written notification to homeowners under a wide range of circumstances, some of which would be helpful to homeowners in or seeking MHA assistance. Treasury should implement these notification requirements in HAMP so that it can assess compliance and take action for non-compliance, such as withholding or clawing back HAMP incentives payments. Partial In Process None TBD/NA Comments X Full 76 * Treasury should establish benchmarks and goals for acceptable program performance for all MHA servicers, including the length of time it takes for trial modifications to be converted into permanent modifications, the conversion rate for trial modifications into permanent modifications, the length of time it takes to resolve escalated homeowner complaints, and the percentage of required modification status reports that are missing. 75 * Treasury should require that MHA servicer communications with homeowners relating to changes in the status or terms of a homeowner’s modification application, trial or permanent modification, HAFA agreement, or any other significant change affecting the homeowner’s participation in the MHA program, be in writing. Recommendation Implementation Status SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 91 Recommendation Treasury should protect borrower personally identifiable information (“PII”) and other sensitive borrower information compiled for the Hardest Hit Fund (“HHF”) by: (1) requiring that within 90 days, all Housing Finance Agencies (and their contractors) (“HFAs”) participating in HHF develop and implement effective policies and procedures to ensure protection against unauthorized access, use, and disposition of PII and other sensitive borrower information; (2) Treasury reviewing each HFA’s policies and procedures to determine if they are effective, and taking such action as is required to ensure effectiveness; (3) requiring that all parties granted access to borrower information should be made aware of restrictions on copying and disclosing this information; (4) requiring annual certification by HFAs to Treasury that they are in compliance with all applicable laws, policies and procedures pertaining to borrower information; and (5) requiring that HFAs promptly notify Treasury and SIGTARP within 24 hours, when a breach of security has occurred involving borrower information. In order to allow for effective compliance and enforcement in HAMP Tier 2, Treasury should require that the borrower prove that the property has been rented and is occupied by a tenant at the time the borrower applies for a loan modification, as opposed to requiring only a certification that the borrower intends to rent the property. As part of the Request for Mortgage Assistance (“RMA”) application for HAMP Tier 2, the borrower should provide the servicer with a signed lease and third-party verified evidence of occupancy in the form of documents showing that a renter lives at the property address, such as a utility bill, driver’s license, or proof of renter’s insurance. In the case of multipleunit properties under one mortgage Treasury should require that the borrower provide the servicer with evidence that at least one unit is occupied by a tenant as part of the RMA. X Full X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury responded to this recommendation by requiring that borrowers certify that they intend to rent the property for at least five years and that they will make reasonable efforts to rent. This does not go far enough. Requiring only a selfcertification, under penalty of perjury, without a strong compliance and enforcement regime to ensure that the intent is carried out and the property is actually rented, leaves the program vulnerable to risks that TARP funds will pay investors for modifications for mortgages on vacation homes that are not rented, and may delay, as opposed to prevent, foreclosures and increase HAMP redefault rates. Although Treasury created written policies and procedures in June 2013, OSM’s policy only contains Treasury’s rule and language from the statute, all of which was existing prior to OSM’s creation. Therefore, OSM has not created its own formal policies. OSM’s written procedures are merely a documentation of some of OSM’s existing practices and guidelines, but not others as contained in the pay determination letters, and were not a new development of robust policies, procedures or guidelines. They do not establish meaningful criteria Treasury can follow for approving cash salaries exceeding $500,000, pay exceeding market medians, pay raises, or the use of longterm restricted stock. In 2012, Treasury began to preserve the independent market data on which it relied to evaluate the market data submitted by the companies. While Treasury’s documentation of granting these cash salaries has improved in that it includes some additional information beyond the company’s assertions, that information is primarily market data that the company provides. The recommendation was not to document better, but instead to “substantiate,” which requires some criteria for granting exceptions as well as independent analysis beyond the company’s assertions. Treasury’s policies and procedures do not contain any criteria for approving cash salaries exceeding $500,000 or any discussion of any analysis by Treasury. Treasury has said it is implementing this recommendation. SIGTARP will monitor Treasury’s efforts to implement the recommendation. Treasury rejected this recommendation without ever addressing why. Treasury responded that it continues its efforts to wind down CPP through repayments, restructuring, and sales. Treasury has not addressed the criteria for these divestment strategies or consulted with regulators. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. 90 89 * The Office of the Special Master should develop more robust policies, procedures, or guidelines to help ensure that its pay determination process and its decisions are evenhanded. These measures will improve transparency and help the Office of the Special Master consistently apply the Interim Final Rule principles of “appropriate allocation,” “performance-based compensation,” and “comparable structures and payments.” 88 * The Office of the Special Master should better document its use of market data in its calculations. At a minimum, the Office of the Special Master should prospectively document which companies and employees are used as comparisons in its analysis of the 50th percentile of the market, and it should also maintain records and data so that the relationship between its determinations and benchmarks are clearly understood. 87 * To ensure that the Office of the Special Master consistently grants exceptions to the $500,000 cash salary cap, the Office of the Special Master should substantiate each exception requested and whether the requests demonstrate or fail to demonstrate “good cause.” 86 85 * Treasury should assess whether it should renegotiate the terms of its Capital Purchase Program contracts for those community banks that will not be able to exit TARP prior to the dividend rate increase in order to help preserve the value of taxpayers’ investments. 84 * Treasury, in consultation with Federal banking regulators, should develop a clear TARP exit path to ensure that as many community banks as possible repay the TARP investment and prepare to deal with the banks that cannot. Treasury should develop criteria pertaining to restructurings, exchanges, and sales of its TARP investments (including any discount of the TARP investment, the treatment of unpaid TARP dividend and interest payments, and warrants). Implementation Status 92 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM To ensure servicer compliance with HAMP Tier 2 guidelines and assess servicer performance, 95 Treasury should set meaningful and measurable performance goals for the Hardest Hit Fund program including, at a minimum, the number of homeowners Treasury estimates will be helped by the program, and measure the program’s progress against those goals. 97 Full X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page In action memoranda sent to 4 state housing finance agencies in 2012 and one in 2015, Treasury appears to be saying it will hold states accountable to estimated numbers of homeowners to be helped. Treasury should set other targeted goals. See Section 2 for further discussion. Treasury has rejected this recommendation. Treasury’s refusal to provide meaningful and measurable goals leaves it vulnerable to accusations that it is trying to avoid accountability. Treasury assesses servicer compliance by reviewing samples of files of homeowner data in HAMP Tier 1 and Tier 2. Treasury, however, is not reporting Tier 2 information separately as SIGRARP recommended, making targeted insight into HAMP Tier 2 improvements difficult. Treasury has not implemented this recommendation. Treasury has not held a summit of all key stakeholders to make the program roll-out efficient and effective. Treasury has not implemented this recommendation. It is important that Treasury educate as many homeowners as possible with accurate information about HAMP in an effort to prevent mortgage modification fraud. Treasury told SIGTARP that implementing this recommendation would create significant additional procedures and documentation requirements. With no compliance regime to determine that a renter is in place, the program remains vulnerable to TARP funds being paid to modify mortgages that do not fit within the intended expansion of the program. Treasury rejected this recommendation, stating that eligibility is not retested prior to conversion. This does not go far enough. Requiring only a self-certification, without a strong compliance and enforcement regime to ensure that the intent is carried out and the property is actually rented, leaves the program vulnerable to risks that TARP funds will pay investors for modifications for mortgages on vacation homes that are not rented, and may delay, as opposed to prevent, foreclosures and increase HAMP redefault rates. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. To allow for assessment of the progress and success of HAMP Tier 2, Treasury should set meaningful and measurable goals, including at a minimum the number of borrowers Treasury estimates will be helped by HAMP Tier 2. Treasury should unambiguously and prominently disclose its goals and report monthly on its progress in meeting these goals. 96 (b) Treasury should develop and publish separate metrics related to HAMP Tier 2 in the compliance results and program results sections of the quarterly Making Home Affordable (“MHA”) servicer assessments of the Top 10 MHA servicers. (a) Treasury should include additional criteria in its servicer compliance assessments that measure compliance with the program guidelines and requirements of HAMP Tier 2. Given the expected increase in the volume of HAMP applications due to the implementation of HAMP Tier 2, Treasury should convene a summit of key stakeholders to discuss program implementation and servicer ramp-up and performance requirements so that the program roll-out is efficient and effective. (b) Treasury should undertake a sustained public service campaign as soon as possible both to reach additional borrowers who could potentially be helped by HAMP Tier 2 and to arm the public with complete, accurate information about the program to avoid confusion and delay, and to prevent fraud and abuse. (a) Treasury should require that servicers provide the SIGTARP/CFPB/Treasury Joint Task Force Consumer Fraud Alert to all HAMP-eligible borrowers as part of their monthly mortgage statement until the expiration of the application period for HAMP Tier 1 and 2. In order to protect against the possibility that the extension and expansion of HAMP will lead to an increase in mortgage modification fraud, (c) Treasury should bar payment of TARP-funded incentives to any participant for a loan modification on a property that has been reported vacant for more than three months, until such time as the property has been re-occupied by a tenant and the borrower has provided third-party verification of occupancy. (b) Treasury should require servicers to provide monthly reports to Treasury of any properties that have remained vacant for more than three months. 94 93 To prevent a property that has received a HAMP Tier 2 modification from remaining vacant for an extended period of time after a lease expires or a tenant vacates, 92 (a) Treasury should require that borrowers immediately notify their servicer if the property has remained vacant for more than three months. To continue to allow for effective compliance and enforcement in HAMP Tier 2 after the trial modification has started, Treasury should require that, prior to conversion of a trial modification to a permanent modification, the borrower certify under penalty of perjury that none of the occupancy circumstances stated in the RMA have changed. 91 Recommendation Implementation Status SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 93 Treasury should develop an action plan for the Hardest Hit Fund that includes steps to increase the numbers of homeowners assisted and to gain industry support for Treasuryapproved HHF programs. Treasury should set interim metrics for how many homeowners it intends to assist in a Treasury-defined time period in each particular program (such as principal reduction, second lien reduction, or reinstatement). If Treasury cannot achieve the desired level of homeowners assisted in any one program area in the defined time period, Treasury should put the funds to better use toward programs that are reaching homeowners. Treasury should stop allowing servicers to add a risk premium to Freddie Mac’s discount rate in HAMP’s net present value test. Treasury should ensure that servicers use accurate information when evaluating net present value test results for homeowners applying to HAMP and should ensure that servicers maintain documentation of all net present value test inputs. To the extent that a servicer does not follow Treasury’s guidelines on input accuracy and documentation maintenance, Treasury should permanently withhold incentives from that servicer. Treasury should require servicers to improve their communication with homeowners regarding denial of a HAMP modification so that homeowners can move forward with other foreclosure alternatives in a timely and fully informed manner. To the extent that a servicer does not follow Treasury’s guidelines on these communications, Treasury should permanently withhold incentives from that servicer. Treasury should ensure that more detail is captured by the Making Home Affordable Compliance Committee meeting minutes regarding the substance of discussions related to compliance efforts on servicers in HAMP. Treasury should make sure that minutes clearly outline the specific problems encountered by servicers, remedial options discussed, and any requisite actions taken to remedy the situation. In order to protect taxpayers who funded TARP against any future threat that might result from LIBOR manipulation, Treasury and the Federal Reserve should immediately change any ongoing TARP programs including, without limitation, PPIP and TALF, to cease reliance on LIBOR. 101 102 103 104 105 106 X Full X X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Neither Treasury nor the Federal Reserve has agreed to implement this recommendation despite Treasury telling SIGTARP that it “share[s SIGTARP’s] concerns about the integrity” of LIBOR, and the Federal Reserve telling SIGTARP that it agreed that “recent information regarding the way the LIBOR has been calculated has created some uncertainty about the reliability of the rate.” Treasury has not implemented this recommendation. SIGTARP found a lack of detail in Treasury’s meeting minutes and because Treasury failed to document its oversight, SIGTARP was unable to verify Treasury’s role in the oversight of servicers or its compliance agent Freddie Mac. Treasury has not implemented this recommendation. Servicer errors using NPV inputs and the lack of properly maintained records on NPV inputs have diminished compliance and placed the protection of homeowner’s rights to challenge servicer error at risk. Treasury has not implemented this recommendation. The addition of a risk premium reduces the number of otherwise qualified homeowners Treasury helps through HAMP. Treasury should implement this recommendation to increase assistance to struggling homeowners. Treasury has expanded the type of assistance offered, but shifted funding from HHF programs that helped homeowners directly to assistance for first time homebuyer downpayments and the demolition of vacant homes. Treasury issued letters to five housing finance agencies (4 in 2012 and 1 in 2015) requiring those states to provide an action plan with measurable interim and overall goals, including benchmarks, to improve the number of homeowners assisted under HHF. Treasury must do more to increase homeowner admission in HHF. See Section 2 for further discussion. Treasury has only partially implemented this recommendation. Treasury recently started publishing some aggregated data on its website. However, Treasury does not publish all of the data SIGTARP recommended nor does Treasury publish any data at all concerning the Hardest Hit Fund in the Housing Scorecard. Treasury issued letters to five housing finance agencies (4 in 2012 and 1 in 2015) requiring those states to provide an action plan with measurable interim and overall goals, after which Treasury said it would make program adjustments. There were some improvements in Florida in 2013. Treasury must have a sustained commitment to making program adjustments. Treasury issued letters to five housing finance agencies (4 in 2012 and 1 in 2015) requiring those states to provide an action plan with measurable interim and overall goals, including benchmarks, to improve the level of homeowner assistance under the HHF program. Treasury should fully adopt SIGTARP’s recommendation with the remaining 14 housing finance agencies in the HHF program. SIGTARP will continue to monitor implementation of this recommendation. See Section 2 for further discussion. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should publish on its website and in the Housing Scorecard on a quarterly basis the total number of homeowners assisted, funds drawn down by states, and dollars expended for assistance to homeowners, assistance committed to homeowners, and cash on hand, aggregated by all state Hardest Hit Fund programs. Treasury should set milestones at which the state housing finance agencies in the Hardest Hit Fund must review the progress of individual state programs and make program adjustments from this review. 99 100 Treasury should instruct state housing finance agencies in the Hardest Hit Fund to set meaningful and measurable overarching and interim performance goals with appropriate metrics to measure progress for their individual state programs. Recommendation 98 Implementation Status 94 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM X X 111 * Each year, Treasury should reevaluate total compensation for those employees at TARP exceptional assistance companies remaining in the Top 25 from the prior year, including determining whether to reduce total compensation. 112 * To ensure that Treasury effectively applies guidelines aimed at curbing excessive pay and reducing risk taking, Treasury should develop policies, procedures, and criteria for approving pay in excess of Treasury guidelines. Note: * Indicates that Treasury considers the recommendation closed and will take no further action. 114 * To be consistent with Treasury’s Interim Final Rule that the portion of performancebased compensation compared to total compensation should be greater for positions that exercise higher levels of responsibility, Treasury should return to using long-term restricted stock for employees, particularly senior employees such as CEOs. 113 * Treasury should independently analyze whether good cause exists to award a Top 25 employee a pay raise or a cash salary over $500,000. To ensure that the Office of the Special Master has sufficient time to conduct this analysis, Treasury should allow OSM to work on setting Top 25 pay prior to OSM’s receiving the company pay proposals, which starts the 60-day timeline. X Treasury should better document its decision whether or not to auction its preferred shares in a TARP bank to adequately reflect the considerations made for each bank and detailed rationale. 110 X X X In order to fulfill Treasury’s responsibility to wind down its TARP investments in a way that promotes financial stability and preserves the strength of our nation’s community banks, Treasury should undertake an analysis in consultation with Federal banking regulators that ensures that it is exiting its Capital Purchase Program investments in a way that satisfies the goals of CPP, which are to promote financial stability, maintain confidence in the financial system and enable lending. This financial stability analysis of a bank’s exit from TARP should determine at a minimum: (1) that the bank will remain healthy and viable in the event of an auction of Treasury’s preferred shares; and (2) that the bank’s exit from TARP does not have a negative impact on the banking industry at a community, state, regional, and national level. Treasury should document that analysis and consultation. 109 X In order to fulfill Treasury’s responsibility to wind down its TARP Capital Purchase Program investments in a way that protects taxpayer interests, before allowing a TARP bank to purchase Treasury’s TARP shares at a discount to the TARP investment (for example as the successful bidder at auction), Treasury should undertake an analysis, in consultation with Federal banking regulators, to determine that allowing the bank to redeem its TARP shares at a discount to the TARP investment outweighs the risk that the bank will not repay the full TARP investment. Treasury should document that analysis and consultation. 108 X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page In 2013, Treasury allowed some GM employees not to have long-term restricted stock and effectively approved only 5% of all of Ally employees pay in long-term restricted stock and failed to consider positions and levels of authority on an individual basis, as called for by Treasury’s rule. In 2014, Treasury eliminated longterm restricted stock for Ally employees. Treasury has not established criteria for awarding an employee a pay raise or a cash salary exceeding $500,000. Such criteria is important to independently analyzing the basis for awarding pay raises or cash salaries greater than $500,000 and ensuring consistency in decision-making. Treasury’s documentation of its justification does not evidence independent analysis, but instead sets forth the company’s assertions and market data supplied by the company. Treasury has not established clear policies, procedures, and criteria for approving pay in excess of Treasury’s guidelines such as the 50th percentile, cash salaries greater than $500,000, or use of long term restricted stock. Treasury’s new procedures state that OSM may reduce pay, however OSM did not address any guidelines or criteria that it would consider in doing so. Treasury has not agreed to implement this important recommendation, but is reviewing its practices in light of SIGTARP’s recommendations. SIGTARP will monitor Treasury’s efforts to implement this recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. On July 8, 2013, the Financial Stability Oversight Council unanimously voted to designate AIG as systemically important. Partial In Process None TBD/NA Comments In order to protect taxpayers who invested TARP funds into AIG to the fullest extent possible, Treasury and the Federal Reserve should recommend to the Financial Stability Oversight Council that AIG be designated as a systemically important financial institution so that it receives the strongest level of Federal regulation. Full 107 Recommendation Implementation Status SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 95 As a result of the findings of Treasury’s research and analysis into the causes of HAMP redefaults, and characteristics of redefaults, Treasury should modify aspects of HAMP and the other TARP housing programs in ways to reduce the number of redefaults. Treasury should require servicers to develop and use an “early warning system” to identify and reach out to homeowners that may be at risk of redefaulting on a HAMP mortgage modification, including providing or recommending counseling and other assistance and directing them to other TARP housing programs. In the letter Treasury already requires servicers to send to homeowners who have redefaulted on a HAMP modification about possible options to foreclosure, Treasury should require the servicers to include other available alternative assistance options under TARP such as the Hardest Hit Fund and HAMP Tier 2, so that homeowners can move forward with other alternatives, if appropriate, in a timely and fully informed manner. To the extent that a servicer does not follow Treasury’s rules in this area, Treasury should permanently withhold incentives from that servicer. Treasury and the Federal banking regulators should improve coordination when collaborating on current and future initiatives by (1) defining the roles of all participants at the outset of collaborative efforts by creating precise and directed governing documents (i.e., charters) that clearly address the responsibilities of each entity; and (2) jointly documenting processes and procedures, including flowcharts, risk management tools, and reporting systems to ensure that objectives are met. Each participant should sign off to demonstrate their understanding of, and agreement with, these procedures. To increase small-business lending by former TARP banks participating in SBLF, Treasury should work with the banks to establish new, achievable plans to increase lending going forward. 116 117 118 119 120 Full X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury now requires servicers to consider homeowners that redefaulted in HAMP Tier 1 for HAMP Tier 2 before any other loss mitigation action. Recently, Treasury created Streamline HAMP, which can be used to remodify HAMP Tier 1 or HAMP Tier 2 modifications that redefaulted or are at risk of redefault. Treasury does not, however, have a mechanism to require servicers to offer HHF assistance to homeowners that redefault in HAMP. Treasury should require servicers to include other available alternative assistance options under TARP such as the Hardest Hit Fund, as SIGTARP recommended. Although SIGTARP issued this recommendation on April 1, 2013, which would require servicers to contact homeowners who missed payments, Treasury has not required servicers to reach out to past due homeowners. Treasury refuses to make this part of HAMP rules, even though, after SIGTARP raised this concern, CFPB implemented two “early intervention” delinquency notice requirements at 36 and 45 days. Treasury should make this same rule in HAMP so that it can assess compliance and take action for non-compliance, such as withholding or clawing back HAMP incentives payments. Treasury took the following action in response to SIGTARP’s recommendation: First, Treasury doubled the amount of TARP funding for incentives to be paid to homeowners by adding a $5,000 “Pay for Performance” homeowner incentive for those that remain in HAMP through the 6th anniversary of their trial modification. While Treasury still allows servicers to apply this to the principal balance of their mortgage, rather than pay it directly to homeowners, Treasury began requiring servicers to recast (reamortization) of the loan to reduce the homeowners’ monthly payment after applying TARP payments to the principal balance. Second, Treasury now requires mortgage servicers to consider homeowners that redefaulted in HAMP Tier 1 for HAMP Tier 2 before any other loss mitigation action. Third, Treasury allows servicers to remodify loans at risk of redefault under HAMP Tier 1 with HAMP Tier 2. Recently, Treasury created Streamline HAMP, which can be used to remodify HAMP Tier 1 or HAMP Tier 2 modifications that redefaulted or are at risk of redefault. Treasury took the following action in response to SIGTARP’s recommendation: First, Treasury doubled the amount of TARP funding for incentives to be paid to homeowners by adding a $5,000 “Pay for Performance” homeowner incentive for those that remain in HAMP through the 6th anniversary of their trial modification. While Treasury still allows servicers to apply this to the principal balance of their mortgage, rather than pay it directly to homeowners, Treasury began requiring servicers to recast (reamortization) of the loan to reduce the homeowners’ monthly payment after applying TARP payments to the principal balance. Second, Treasury now requires mortgage servicers to consider homeowners that redefaulted in HAMP Tier 1 for HAMP Tier 2 before any other loss mitigation action. Third, Treasury allows servicers to remodify loans at risk of redefault under HAMP Tier 1 with HAMP Tier 2. Recently, Treasury created Streamline HAMP, which can be used to remodify HAMP Tier 1 or HAMP Tier 2 modifications that redefaulted or are at risk of redefault. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should conduct in-depth research and analysis to determine the causes of redefaults of HAMP permanent mortgage modifications and the characteristics of loans or the homeowner that may be more at risk for redefault. Treasury should require servicers to submit any additional information that Treasury needs to conduct this research and analysis. Treasury should make the results of this analysis public and issue findings based on this analysis, so that others can examine, build on, and learn from this research. Recommendation 115 Implementation Status 96 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM In order to prevent confusion, promote transparency, and present taxpayers who funded TARP with clear and accurate reporting, when Treasury discusses the amount of TARP funds (or CPP funds) recovered or repaid, Treasury should not count the $2.1 billion in TARP investments that Treasury refinanced into the Small Business Lending Fund, which is outside of TARP. To ensure that homeowners in HAMP get sustainable relief from foreclosure, Treasury should research and analyze whether and to what extent the conduct of HAMP mortgage servicers may contribute to homeowners redefaulting on HAMP permanent mortgage modifications. To provide transparency and accountability, Treasury should publish its conclusions and determinations. Treasury should establish an achievable benchmark for a redefault rate on HAMP permanent mortgage modifications that represents acceptable program performance and publicly report against that benchmark. Treasury should publicly assess and report quarterly on the status of the ten largest HAMP servicers in meeting Treasury’s benchmark for an acceptable homeowner redefault rate on HAMP permanent mortgage modifications, indicate why any servicer fell short of the benchmark, require the servicer to make changes to reduce the number of homeowners who redefault in HAMP, and use enforcement remedies including withholding, permanently reducing, or clawing back incentive payments for any servicer that fails to comply in a timely manner. To protect the investment taxpayers made through TARP in community banks and to ensure that these banks continue to lend in their communities which is a goal of TARP’s Capital Purchase Program, Treasury should enforce its right to appoint directors for CPP institutions that have failed to pay six or more quarterly TARP dividend or interest payments. In enforcing its right to appoint directors to the board of CPP institutions that have failed to pay six or more quarterly dividend or interest payments, Treasury should prioritize appointing directors to the board of those CPP institutions that meet one or more of the following criteria: (1) rejected Treasury’s request to send officials to observe board meetings; (2) have failed to pay a large number of TARP dividend payments or that owe the largest amount of delinquent TARP dividends; or (3) is currently subject to an order from their Federal banking regulator, particularly orders related to the health or condition of the bank or its board of directors. In addition, Treasury should use information learned from Treasury officials that have observed the bank’s board meetings to assist in prioritizing its determination of banks to which Treasury should appoint directors. To protect the investment taxpayers made in TARP and to ensure that institutions continue to lend in low and moderate income communities which is the goal of TARP’s Community Development Capital Initiative, Treasury should enforce its right to appoint directors to CDCI institutions that have failed to pay eight or more TARP quarterly dividend (or interest) payments. 122 123 124 125 126 127 128 Full X X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has made some progress implementing this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has made progress toward implementing this recommendation. In Treasury’s quarterly “MHA Servicer Assessment,” published in its October 2013 “Making Home Affordable Performance Report,” Treasury included a new servicer performance metric, assessing whether seven HAMP servicers complied with Treasury’s guidelines concerning homeowners’ HAMP modifications that servicers disqualified. SIGTARP looks forward to working with Treasury to fully implement this recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. To preserve the amount of capital former TARP banks participating in SBLF have to lend, the primary Federal banking regulators (the Federal Reserve, FDIC, or OCC) should not approve dividend distributions to common shareholders of former TARP banks that have not effectively increased small-business lending while in SBLF. 121 Recommendation Implementation Status SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 97 To educate homeowners and help them avoid becoming victims to mortgage modification fraud, Treasury should prominently display all of the information containing in the Consumer Fraud Alert: “Tips For Avoiding Mortgage Modification Scams” created jointly by SIGTARP, Treasury, and the Consumer Financial Protection Bureau on the home page of websites related to HAMP, including Treasury’s TARP website and the “Making Home Affordable” website along with simple and direct information on SIGTARP’s mission and how to contact SIGTARP’s hotline if they suspect mortgage modification fraud. Treasury should determine how many homeowners who completed a HAMP application for which Treasury paid NeighborWorks under the MHA Outreach and Borrower Intake Project are accepted into a HAMP trial modification and whether that homeowner is granted a permanent HAMP modification. Treasury should continue to monitor these results on a monthly basis. Treasury should publicly report all of these results on a quarterly basis. Treasury should publicly report for each of the top 10 servicers how many homeowners who completed a HAMP application for which Treasury paid NeighborWorks were denied by the servicer for a HAMP trial modification. Treasury should use the results of SIGTARP-recommended monitoring and reporting on the MHA Outreach and Borrower Intake Project to determine whether there are areas of improvement. Treasury should post the original surveys received from CPP and CDCI institutions on how they used TARP funds for each year to the Treasury website. The original surveys and responses should not be subjected to any manipulations or changes to calculate survey results. Treasury should develop written repeatable operating procedures for submitting and receiving survey responses from CPP and CDCI recipients on how they used TARP funds. The procedures should include the functional roles and responsibilities and automated and manual process steps involved, such as documenting and determining the survey population, compiling and analyzing the responses, verifying and validating the data, resolving discrepancies, and posting the responses on the Treasury website. Treasury should take aggressive action to enforce its requests that all CPP institutions report annually on their use of TARP funds, and its requirement that all CDCI institutions report annually on their use of TARP funds. At a minimum, Treasury should draft a letter to each CPP and CDCI institution that fails to report each year, and follow up on that letter with the institution. Treasury should exercise its rights to compel reporting on use of TARP funds by CDCI institutions. Concerning the survey responses posted on Treasury’s website submitted by TARP recipients indicating how they and used CPP or CDCI funds, Treasury should fix all errors and/or deficiencies, which SIGTARP previously provided to Treasury, and submit documentation to SIGTARP confirming the correction/elimination of these errors. Treasury should perform a thorough review of any and all submissions by TARP recipients on their use of TARP funds prior to posting the surveys on the Treasury website, and follow up with the institution for any missing information or information that is inconsistent or has an obvious error. 130 131 132 133 134 135 136 137 138 X X Full X X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury has not agreed to implement this important recommendation Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has agreed to implement this important recommendation. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should increase the amount of the annual incentive payment paid to each homeowner who remains in HAMP. Treasury should require the mortgage servicer to apply the annual incentive payment earned by the homeowner to reduce the amount of money that the homeowner must pay to the servicer for the next month’s mortgage payment (or monthly payments if the incentive exceeds the monthly mortgage payment), rather than to reduce the outstanding principal balance of the mortgage. Recommendation 129 Implementation Status 98 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Treasury should ensure that mortgage servicers who contract with Treasury have sufficient staffing and other resources to review the number of homeowner HAMP applications submitted each month, plus additional applications to decrease any backlog of homeowners who applied in prior months without a decision. The Secretary of the Treasury should require OSM to maintain documentation of the substance of all OSM communications with TARP companies. The Secretary of the Treasury should require all Treasury employees to maintain documentation of all communications with TARP companies regarding compensation. The Secretary of the Treasury should require OSM to maintain documentation of OSM’s communications with Treasury officials regarding compensation at TARP companies. The Secretary of the Treasury should require OSM to use long-term restricted stock as part of each TARP company’s employee’s compensation package to ensure compensation is tied to both the employee’s and the company’s performance, and the full repayment of TARP funds. The Secretary of the Treasury should direct OSM to conduct an analysis, independent of company proposals and assertions, for an employee of a TARP exceptional assistance company to be paid a cash salary exceeding $500,000. The Secretary of the Treasury should direct OSM to document its independent analyses regarding the decision that a TARP exceptional assistance company employee be paid a cash salary exceeding $500,000 The Secretary of the Treasury should direct OSM to conduct an analysis, independent of company proposals and assertions, for an employee of a TARP exceptional assistance company to receive an increase in annual compensation. The Secretary of the Treasury should direct OSM to document its independent analyses regarding the decision that a TARP exceptional assistance company employee will receive an increase in annual compensation. The Secretary of the Treasury should direct OSM to conduct an analysis, independent of company proposals and assertions, for an employee of a TARP exceptional assistance company to be paid a cash salary that exceeds the market median cash salary for similar positions in similar companies. The Secretary of the Treasury should direct OSM to document its independent analyses regarding the decision that a TARP exceptional assistance company employee be paid a cash salary exceeding market medians. The Secretary of the Treasury should direct OSM to include in its written procedures whether it will target, for each Top 25 employee of a TARP exceptional assistance company, median total compensation for similar positions in similar companies. Treasury require mortgage servicers administering HAMP to designate a single point of responsibility at the transferring servicer and the new receiving servicer to ensure that submitted HAMP applications (whether complete or not), HAMP trial modifications, and HAMP permanent modifications transfer to the new mortgage servicer at the time the mortgage servicing is transferred. 140 141 142 143 144 145 146 147 148 149 150 151 152 Full X X X X X X X X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. This past quarter, Treasury began including in their assessment of the top 7 HAMP servicers, a metric for the percentage of completed HAMP applications not processed within 30 days of receipt, establishing a benchmark of 98% compliance. The 7 mortgage servicers included in Treasury’s reporting accounted for approximately 87% of active TARP-funded HAMP modifications as of June 30, 2015. If Treasury finds that servicers are not timely reviewing homeowners HAMP applications, Treasury should take action to hold these servicers accountable, by ensuring that mortgage servicers who contract with Treasury have sufficient staffing and other resources to review the number of homeowner HAMP applications submitted, as SIGTARP recommended, and taking other enforcement action. Treasury has not agreed to implement this important recommendation Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should publicly report on all CPP and CDCI institutions that have not submitted a survey response on their use of TARP funds for prior years and continue that reporting in future years. 139 Recommendation Implementation Status SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 99 Treasury should require that a new receiving servicer’s single point of responsibility employee be responsible for: (1) confirming receipt in writing of the HAMP information and documents from the transferring servicer at the time of transfer; (2) ensuring that the receiving servicer fully complies with all HAMP rules and Treasury reporting requirements related to mortgage servicing transfers; and (3) promptly informing homeowners that their HAMP information and documentation has been received, confirming their status in HAMP, and providing the name and contact information of the receiving servicer’s single point of responsibility. Treasury should increase its oversight of mortgage servicers to ensure that they are following all HAMP rules and Treasury reporting requirements related to mortgage servicing transfers on a timely basis, that they have designated a single point of responsibility for transfers, and that single point of responsibility is effectively fulfilling its responsibilities. Treasury should publicly report the results of its oversight in this area in its quarterly servicer assessment, and should assess fines and permanently withhold financial incentives for servicers not in compliance. Treasury should ensure that state housing finance agencies and all of their city or county/land bank/non-profit/for-profit partners have the resources, staffing, training, and knowledge, and are ready for, and can effectively handle the increase in contracting, demolition, and other blight elimination activities contemplated under HHF. Treasury should keep itself informed and gain insight of critical activities taking place under HHF blight elimination by knowing the identities of all who will participate in blight elimination activity under HHF or receive TARP funds including city or county/land bank/ non-profit/for profit partners and their subcontractors through required reporting by state HFAs to Treasury on an ongoing basis. Treasury should keep itself informed and gain insight of critical activities taking place under HHF blight elimination by requiring reporting by state HFAs on: (1) the neighborhoods selected for HHF blight elimination and the strategy for choosing that neighborhood; and (2) property address including zip codes for any property demolished or removed under HHF. Treasury should increase transparency by publicizing on its website: (1) a list of all city or county/land bank/non-profit/ for-profit partners that will participate in blight elimination activity under HHF on a state by state basis; (2) a list of addresses including zip code where a property has been demolished or removed under HHF on a city and state basis; (3) Treasury’s expected target outcomes by city and state; and (4) performance indicators to measure progress by city and state. 154 155 156 157 158 159 Full X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Although Treasury is not requiring the state housing finance agencies to develop performance indicators, Michigan’s state housing finance agency created performance indicators and other state agencies have told SIGTARP that they are in the process of creating (or contracting for the creation of) performance indicators. Even though Treasury does not publish the information SIGTARP recommended, SIGTARP reports quarterly the list of partners who have entered into agreements with the cities/counties that are the applicant/recipients of the blight funds. Several partners publish lists of properties on their own websites as well. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. However, SIGTARP has begun providing transparency by identifying the partners. Treasury has not agreed to implement this important recommendation. Treasury has said it is implementing this important recommendation. SIGTARP will monitor Treasury’s efforts to implement this recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should require that a transferring servicer’s single point of responsibility employee be responsible for: (1) transferring all information and documents related to the homeowner and HAMP to the new servicer at the time of service transfer; (2) confirming receipt in writing of the HAMP information and documents from the new servicer; (3) ensuring that the transferring servicer retains all documents and information provided to the new servicer related to HAMP; (4) ensuring that the transferring servicer fully complies with all HAMP rules and Treasury reporting requirements related to mortgage servicing transfers; and (5) promptly informing homeowners in writing that their HAMP information and documents were transferred to the new servicer, the date of the transfer of HAMP information and documents, and the name and contact information of the original transferring servicer’s single point of responsibility. Recommendation 153 Implementation Status 100 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Treasury should engage in comprehensive planning to ensure that blight elimination under HHF progresses in the most effective way by, within 60 days, requiring state HFAs participating in blight elimination activities under TARP to develop performance indicators such as decreases in default rates or foreclosure filings, or increases in home values through home sales and annual tax assessments to measure progress towards Treasury’s target reduction in foreclosures and target increase in home values. Treasury should use its expertise and resources to help the state HFAs develop performance indicators. Treasury should require reporting by state HFAs on a periodic basis no less than bi-annually on chosen performance indicators and use that reporting to monitor which cities and states are on track to achieve successfully Treasury’s goal and to identify improvements to increase effectiveness. Treasury should require quarterly detailed accounting by state HFAs of how TARP funds are spent reimbursing local partners for blight elimination activities under HHF that lists actual TARP reimbursed expenditures for each local partner by each category of blight elimination activity, including demolition, acquisition, greening, maintenance, asbestos removal, engineering studies, environmental studies, or any other category of expenditures. Treasury should require state HFAs to develop a system of internal controls targeted specifically at blight elimination. Treasury should increase the effectiveness of oversight at both the Treasury and state HFA levels by (1) collecting all contracts and subcontracts for HHF blight elimination activities; and (2) requiring the state HFAs to collect all contracts and subcontracts for HHF blight elimination activities. In order to increase HAMP’s effectiveness at reaching all HAMP-eligible homeowners, Treasury should hold in-person homeowner outreach events in all major cities and high foreclosure cities within the 10 HAMP-underserved states of Alaska, Arkansas, Indiana, Iowa, Kansas, Michigan, North Dakota, Oklahoma, Tennessee, and Texas. Treasury should ensure that there are sufficient HUD-approved counselors who can help the number of homeowners who attend these events with HAMP applications. Treasury should hold additional and sustained public service campaign, and TARP-paid television and radio advertisements in all major cities and high foreclosure cities within the 10 HAMP-underserved states of Alaska, Arkansas, Indiana, Iowa, Kansas, Michigan, North Dakota, Oklahoma, Tennessee, and Texas, as soon as possible to ensure that homeowners have accurate and complete information about the program and to prevent homeowners from becoming victims of fraud schemes. Treasury should identify improper payment risks, and fraud, waste, and abuse risks, related to Hardest Hit Fund down payment assistance and should design an effective Treasury oversight plan with program requirements and guidelines, in addition to compliance efforts to mitigate those risks. In addition to the potential benefits of these programs that Treasury already analyzed, Treasury should analyze the risks associated with down payment assistance programs. 161 162 163 164 165 166 167 Full X X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury has not agreed to implement this important recommendation. Treasury has held no in person outreach events since SIGTARP raised this concern. Treasury has held no in person outreach events since SIGTARP raised this concern. While Treasury does not collect full contracts and subcontracts, SIGTARP has asked each state HFA to produce them directly to SIGTARP. Doing so leads to the state HFAs collecting this information, where they had not done so previously. Although Treasury has not agreed to implement this important recommendation, in response to SIGTARP’s request, five states (Michigan, Ohio, Indiana, Alabama, South Carolina) provided to SIGTARP internal control documentation relating to HHF blight elimination; another state, Illinois, indicated it would provide such documentation, but has not yet done so. While this demonstrates a positive step, SIGTARP continues to evaluate the scope and effectiveness of the states’ internal controls. Treasury has not agreed to implement this important recommendation. SIGTARP raised this important issue for the first time in an April 2012 report on factors implementing implementation of HHF. Several state housing finance agencies are in the process of creating (or contracting for the creation of) performance indicators. Still, Treasury should implement SIGTARP’s important recommendation. SIGTARP raised this important issue for the first time in an April 2012 report on factors implementing implementation of HHF. Although Treasury is not requiring the state housing finance agencies to develop performance indicators, Michigan’s state housing finance agency created performance indicators and other state agencies have told SIGTARP that they are in the process of creating (or contracting for the creation of) performance indicators. Still, Treasury should implement SIGTARP’s important recommendation. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should engage in comprehensive planning to ensure that blight elimination under HHF progresses in the most effective way by, within 60 days, setting target outcomes for HHF blight elimination of how much Treasury expects blight elimination under TARP to increase home values and decrease foreclosures by city and state. Treasury can consult with the state HFAs as to set realistic target outcomes, but should not defer to state HFAs to define success. Treasury should share its target outcome with each state HFA. 160 Recommendation Implementation Status SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 101 To reduce the risk of fraud, waste and abuse, and to facilitate effective oversight, Treasury should require state housing finance agencies to report quarterly to Treasury the names and addresses of all homebuyers participating in any Hardest Hit Fund funded down payment assistance program. To reduce the risk of waste and abuse, to facilitate effective oversight, and to protect Treasury’s right to the return of TARP funds where a homebuyer participating in any Hardest Hit Fund funded down payment assistance program sells the home prior to the expiration of the lien, Treasury should require that state housing finance agencies develop an effective process to check a homebuyer’s continued primary residency in the home prior to releasing the lien. Treasury should conduct effective oversight of that process including providing guidelines for that process in addition to conducting oversight through compliance. To prevent fraud, waste and abuse particularly through commingling and improper reporting, Treasury should require the participating state housing finance agencies to maintain down payment assistance funds and reporting under Hardest Hit Fund separate from other state down payment assistance programs, both at the state level and at the local city or county level. To prevent homeowners and homebuyers from becoming victims of fraud, and to arm the public with complete and accurate information, Treasury should sponsor outreach events in each county participating in the Hardest Hit Fund down payment assistance and conduct a media outreach campaign, consisting of, among other things, television, out-ofhome (such as billboards and bus and shuttle stop advertisements), radio, and print. To ensure that any TARP Hardest Hit Fund down payment assistance successfully prevents foreclosures as required by EESA, at the start of the program, Treasury should set target outcomes quantifying expected results from this use of these TARP funds. Treasury can consult with each participating state housing finance agency to set realistic target outcomes, but should not defer to state housing finance agencies to define success. Treasury should share its target outcome with each participating state housing finance agencies. 169 170 171 172 173 Full X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. To reduce the likelihood of improper payments to ineligible homeowners and to deter fraud, waste, and abuse in TARP, Treasury should require that state housing finance agencies include in any homebuyer application for any Hardest Hit Fund down payment assistance program a certification to be signed by the homebuyer relating to income, first-time homebuyer status, primary residence status, and any other material requirements for program participation. The certification should specify that any false or fictitious statements concerning such requirements would be the basis for civil penalties and assessments under the False Claims Act, 31 U.S.C. §§ 3729-3733, the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812, and/or criminal penalties under 18 U.S.C. § 1001 or other Federal law. SIGTARP recommends the following certification be included in the application form: I acknowledge that knowingly failing to disclose material information to the [name of state housing finance agency], or making or causing to be made a false, fictitious, or fraudulent statement or representation of material fact in an application for use in determining eligibility for a payment under the U.S. Department of Treasury’s Hardest Hit Fund’s [name of down payment assistance program], constitutes a crime punishable under Federal law. I, therefore, certify, under penalty of perjury that all the information I have given on this form, and in any accompanying statements, is complete, true, and correct and I acknowledge that any material omission or false, fictitious, or fraudulent statement or representation or entry could be the basis for civil penalties and assessments under the False Claims Act, 31 U.S.C. §§ 3729-3733, the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812, and/or criminal penalties under 18 U.S.C. § 1001 or other Federal law. Recommendation 168 Implementation Status 102 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Treasury should require that state housing finance agencies participating in Hardest Hit Fund down payment assistance report, on a periodic basis no less than every six months, on performance indicators. Treasury should use that reporting to monitor which cites/ counties and states are on track to achieve Treasury’s target outcomes. Treasury should monitor this information and use it to determine whether to continue the TARP assistance past the pilot stage, whether to expand the assistance to other cites/counties or states, and to identify ways to improve the effectiveness of HHF down payment assistance. Treasury should ensure that state housing finance agencies participating in the Hardest Hit Fund down payment assistance have the resources, staffing, training, and knowledge, and that they are ready for and can effectively handle the expected number of homebuyer applications and other required work. To improve the effectiveness of the Hardest Hit Fund Florida on an urgent basis, and to ensure that Florida homeowners have the same chance of Hardest Hit Fund assistance as homeowners in other HHF states, Treasury should improve the homeowner admission rate in HHF Florida to a targeted level that would bring it closer to the average homeowner admission rate of the other HHF states. Treasury should set numeric targets that HHF Florida must meet each quarter to reach the targeted homeowner admission rate and include those targets in an action memorandum to Florida’s housing finance agency. To improve the effectiveness of the Hardest Hit Fund in all states on an urgent basis, Treasury should form a HHF performance committee to meet each quarter to assess performance by each state housing finance agency in comparison to other state HHF programs, identify obstacles and risks, and develop strategies to mitigate those obstacles and risks. Treasury should memorialize the work of that committee through meeting minutes, and report on those obstacles and risks, as well as mitigation strategies to the Treasury Deputy Secretary twice a year. To improve the effectiveness of the Hardest Hit Fund Florida in reaching homeowners in Florida on an urgent basis, Treasury should, within 60 days, reassess eligibility requirements of each HHF Florida program to ensure that programs target the typical Florida homeowner, keep only those requirements that are absolutely necessary, and eliminate those that are not. Treasury should memorialize the findings of this reassessment. To give Treasury insight into areas to improve the effectiveness of the Hardest Hit Fund on an urgent basis, Treasury should require all participating state housing finance agencies to report on an overall state HHF level as well as individual HHF program level: the reasons why homeowners were denied assistance along with the corresponding number of homeowners denied for that reason. Treasury should require this reporting on a quarterly and cumulative basis and post that information on its website for transparency and accountability. 175 176 177 178 179 180 Full X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Treasury has not agreed to implement this important recommendation. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. To ensure that any TARP Hardest Hit Fund down payment assistance successfully prevents foreclosures as required by EESA, at the start of the program, Treasury should require participating state housing finance agencies to develop performance indicators that measure progress towards Treasury’s quantified target outcomes. Treasury should use its expertise and resources to help the state housing finance agencies develop performance indicators. 174 Recommendation Implementation Status SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 103 To improve the effectiveness of the Hardest Hit Fund Florida on an urgent basis, and ensure that homeowners throughout Florida have the same chance of HHF assistance as homeowners in other counties within the state, Treasury should assess whether HHF Florida is operating in the most effective manner in each county. This should include, at a minimum, Treasury analyzing, within 60 days, which Florida counties have the lowest homeowner admission rates, the highest homeowner denial rates, the highest rate of homeowner applications withdrawn by an advisor agent for Florida’s housing finance agency, and the longest application processing times, Treasury setting targets and milestones for improvement in an action memorandum to Florida’s housing finance agency. Treasury program staff should, within six months, visit with advisor agents of Florida’s housing finance agency in counties hit the hardest but where HHF Florida is least effective, not for a compliance review, but to get an understanding of eligibility requirements that may be too strict to target the typical Florida homeowner seeking HHF assistance, and the challenges and obstacles the advisor agents face in making a decision to deny or withdraw a homeowner. To give Treasury insight into areas to improve the effectiveness of the Hardest Hit Fund on an urgent basis, Treasury should require that state housing finance agencies report separately the number of homeowners who withdrew their HHF application from the number of homeowners whose HHF application was withdrawn by the state housing finance agency. Treasury should require that reporting on a quarterly and cumulative basis and post that reporting on its website for transparency and accountability. To improve the effectiveness of the Hardest Hit Fund on an urgent basis, Treasury should reduce to a targeted level the length of time to process a senior citizen’s application and give assistance in the Hardest Hit Fund Florida’s senior citizen program known as ELMORE. Florida’s housing finance agency should view a targeted length of time to process an application under ELMORE not as an excuse to deny a homeowner, but instead as a target for their own improvement in helping homeowners make it through the approval process. Treasury should set numeric targets that HHF Florida must meet each quarter to reach the targeted processing time, and include those targets in an action memorandum to Florida’s housing finance agency, and measure progress quarterly. To improve the effectiveness of the Hardest Hit Fund Florida on an urgent basis, including the median 280 days to process a homeowner’s application and the fact that 46% of applications have been withdrawn, Treasury should identify with more detail the obstacle to senior citizens getting assistance from the Hardest Hit Fund Florida’s program known as ELMORE by determining which documents senior citizens are having trouble providing. To assist in identifying these documents, Treasury should, within 60 days, separately meet with Florida’s Department of Elderly Affairs, and advisor agencies for Florida’s housing finance agency in targeted counties with low ELMORE participation in comparison to the number of senior citizens in those counties with reverse mortgages. After identifying the documents that are causing obstacles to homeowner participation, Treasury should determine whether those documents are essential for HHF Florida to provide assistance, and mitigate that obstacle by further reducing required documents (beyond what Treasury and Florida’s housing finance agency have already reduced) to only those documents that are essential. 182 183 184 185 Full X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. To give Treasury insight into areas to improve the effectiveness of the Hardest Hit Fund on an urgent basis, Treasury should require each state housing finance agency to report county-level data for all HHF programs and individual state HHF program on: the number of homeowners who have applied for HHF, the number of homeowners denied, the number of homeowners who withdrew their application after being approved for assistance, the number of homeowners who the state housing finance agency withdrew their application, the number of homeowners whose applications are in process, and the median number of days to process homeowner applications. Treasury should require this reporting on a quarterly and cumulative basis and post this information on its website for transparency and accountability. Recommendation 181 Implementation Status 104 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM To identify obstacles to the effectiveness of the Hardest Hit Fund Florida on an urgent basis, Treasury should increase its contact and communication with Florida homeowners, particularly those who have gone through HHF Florida’s application process by: (1) within 90 days, Treasury begin communications with Florida homeowners who withdrew their application or had their application withdrawn to understand the reasons why; (2) inviting homeowner advocacy groups representing homeowners who have applied for HHF to an annual summit with Treasury officials similar to Treasury’s servicer summit; (3) holding targeted Treasury-sponsored outreach events, for example, at Florida senior citizen centers, and in areas of high underwater Florida homeowners with limited participation in the principal reduction program; and (4) having the new HHF performance committee review and discuss homeowner complaints about HHF Florida at each meeting. To ensure that HHF Florida is effective and ensure that homeowners throughout Florida have the same chance of HHF assistance as homeowners in other counties within the state, Treasury should hold HHF Florida accountable to maintaining its improvement in homeowner denial rates, by setting a targeted homeowner denial rate that keeps HHF Florida in line with the national average for HHF. Treasury should provide that targeted rate in an action memorandum to Florida’s housing finance agency and each quarter ensure that it meets that target. To improve the efficiency of the Hardest Hit Fund Florida on an urgent basis, Treasury should reduce the length of time HHF Florida takes to process an application from the median of 167 days to a targeted length of time. Treasury should provide that target in an action memorandum to Florida’s housing finance agency and each quarter measure progress against that target. To improve the effectiveness of the Hardest Hit Fund Florida on an urgent basis, Treasury should reduce the rate of homeowner applications withdrawn by the state housing finance agency to a targeted level. Treasury should provide that target in an action memorandum to Florida’s housing finance agency and each quarter measure progress against that target. To improve the effectiveness and efficiency of the Hardest Hit Fund Florida on an urgent basis, Treasury should, within 90 days, determine to either convert the Hardest Hit Fund pilot program known as the Modification Enabling Project to a full program or close it and put the funds to better use in existing HHF Florida programs. To prevent fraud, waste, and abuse in the Hardest Hit Fund and non-compliance with the Dodd-Frank Act, Treasury should ensure HHF funds do not go to felons convicted of mortgage-related crimes by searching or requiring state housing finance agencies to search federal, state, and county databases for an applicant homeowner’s criminal history, prior to the release of any funds to the applicant, given the fact that convictions are public records. Treasury should make efforts to gain access to other criminal databases. 187 188 189 190 191 192 Full X X X X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Continued on next page Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Partial In Process None TBD/NA Comments Note: * Indicates that Treasury considers the recommendation closed and will take no further action. To improve the effectiveness of the Hardest Hit Fund Florida on an urgent basis, Treasury should preclude Florida’s housing finance agency from withdrawing a senior citizen’s application to the HHF program known as ELMORE based on homeowner nonresponsiveness unless Florida’s Department of Elderly Affairs has stated in writing that it has done all it can to help the homeowner complete the application and find the required documents. 186 Recommendation Implementation Status SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 105 To prevent fraud, waste, and abuse in the Hardest Hit Fund, Treasury should ensure that state housing finance agencies conduct regular criminal history background checks on staff or contractors who are paid, either directly or indirectly, with HHF funds by searching federal, state, and county databases. To prevent fraud, waste, and abuse in the Hardest Hit Fund, Treasury should conduct due diligence by searching public records for an applicant’s conviction for non-mortgage related crimes of dishonesty (such as embezzlement, forgery, bank fraud, welfare fraud, unemployment compensation fraud, tax fraud, money laundering, and fast statements), and, if found, conduct further due diligence, including looking into potential misrepresentations of assets and income based on the nature of the crimes. To increase nationwide stakeholder communication and address obstacles on an urgent need basis, Treasury should hold its servicer summit with the 19 Hardest Hit Fund states on a bi-annual instead of an annual basis to keep proactively apprised of the obstacles and limitations the HHF states are experiencing, and to make timely interventions to better the performance and increase effectiveness in every HHF state in getting assistance to homeowners. 194 195 196 Full Note: * Indicates that Treasury considers the recommendation closed and will take no further action. To prevent fraud, waste, and abuse in the Hardest Hit Fund and non-compliance with the Dodd-Frank Act, Treasury should monitor applicants (and existing recipients) for subsequent mortgage-related convictions that would disqualify the homeowner from receiving HHF funds (or additional HHF funds). If an applicant has been arrested but not yet convicted of a crime that falls within the Dodd-Frank Act exclusion, Treasury should ensure that the state housing finance agency checks to see if the applicant (or existing recipient) has been convicted as a final underwriting step prior to releasing any funds (or further funds) to the homeowner. Recommendation 193 X X X X SIGTARP RECOMMENDATIONS TABLE (CONTINUED) Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Treasury said they would review this recommendation in the ordinary course. SIGTARP urges Treasury to do so with a sense of urgency. See further discussion in Section 2. Partial In Process None TBD/NA Comments Implementation Status 106 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SECT IO N 3 HOMEOWNERS HAVE STRUGGLED WITH LOW ADMISSION RATES AND LENGTHY DELAYS IN GETTING HELP FROM TARP’S SECOND-LARGEST HOUSING PROGRAM — THE HARDEST HIT FUND 108 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 With the nation’s largest financial institutions teetering on the brink of failure and millions of American homeowners facing imminent foreclosure, Congress rejected Treasury’s initial TARP proposal and insisted that TARP funds be used not just for banks, but also to aid struggling homeowners.1 The “preservation of homeownership” is an explicit purpose of the law that established TARP, which includes “the need to help families keep their homes” as a chief consideration required of the Treasury Secretary in exercising his authorities under TARP.2 In February 2010, the Administration announced TARP’s Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (“Hardest Hit Fund” or “HHF”), to target help to families in the states “hit the hardest by the aftermath of the housing bubble.”3 The program initially targeted five states that each saw the average price of homes fall by more than 20% from the peak. The program was expanded to become the second-largest TARP housing program, with $7.6 billion in funding and covering 18 states and the District of Columbia. In SIGTARP’s recent evaluation report, “Factors Impacting the Effectiveness of Hardest Hit Fund Florida,” released earlier this month, SIGTARP found that Treasury abandoned its intent to set goals for HHF program effectiveness and to measure progress against those goals.i SIGTARP found that Treasury set the objective of HHF to allow state housing finance agencies (“HFAs”) “to develop creative, effective approaches that consider local conditions” [emphasis added], but that Treasury has not done everything it can do to ensure that HHF Florida is “effective” in providing assistance to homeowners. In Treasury’s March 29, 2010 press release, and in guidelines given to the HHF states, Treasury stated that the objective of HHF is to develop creative, effective approaches that consider local conditions. After Treasury approved state-specific HHF programs, on June 23, 2010, Treasury’s Assistant Secretary for Financial Stability, Herbert Allison, stated that the Administration “will continue to do everything it can to help those who are struggling the most during this difficult time.” In February 2010, the White House announced, “The program will be under strict transparency and accountability rules.” The White House announced that “program effectiveness” would be measured, and that there would be “effective oversight” under the Emergency Economic Stabilization Act of 2008 (the law that created TARP) [emphasis added]. Oversight under EESA means Treasury, not just the state housing finance agencies. On March 29, 2010, Treasury repeated that program activity will be subject to effective oversight under EESA, stating: HFAs will be required to develop and maintain operational and performance metrics, have a detailed financial reporting system and track homeowners helped through its programs. HFAs will report data to Treasury on a periodic basis, including metrics used to measure program effectiveness against stated objectives. Treasury may request that the HFA modify the proposed performance measures or seek additional metrics as necessary [emphasis added]. i SIGTARP, “Factors Impacting the Effectiveness of Hardest Hit Fund Florida,” October 6, 2015, www.sigtarp.gov/Audit%20Reports/ SIGTARP_HHF_Florida_Report.pdf. 109 110 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Treasury repeated this statement in its guidelines to state HFAs. Treasury’s guidelines provide that HHF is designed to allow the maximum possible flexibility to eligible HFAs in designing programs that are tailored to the needs of the specific state, while Treasury ensures the effectiveness of the program. The two concepts of state flexibility and Treasury measuring effectiveness were not mutually exclusive. Among other things, Treasury required states to provide (i) detailed information about the specific problems that the program would address, as well as the specific goals for the program and how progress toward those goals will be measured, and (ii) a description of the proposed methodology for measuring program progress, including key performance measurements, frequency of reporting and a tracking system to measure progress against goals. Treasury’s former Home Preservation Office Chief, Phyllis Caldwell, told SIGTARP in 2011, that Treasury could evaluate success in HHF in ways such as, “are we reaching the right number of people, are we reaching them in a sustainable way…” [emphasis added]. HHF states’ performance numbers are the only information Treasury publishes on accountability in HHF. In its April 2012 audit of HHFii SIGTARP found that—contrary to what the Administration and Treasury said they would do at the start of HHF to conduct effective oversight—Treasury had not set any measurable goals and metrics that would allow Treasury, the public, and Congress to measure the progress of HHF. Treasury rejected SIGTARP’s recommendations to set goals, stating, “Treasury believes establishing static numeric targets (as the recommendations seem to suggest) is not well suited to the dynamic nature of HHF. Treasury has a rigorous performance management program in place, which requires each HFA to set goals and targets for all of its initiatives.” The number of people helped is not the only goal that Treasury could have set. There are a number of goals that Treasury could have set, but did not. Treasury’s current HPO Chief, Mark McArdle, told SIGTARP, “There is no such thing as one set goal that works or doesn’t work.” Treasury’s responsibility to define targeted outcomes and measure progress against them is important for accountability over the state HFAs’ uses of TARP funds. The Government Performance and Results Act (“GPRA”) requires Federal agencies to measure performance against established goals. Congress enacted this law to hold Federal agencies accountable for achieving program results and to improve management of Federal programs. Treasury cannot escape GPRA’s requirements because a state should have flexibility and be innovative under HHF. Flexibility and innovation does not come in a Federal program without accountability that can be measured. Treasury’s measurement of program effectiveness announced by the Administration for HHF must include not only how many homeowners are helped by HHF, but how many homeowners seek help but do not receive it. Each quarter, Treasury prepares and releases a Hardest Hit Fund Quarterly Performance Summary, Treasury’s report on the performance of HHF. That 22-page report discusses the number of homeowners assisted in HHF, but does not discuss or ii SIGTARP, “Factors Affecting Implementation of the Hardest Hit Fund Program,” April 12, 2012, www.sigtarp.gov/Audit%20Reports/ SIGTARP_HHF_Audit.pdf. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 report on all of the homeowners who applied for HHF, but were not assisted.4 To find information on those homeowners, the public would have to look to a different section of Treasury’s website, where some more detailed aggregate HHF information is reported, and to the websites of the individual HHF state housing finance agencies. According to Treasury’s data, of the 551,563 homeowners who applied as of June 30, 2015, only 234,497 received HHF assistance. This is a homeowner admission rate of 43%. The homeowner admission rate is simple arithmetic: the number of people who received HHF assistance divided by the number of people who applied. Another 293,344 homeowners applied for HHF, but did not receive assistance for one reason or another. Some were denied. Some had their applications withdrawn for them by the state agency. Some withdrew their applications themselves.5 Treasury does not require states to report the reasons why a homeowner is denied or why the agency or the homeowner withdraws an application.6 As homeowners struggle to keep their homes, homeowners face lengthy and frustrating delays in getting their applications processed, which could have led homeowners to withdraw their applications and seek help elsewhere. While the largest financial institutions have recovered from the financial crisis, many homeowners in this country continue to struggle to keep their homes. Five years into the program, Treasury and the participating state housing finance agencies must be accountable for mitigating obstacles to homeowners getting help from HHF, and for continually ensuring that HHF is effective at getting help to homeowners. Struggling homeowners—and the taxpayers who funded TARP— deserve the accountability for performance that the Administration promised when HHF was launched. Homeowners in distress need TARP’s help now, not by the end of 2017 when Treasury will stop funding HHF.7 FEWER THAN HALF OF HOMEOWNERS WHO APPLIED FOR HHF ASSISTANCE RECEIVED HELP, FAR LESS THAN THAT IN CERTAIN STATES Struggling homeowners who turned to HHF for help have less than a 50-50 chance of getting HHF assistance, based on a national average in HHF. As of June 30, 2015, only 234,497 homeowners out of 551,563 homeowners who applied for HHF assistance (43%) were assisted.8 More than half (57%) of homeowners who applied for help from HHF have not received that HHF assistance. Seven states have stopped accepting applications for HHF, although they continue to review applications of homeowners who applied before the cut-off and, according to Treasury, in several cases have again begun accepting new homeowner applications on a limited basis.9,iii Among the other twelve states whose HHF programs have remained open to accepting homeowner applications, almost two-thirds (62%) of homeowners who applied for HHF in these states did not receive assistance.10 iii According to Treasury, as of September 30, 2015, four state HFAs had indicated they were again accepting applications for HHF assistance “under select programs”: Illinois, New Jersey, Oregon, and Washington, DC. 111 112 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Ten of the 19 participating HHF states had HHF homeowner admission rates below 50%, including some of the largest states participating in HHF, such as California, Florida, and Michigan. Four states have HHF homeowner admission rates of less than one-third. These states include Florida, which as of June 30, 2015, has an HHF admission rate of only one in five homeowners (20.5%), Arizona (24.1%), Alabama (26.2%), and Georgia (28.1%). Table 3.1 shows the HHF homeowner admission rates by state, as of the latest data available (June 30, 2015). TABLE 3.1 HARDEST HIT FUND HOMEOWNER ADMISSION RATE BY HHF STATE, PROGRAM TO DATE, AS OF 6/30/2015 Homeowners That Applied Homeowners That Received Assistance Homeowner Admission Rate Florida 113,086 23,234 20.5% Yes Arizona 16,156 3,891 24.1% Yes Alabama 15,650 4,093 26.2% Yes Georgia 23,785 6,686 28.1% Yes Nevada 13,749 5,306 38.6% Yes State California Still Accepting Applications? 125,765 51,612 41.0% Yes Oregon 28,301 11,759 41.5% No* South Carolina 22,837 9,611 42.1% Yes New Jersey 13,093 6,004 45.9% No* Michigan 56,252 26,865 47.8% Yes Mississippi 5,279 3,344 63.3% Yes Rhode Island 4,833 3,075 63.6% No Kentucky 10,286 6,992 68.0% Yes North Carolina 29,698 19,860 66.9% Yes Illinois 20,375 13,868 68.1% No* Ohio 34,779 24,521 70.5% No Indiana 7,423 5,718 77.0% Yes Tennessee 9,352 7,355 78.6% No 864 703 81.4% No* District of Columbia Source: SIGTARP analysis of Treasury’s Q2 2015 Quarterly Performance Reports, accessed from Treasury’s Hardest Hit Fund – State by State Information website, www.treasury.gov/initiatives/financial-stability/TARP-Programs/housing/Pages/Program-Documents. aspx, accessed 10/1/2015. * According to Treasury, this state HFA has resumed accepting applications “under select programs” as of September 30, 2015. During the past year Treasury and states have made almost no progress in improving homeowner admission to HHF programs. Through June 30, 2014, only 41.2% of homeowners who applied got HHF assistance; one year later, that rate was essentially unchanged at 42.5%.11 If Treasury and the HHF state housing finance agencies fail to correct course, homeowners are running out of opportunities to receive HHF assistance. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 HHF ADMISSION RATES ARE EVEN LOWER FOR CERTAIN TYPES OF ASSISTANCE Some categories of HHF assistance have been much more difficult for struggling homeowners to obtain than others.iv As SIGTARP reported in its July 2015 Quarterly Report to Congress, unemployment programs and past-due payment assistance made up 77.8% of TARP funding for HHF programs as of June 30, 2015.12 Homeowner admission rates for HHF unemployment assistance ranged from 20% to 76% but, overall, only 48% of homeowners were admitted. HHF pastdue payment assistance programs have admitted homeowners at rates ranging from 11% to 96% but, overall, only 33% of those that applied got that help from HHF.v Mortgage modification programs (including assistance that reduces the principal amount of a homeowner’s primary mortgage) account for 20.4% of TARP funding for HHF, but have the lowest homeowner admission rates in HHF. Although admission rates in individual modification programs range from 1% to 83%, overall, only 19% of homeowners who applied have received assistance.13 Figure 3.1 shows the homeowner admission rate of admission by HHF program type. FIGURE 3.1 HARDEST HIT FUND HOMEOWNER ADMISSION RATE BY PROGRAM TYPE, PROGRAM TO DATE, AS OF 6/30/2015 83% 19% Modification 1% 96% 33% Past-Due Payment 11% 91% 43% Second Lien Reduction 26% 81% 47% Transition 18% 76% 48% Unemployment 20% 0% 10% 20% 30% Highest Admission Rate 40% 50% 60% Average Admission Rate 70% 80% 90% 100% Lowest Admission Rate Source: SIGTARP analysis of Treasury’s Q2 2015 Quarterly Performance Reports, accessed from Treasury’s Hardest Hit Fund – State by State Information website, www.treasury.gov/initiatives/financial-stability/ TARP-Programs/housing/Pages/Program-Documents.aspx, accessed 10/1/2015. iv The classification of all state HFF programs is provided by Treasury in response to SIGTARP data calls. v Several states’ HHF unemployment programs include a past-due/reinstatement component, and so do not have a separate HHF pastdue payment assistance program. 113 114 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Treasury and states can take action to fix low homeowner admission rates in the 12 participating HHF states that remain fully open to new homeowner applications, as well as in the four states whose HFAs, according to Treasury, have recently begun to again accept applications for HHF assistance under select programs. HHF Alabama has the lowest homeowner admission rate (1%) for HHF with modification assistance, in a program that began in early 2013. HHF California has the lowest homeowner admission rate (11%) of all HHF past-due payment programs. HHF Indiana has the lowest homeowner admission rate (18%) of HHF transition assistance programs. HHF Florida and HHF Nevada have the lowest homeowner admission rates of all HHF unemployment and second-lien reduction assistance programs (20% and 26%, respectively).14 LONG WAITING PERIODS FOR HOMEOWNERS TO RECEIVE HHF ASSISTANCE Homeowners applying for HHF assistance to keep their homes face long waiting periods for a decision on their HHF applications for help. Some states offer more than one HHF program, such as unemployment assistance and past-due assistance programs. According to Treasury, as of September 30, 2015, there were 77 active HHF programs.15 Treasury requires states to report the waiting periods for homeowners to receive HHF assistance in terms of the median number of days it takes a homeowner to receive HHF help for each program. A median number of days means that half of the homeowners applying had to wait longer than the reported (median) period to receive assistance after applying, while half received assistance within a shorter period. As some programs have closed and some are new, as of June 30, 2015, Treasury has data on homeowner waiting periods for 66 of the 77 of the active HHF programs. Treasury data shows that it takes months for homeowners to get HHF assistance. For 15 HHF programs, homeowners had to wait a median of more than 6 months to get help.16 In more than half of all reported HHF programs (37), homeowners had to wait a median of 4 months or longer to receive help. Homeowners applying for help from 45 HHF programs had to wait a median of at least 3 months to receive assistance. Appendix 3.1 to this report shows the (median) number of days homeowners had to wait after applying to receive HHF assistance for each program over the lifetime of the program, as reported by each state to Treasury as of June 30, 2015. Appendix 3.1 also shows Treasury’s most recent reporting on how long homeowners who received help in the last 2 quarters had to wait after applying for HHF assistance. Homeowners in Ohio have suffered some of the longest delays in seeking HHF assistance. Unemployed homeowners in Ohio waited more than a median of 6 months to receive HHF unemployment assistance. According to Treasury’s data, homeowners in Ohio who seek transition assistance when they give up their homes waited a full year to get help (a median of 366 days). Ohio homeowners who apply SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 for HHF help with past-due payments waited almost 9 months (266 days) to get assistance. Homeowners in Ohio who apply for HHF modification assistance had to wait more than 7-8 months to get assistance from the state’s Lien Elimination Program (251 days) and Modification with Contribution Assistance Program (233 days). Given that these are median numbers, some Ohio homeowners waited less time, but some Ohio homeowners had to wait considerably longer to get HHF help. HHF Ohio is no longer accepting new homeowner applications for HHF, but has homeowners who applied before the cut-off. HHF Ohio continues to review those homeowner applications, and in the most recent quarter ended June 30, 2015, provided assistance to 36 of those homeowners. Ohio’s HFA reported to Treasury that the unemployed homeowners who got help from HHF Ohio in the quarter ended March 31, 2015, had waited a median of 14 months (426 days) to get that assistance. Ohio’s HFA reported that unemployed homeowners who finally received HHF unemployment assistance in the quarter ended June 30, 2015, had waited a median of almost 2 years (710 days) for that assistance. But Ohio homeowners are not alone. Over the life of HHF programs, unemployed homeowners in 15 of 19 states had to wait longer than a median of 3 months to get unemployment assistance from HHF. Only 6 programs within the participating states provided HHF unemployment assistance to homeowners with less than a 3-month median wait time.vi Table 3.2 shows the HHF unemployment and past-due assistance programs—which account for over 77% of TARP funding for HHF—for which homeowners had to wait at least a median of 3 months to get assistance. vi There is more than one HHF program in some categories in some states. 115 116 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 3.2 HARDEST HIT FUND UNEMPLOYMENT & PAST-DUE PAYMENT PROGRAMS FOR WHICH HOMEOWNERS HAD TO WAIT A MEDIAN OF AT LEAST THREE MONTHS, PROGRAM TO DATE, AS REPORTED TO TREASURY AS OF 6/30/2015 State Program Median Days to Obtain Assistance During Q1 2015 Median Days to Obtain Assistance During Q2 2015 Median Days to Obtain Assistance - Program To Date (Q2 2015) Unemployment Programs Ohio Mortgage Payment Assistance Program 426 710 198 New Jersey HomeKeeper Program 881 1,158 188 Rhode Island Mortgage Payment Assistance Unemployed * * 181 Florida Unemployment Mortgage Assistance 174 167 167 Illinois Homeowner Emergency Loan Program 669 720 165 Georgia Mortgage Payment Assistance 155 153 160 Oregon Mortgage Payment Assistance Program 213 279 159 Washington, DC HomeSaver Program 101 135 145 South Carolina Monthly Payment Assistance Program 165 181 143 Indiana Unemployment Bridge Program 121 105 142 Nevada Mortgage Assistance Program Alternative * * 126 Tennessee Hardest Hit Fund Program * * 121 Mississippi Home Saver Program 93 94 108 North Carolina Mortgage Payment Program -MPP1 75 63 98 Michigan Unemployment Mortgage Subsidy Program 129 129 95 Past-Due Payment Programs Ohio Homeownership Retention Assistance 494 538 266 Florida Mortgage Loan Reinstatement Program 167 153 224 Florida Elderly Mortgage Assistance Program 280 324 199 Ohio Rescue Payment Assistance Program 474 519 197 Georgia Mortgage Reinstatement Assistance 180 182 181 Michigan Loan Rescue Program 188 219 144 Rhode Island Temporary and Immediate Homeowner Assistance * * 144 South Carolina Direct Loan Assistance Program 149 152 137 Oregon Loan Preservation Assistance Program 244 309 135 California Reverse Mortgage Assistance Program 92 102 96 * State reported to Treasury either “NA” or zero activity for this program in this period. Source: Treasury’s Q2 2015 Quarterly Performance Reports, accessed from Treasury’s Hardest Hit Fund – State by State Information website, www.treasury.gov/initiatives/financial-stability/TARPPrograms/housing/Pages/Program-Documents.aspx, accessed 10/1/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Unemployed homeowners in New Jersey had to wait a median time longer than 6 months (188 days) to get HHF unemployment. HHF New Jersey had stopped accepting applications for its HHF unemployment program but, according to Treasury, had again begun accepting homeowner applications for HHF on a limited basis. New Jersey’s HFA continues to review homeowner applications, and in the most recent quarter ended June 30, 2015, provided assistance to 4 homeowners. New Jersey’s HFA reported to Treasury that the unemployed New Jersey homeowners who received HHF assistance in the quarter ended March 31, 2015, had waited a median of almost 2.5 years (881 days) to get that assistance. Unemployed New Jersey homeowners who received assistance in the most recent reported quarter ended June 30, 2015, had waited over 3 years (1,158 days) for that assistance. Unemployed homeowners in Rhode Island had to wait a median of 181 days to get HHF help. In Illinois, unemployed homeowners had to wait a median of 165 days to get HHF help. HHF Illinois had stopped accepting applications for its HHF unemployment assistance program but, according to Treasury, had again begun accepting homeowner applications for HHF on a limited basis. Illinois’ HFA continues to review homeowner applications, and in the most recent quarter ended June 30, 2015, provided assistance to 40 homeowners. HHF Illinois reported to Treasury that the homeowners who finally got HHF unemployment assistance in the 2 most recent quarters had waited considerably longer: 669 and 720 days, respectively, for those who finally received help in the quarters ended March 31 and June 30, 2015. Overall, Oregon homeowners faced median delays of 159 days and 135 days in getting help from HHF unemployment and past-due programs, respectively, though those homeowners who finally received help in the most recent reported quarter had waited up to over twice as long: 279 and 309 days, respectively, to receive that help after applying. Homeowners face similar obstacles in state HHF programs still accepting applications. Unemployed Florida homeowners seeking HHF unemployment assistance, for example, had to wait a median of 167 days to get assistance. Florida homeowners also had to wait over 7 months to get HHF past-due assistance (224 days). As of June 30, 2015, senior citizens in Florida with reverse mortgages seeking HHF help had to wait more than a median 6 months to get it (199 days) over the lifetime of the program (including the most recent quarter). However, that delay is getting worse with time. As of March 31, 2015, HHF Florida reported that the senior citizens who got HHF reverse mortgage assistance in that quarter had waited a median of 9-10 months (280 days) to get help—far longer than the median of 199 days reported over the lifetime of the program. HHF Florida reported that the seniors who got HHF reverse mortgage help in the most recent quarter ended June 30, 2015, had waited a median of almost 11 months (324 days) to get assistance. Homeowners in 10 HHF states had to wait over 3 months to get help from HHF mortgage modification programs, the second-largest category of HHF assistance (20% of HHF funding). Rhode Island homeowners applying for HHF mortgage modification in one of HHF Rhode Island’s programs had to wait a 117 118 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM median of more than 7 months (223 days) for that help. Indiana homeowners seeking HHF mortgage modification help waited a median of 211 days for that help. The 18 Georgia homeowners helped in HHF Georgia’s mortgage modification program since it began in 2013 waited a median of 142 days to get that assistance. HHF Georgia reported to Treasury that the 5 homeowners who got HHF help from that program in the quarter ended March 31, 2015, though, had waited a median of more than a year (369 days). TABLE 3.3 HARDEST HIT FUND MORTGAGE MODIFICATION PROGRAMS FOR WHICH HOMEOWNERS HAD TO WAIT A MEDIAN OF AT LEAST THREE MONTHS, PROGRAM TO DATE, AS REPORTED TO TREASURY AS OF 6/30/2015 Median Days to Obtain Assistance During Q1 2015 Median Days to Obtain Assistance During Q2 2015 Median Days to Obtain Assistance - Program To Date (Q2 2015) 251 State Program Ohio Lien Elimination Program 532 573 Ohio Modification With Contribution Assistance 440 711 233 Rhode Island Principal Reduction Program * * 223 Indiana Recast/Modification Program 309 208 211 Michigan Modification Plan Program 134 159 199 South Carolina Modification Assistance Program 137 161 168 Florida Principal Reduction Program 210 147 154 Rhode Island Loan Modification Assistance Program (LMA) 13 11 143 Georgia Recast/Modification 369 142 142 Oregon Loan Refinancing Assistance Pilot Project 319 425 142 Nevada Principal Reduction Program * * 132 Michigan Principal Curtailment Program Alabama Loan Modification Assistance Program * * 120 136 92 108 * State reported to Treasury either “NA” or zero activity for this program in this period. Source: Treasury’s Q2 2015 Quarterly Performance Reports, accessed from Treasury’s Hardest Hit Fund – State by State Information website, www.treasury.gov/initiatives/financial-stability/TARPPrograms/housing/Pages/Program-Documents.aspx, accessed 10/1/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Among the other categories of HHF assistance, South Carolina homeowners seeking HHF assistance including transition assistance when they give up their homes faced a median wait time of over 8 months (254 days) to get HHF assistance over the life of the program. HHF South Carolina reported to Treasury that the 15 homeowners who received HHF transition assistance in the quarter ended March 31, 2015, however, had waited a median of over twice that long— more than 18 months (568 days). South Carolina homeowners who received HHF transition assistance in the most recent reported quarter had waited a median of 15 months (451 days) for that help. Homeowners seeking HHF assistance including transition assistance in Indiana had to wait a median of over 4 months (149 days) over the lifetime of the program, although the 7 homeowners who were helped in the last two quarters by that program (ended March 31 and June 30, 2015) had waited a median of more than twice that—almost one year (331 days)—for that help. California homeowners seeking HHF assistance to reduce a second mortgage on their homes waited a median of longer than 3 months (108 days) for that help.17 Treasury’s data shows that, in far too many HHF programs, the delays confronting homeowners who have applied for HHF assistance are long, and getting worse. While any help from HHF is welcome, even after many months or a year or more of waiting, TARP emergency rescue programs should be spent with a sense of urgency by each HHF state and by Treasury. In its October 2015 evaluation report, SIGTARP found that rather than holding itself and Florida’s HHF strictly accountable, Treasury conducts only deferential oversight, without a sense of urgency. SIGTARP reported that without change HHF Florida may spend the $1 billion in allocated HHF funds by December 2017, but it risks not being as effective as it can be to help the urgent needs of Florida homeowners now. All TARP programs are emergency programs designed to help during a time of crisis. That includes HHF in all 19 states. MORE THAN HALF OF HOMEOWNERS ARE DENIED OR HAVE THEIR APPLICATIONS WITHDRAWN As of June 30, 2015, more than half (53%) of homeowners who applied for HHF were denied assistance (26%) or were withdrawn from the application process (27%). A small number (4%) of homeowner applications were still being processed.18 HHF Arizona and HHF New Jersey denied homeowners most frequently, denying 11,007 out of 16,156 (68.1%) and 6,953 of 13,093 (53.1%) homeowners who applied, respectively, as of June 30, 2015. Table 3.4 shows homeowners denied for HHF applications in each state. 119 120 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 3.4 HARDEST HIT FUND HOMEOWNER DENIAL RATE BY HHF STATE, PROGRAM TO DATE, AS OF 6/30/2015 State Arizona Homeowners That Applied Homeowners Denied Assistance Homeowner Denial Rate 16,156 11,007 68.1% New Jersey 13,093 6,953 53.1% Georgia 23,785 9,228 38.8% South Carolina 22,837 8,090 35.4% 4,833 1,425 29.5% 56,252 16,181 28.8% Rhode Island Michigan California 125,765 33,626 26.7% Florida 113,086 30,201 26.7% Mississippi Nevada 5,279 1,324 25.1% 13,749 2,753 20.0% Illinois 20,375 4,059 19.9% North Carolina 29,698 5,476 18.4% Kentucky 10,286 1,873 18.2% District of Columbia Ohio Tennessee 864 125 14.5% 34,779 4,882 14.0% 9,352 1,300 13.9% Alabama 15,650 1,538 9.8% Oregon 28,301 2,141 7.6% Indiana 7,423 469 6.3% Source: SIGTARP analysis of Treasury’s Q2 2015 Quarterly Performance Reports, accessed from Treasury’s Hardest Hit Fund – State by State Information website, www.treasury.gov/initiatives/financial-stability/TARP-Programs/housing/Pages/Program-Documents. aspx, accessed 10/1/2015. HHF Alabama and HHF Oregon had the highest rate of withdrawn homeowner applications, with 9,860 out of 15,650 (63.0%) and 14,330 out of 28,301 (50.6%) homeowner applications withdrawn, respectively. As SIGTARP found in its recent audit of HHF in Florida,vii Treasury does not distinguish in its records between homeowners who withdrew voluntarily from the application process and homeowners whom were withdrawn by state agencies. SIGTARP recommended that Treasury report these two very different situations separately. Treasury said it would review SIGTARP’s recommendations in the ordinary course, and SIGTARP urges Treasury to do so with a sense of urgency. Table 3.5 shows the number of homeowners withdrawn from the application process, by state. vii SIGTARP, Factors Impacting the Effectiveness of Hardest Hit Fund Florida, 10/6/2015, www.sigtarp.gov/Audit%20Reports/SIGTARP_ HHF_Florida_Report.pdf. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TABLE 3.5 HARDEST HIT FUND WITHDRAWN HOMEOWNER APPLICATIONS BY HHF STATE, PROGRAM TO DATE, AS OF 6/30/2015 Homeowners That Applied Homeowner Applications Withdrawn Homeowner Withdrawal Rate Alabama 15,650 9,860 63.0% Oregon 28,301 14,330 50.6% Nevada 13,749 5,687 41.4% Florida 113,086 45,753 40.5% State 23,785 6,844 28.8% California Georgia 125,765 35,273 28.0% Michigan 56,252 11,739 20.9% South Carolina 22,837 4,598 20.1% Ohio 34,779 5,119 14.7% North Carolina 29,698 3,885 13.1% Indiana 7,423 871 11.7% Kentucky 10,286 1,157 11.2% Illinois 20,375 2,204 10.8% Mississippi 5,279 474 9.0% Tennessee 9,352 697 7.5% Rhode Island Arizona District of Columbia New Jersey 4,833 333 6.9% 16,156 1,068 6.6% 864 28 3.2% 13,093 136 1.0% Source: SIGTARP analysis of Treasury’s Q2 2015 Quarterly Performance Reports, accessed from Treasury’s Hardest Hit Fund – State by State Information website, www.treasury.gov/initiatives/financial-stability/TARP-Programs/housing/Pages/Program-Documents. aspx, accessed 10/1/2015. Given the lengthy wait times homeowners have experienced in receiving HHF help after applying, some homeowners may have had their applications withdrawn because they could not wait any longer for HHF help. HOMEOWNERS CONTINUE TO NEED HELP FROM HHF Low homeowner admission rates and lengthy delays can be formidable obstacles to homeowners who are still struggling and seek help from HHF. While improved from the height of the crisis, homeowner foreclosures and mortgage delinquencies are still critical problems for many struggling homeowners. According to CoreLogic, 2,527,142 homeowners have lost their homes to foreclosure in the 19 HHF states since August 2010 (the month in which Treasury approved the last of 121 122 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM the HHF states to participate in the program), and another 272,093 homeowners are currently in the foreclosure process. More than one million homeowners (1,369,638) in HHF states are at risk of foreclosure, currently at least 3 payments behind. Some 3,340,974 homeowners in HHF states are underwater on their house (with a mortgage that exceeds what the home is worth). FIGURE 3.2 FORECLOSURES AND AT RISK HOMEOWNERS IN HHF STATES, AS OF 6/30/2015 Foreclosures At Risk Homeowners Homeowners Who Lost Their Homes to Foreclosure Since HHF Started Homeowners in the Foreclosure Process Homeowners Three or More Mortgage Payments Behind Homeowners Underwater on Their Homes 2,527,142 272,093 1,369,638 3,340,974 = 100,000 Homeowner Mortgages Source: CoreLogic. As homeowners continue to struggle to keep their homes, HHF has an opportunity to provide real help to more people, but only if there are improvements to HHF. There are more than 2 years for states to draw down TARP funds for HHF. Treasury must make the most of the opportunity that exists right now to reduce the obstacles homeowners have faced in receiving assistance from the program. In its evaluation report on HHF Florida issued this month,viii SIGTARP made 20 recommendations for Treasury and HHF state agencies to make HHF more effective in providing assistance to homeowners in all 19 states, which Treasury said it is currently considering. SIGTARP urges Treasury to do so with a sense of urgency. SIGTARP’s latest 20 HHF recommendations supplement (with more detail) recommendations SIGTARP made in 2012 focused on Treasury setting targets designed specifically for each HHF state (such as the targeted numbers of homeowners to assist), measuring progress, and taking strong action when targets are not met. In SIGTARP’s HHF Florida report, SIGTARP discusses how, around the time of SIGTARP’s 2012 report, Treasury took a stronger and more proactive role that led to stronger HHF performance. That stronger role included Treasury issuing a formal directive called an Action Memorandum to four states (Florida, Arizona, George, and New Jersey). viii SIGTARP, “Factors Impacting the Effectiveness of Hardest Hit Fund Florida,” October 6, 2015, www.sigtarp.gov/Audit%20Reports/ SIGTARP_HHF_Florida_Report.pdf. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Creativity does not matter if HHF is not effective in reaching homeowners. HHF performance numbers shown in this report (all based on Treasury data) highlight that Treasury must focus more on the word “effective” in their oversight of HHF, and must act with a sense of urgency. Although Treasury continues to say that targets for state agencies violate the fundamental principles of HHF, SIGTARP recently learned (after release of its most recent report on HHF Florida) that Treasury itself had done exactly what SIGTARP recommends. On July 10, 2015, Treasury sent another formal directive (like the ones sent in 2012) to Alabama’s housing finance agency in HHF holding Alabama’s HFA accountable to targeted numbers of homeowners to be assisted in each of four HHF programs. Treasury measured HHF Alabama’s performance against those targets, and found performance lacking and that HHF Alabama has fallen behind other states. Treasury requested a formal written plan identifying measurable targets for homeowners assisted (and blighted structures removed) over the next four quarters and specific action to reach those targets. Treasury also set a goal for the amount of HHF funds to be committed each month. This is the type of strong initial action that SIGTARP recommended that Treasury take to improve HHF so that it effectively provides assistance to homeowners. Treasury must follow through with strong action to improve the effectiveness of HHF Alabama with a sense of urgency, and take similar action with other states. 123 124 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM APPENDIX 3.1 HARDEST HIT FUND MEDIAN DAYS TO OBTAIN ASSISTANCE BY HHF STATE AND PROGRAM TYPE, AS OF 6/30/2015 State Program Type Unemployment Alabama Arizona Transition Georgia Illinois Kentucky 74 81 * * 92 108 Modification 58 70 49 Second Lien Reduction 72 91 70 Unemployment 71 73 59 186 84 132 Unemployment 50 52 39 Modification 63 61 78 Past-Due Payment 71 66 68 Transition 58 63 57 * * 108 92 102 96 Unemployment 101 135 145 Past-Due Payment 167 153 224 Unemployment 174 167 167 Modification * * * Modification 210 147 154 Past-Due Payment 280 324 199 Unemployment 155 153 160 Past-Due Payment 180 182 181 Modification 369 142 142 Unemployment 669 720 165 * * * Modification Modification Indiana 74 * Past-Due Payment Florida Throughout the Life of the Program 136 Second Lien Reduction District of Columbia Homeowners Assisted During the Quarter Ended 6/30/2015 Modification Transition California Homeowners Assisted During the Quarter Ended 3/31/2015 60 88 48 Unemployment 121 105 142 Modification 309 208 211 Transition 331 331 149 45 49 Unemployment 45 Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 HARDEST HIT FUND MEDIAN DAYS TO OBTAIN ASSISTANCE BY HHF STATE AND PROGRAM TYPE, AS OF 6/30/2015 (CONTINUED) State Program Type Past-Due Payment Michigan Mississippi Nevada Modification North Carolina Ohio 188 219 144 * * 120 129 95 Modification 134 159 199 93 94 108 Modification * * 132 Second Lien Reduction * * 59 Transition * * 66 79 80 78 Unemployment Unemployment * * 126 Unemployment 881 1,158 188 Unemployment 75 63 98 Unemployment 73 79 71 Second Lien Reduction 105 78 101 Modification 145 66 67 Unemployment 426 710 198 Modification 440 711 233 Past-Due Payment 474 519 197 1,367 * 366 Transition 494 538 266 Modification * * * Modification 532 573 251 Unemployment 213 213 159 Past-Due Payment 244 309 135 Modification 319 425 142 Modification * * * Modification 13 11 143 * * 144 Past-Due Payment Rhode Island Throughout the Life of the Program 129 Past-Due Payment Oregon Homeowners Assisted During the Quarter Ended 6/30/2015 Unemployment Unemployment New Jersey Homeowners Assisted During the Quarter Ended 3/31/2015 Transition * * 118 Unemployment * * 181 Modification * * 223 Continued on next page 125 126 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM HARDEST HIT FUND MEDIAN DAYS TO OBTAIN ASSISTANCE BY HHF STATE AND PROGRAM TYPE, AS OF 6/30/2015 (CONTINUED) State South Carolina Tennessee Homeowners Assisted During the Quarter Ended 3/31/2015 Homeowners Assisted During the Quarter Ended 6/30/2015 Throughout the Life of the Program Unemployment 165 181 143 Past-Due Payment 149 152 137 Modification 137 161 168 Transition 568 451 254 * * 121 Program Type Unemployment * State reported to Treasury either “NA” or zero activity for this program in this period. Source: Treasury’s Q2 2015 Quarterly Performance Reports, accessed from Treasury’s Hardest Hit Fund – State by State Information website, www.treasury.gov/initiatives/financial-stability/TARP-Programs/housing/Pages/Program-Documents.aspx, accessed 10/1/2015. SECT IO N 4 TARP OVERVIEW 128 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 This section summarizes the Troubled Asset Relief Program (“TARP”). TARP FUNDS UPDATE Initial authorization for $700 billion of TARP funding came through the Emergency Economic Stabilization Act of 2008 (“EESA”), which was signed into law on October 3, 2008.19 The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), which became on July 21, 2010, reduced the Treasury Secretary’s authority under TARP to $475 billion.20 Treasury had obligated $474.8 billion to 14 programs, but subsequently deobligated funds, reducing obligations to $454.6 billion.21 Of that amount, as of September 30, 2015, $429.7 billion had been spent, and taxpayers are owed $35.8 billion.22 Table 4.1 provides a breakdown of financial investments in each funded TARP program as of September 30, 2015. According to Treasury, as of September 30, 2015, it had $35.1 billion in write-offs and realized losses (shown in Table 4.2), leaving $0.7 billion in TARP funds outstanding.23 Treasury’s write-offs and realized losses are money that taxpayers will never get back. These amounts do not include $18 billion in TARP funds spent on housing support programs, which are designed as a Government subsidy, with no repayments to taxpayers expected.24 Treasury has also collected $48.6 billion in interest, dividends, and other income, including proceeds from the sale of warrants and related stock. Obligated funds remain available to be spent on only TARP’s housing support programs. According to Treasury, in the quarter ended September 30, 2015, $1.5 billion of TARP funds were spent on housing programs, leaving $19.5 billion obligated and available to be spent on TARP housing programs.25 Obligations: Definite commitments that create a legal liability for the Government to pay funds. Deobligations: An agency’s cancellation or downward adjustment of previously incurred obligations. 129 130 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.1 OBLIGATIONS, EXPENDITURES, PRINCIPAL REPAID, PRINCIPAL REFINANCED, AMOUNTS STILL OWED TO TAXPAYERS, AND OBLIGATIONS AVAILABLE TO BE SPENT ($ BILLIONS) Program Obligation After DoddFrank (As of 10/3/2010) Current Obligation Expenditure Principal Repaid (As of 9/30/2015) (As of 9/30/2015) (As of 9/30/2015) Principal Refinanced into SBLF (As of 9/30/2015) Still Owed to Taxpayers under TARP (As of 9/30/2015)a Available to Be Spent (As of 9/30/2015) Housing Support Programsb $45.6 $37.5c $18.0n NA $0.0 Capital Purchase Program 204.9 204.9 204.9 $197.4d 2.2 $5.3 0.0 0.6 0.6 0.2 0.1 0.0 0.5 0.0 Systemically Significant Failing Institutions 69.8 67.8f 67.8 54.4 0.0 13.5 0.0 Targeted Investment Program 40.0 40.0 40.0 40.0 0.0 0.0 0.0 5.0 5.0 0.0 0.0 0.0 0.0 0.0 81.8g 79.7h 79.7 63.1i 0.0 16.6 0.0 4.3 0.1j 0.1 0.1 0.0 0.0 0.0 Public-Private Investment Program 22.4 18.6 18.6 18.6k 0.0 0.0 0.0l Unlocking Credit for Small Businesses 0.4 0.4 0.4 0.4 0.0 0.0 0.0 $474.8 $454.6 $373.7 $2.2 $35.8 $19.5 Community Development Capital Initiativee Asset Guarantee Program Automotive Industry Support Programs Term Asset-Backed Securities Loan Facility Total $429.7m NA $19.5 Notes: Numbers may not total due to rounding. NA=Not applicable. a Amount taxpayers still owed includes amounts disbursed and still outstanding, plus $35.1 billion in write-offs and realized losses. It does not include $18 billion in TARP dollars spent on housing programs. These programs are designed as Government subsidies, with no repayments to taxpayers expected. b Housing support programs were designed as a Government subsidy, with no repayment to taxpayers expected. c On March 29, 2013, Treasury deobligated $7.1 billion of the $8.1 billion that was originally allocated to the FHA Short Refinance Program. On March 31, 2015, Treasury deobligated an additional $900 million under that program. d Includes $363.3 million in non-cash conversions from CPP to CDCI, which is not included in the total of $373.7 billion in TARP principal repaid because it is still owed to TARP from CDCI. Does not include $2.2 billion refinanced from CPP into the Small Business Lending Fund. e CDCI obligation amount of $570.1 million. There are no remaining dollars to be spent on CDCI. Of the total obligation, $363.3 million was related to CPP conversions for which no additional CDCI cash was expended; this is not counted as an expenditure, but it is counted as money still owed to taxpayers. Another $100.7 million was expended for new CDCI expenditures for previous CPP participants. Of the total obligation, only $106 million went to non-CPP institutions. f Treasury deobligated $2 billion of an equity facility for AIG that was never drawn down. g Includes $80.7 billion for Automotive Industry Financing Program, $0.6 billion for Auto Warranty Commitment Program, and $0.4 billion for Auto Supplier Support Program. h Treasury deobligated $2.1 billion of a Chrysler credit facility that was never drawn down. i $63.1 billion includes both payments toward principal and proceeds recovered from common stock sales. j On June 28, 2012, Treasury deobligated $2.9 billion in TALF funding, reducing the total obligation to $1.4 billion. On January 23, 2013, Treasury deobligated $1.3 billion, reducing the total obligation to $0.1 billion. k On April 10, 2012, Treasury changed its reporting methodology to reclassify as repayments of capital to the Government $958 million in receipts previously categorized as PPIP equity distributions. That $958 million is included in this repayment total. l PPIP funds are no longer available to be spent because the three-year investment period ended during the quarter ended December 31, 2012. Total obligation of $22.4 billion and expenditure of $18.6 billion for PPIP includes $356.3 million of the initial obligation to The TCW Group, Inc. (“TCW”) that was funded. TCW subsequently repaid the funds that were invested in its PPIF. Current obligation of $18.8 billion results because Oaktree, Marathon, RJL Western, BlackRock, AG GECC, Invesco and AllianceBernstein did not draw down all the committed equity and debt. All undrawn debt and equity has been deobligated as of September 30, 2015. m The $5 billion reduction in exposure under AGP is not included in the expenditure total because this amount was not an actual cash outlay. n Treasury entered into a letter of credit (L/C) to fund the FHA Short Refinance Program. In March 2013, pursuant to the agreement, Treasury funded a reserve account with $50 million for any future loss claim payments. In March 2015, $40 million of the reserve balance was returned to Treasury. All unused reserve balances will be returned to Treasury at the program’s conclusion. Sources: Treasury, Transactions Report, 9/29/2015; Treasury, Monthly TARP Update, 6/1/2015 and 10/1/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 131 TABLE 4.2 TREASURY’S STATEMENT OF REALIZED LOSSES AND WRITE-OFFS IN TARP, AS OF 9/30/2015 TARP Program Institution Total TARP Investment Realized Lossa, Write-Offsb,c ($ MILLIONS) Description Autos Chrysler $1,328a Sold 98,461 shares and equity stake in the UAW Retiree trust for $560,000,000 Chrysler 1,600b Accepted $1.9 billion as full repayment for the debt of $3.5 billion Chrysler Total $10,465 $2,928 GM 3,203a Treasury sold to GM at a loss GM 7,130a Treasury sold to public at a loss GM 826a Loss due to bankruptcy plan of restructuring GM Total $49,500 $11,159 Ally Financial Ally Financial Total Total Investment 2,473a $17,174 $79,693 c Sold 219,079 common shares in a private offering, 95,000,000 common shares, 7,245,670 common shares, 8,890,000 common shares, 11,249,044 common shares, and 43,685,076 common shares in five separate public offerings, all for a loss $2,473 Total Realized Loss, Write-Offs $16,560 CDCI Premier Bancorp, Inc. Total Investment $7a $570 Total Realized Loss, Write-Offs Liquidation of failed bank $7 CPP 197 CPP Banks $1,818a,b 29 CPP Banks in Bankruptcy Anchor Bancorp Wisconsin, Inc. CIT Group Inc. Total Investment Bankruptcy in process, loss written off by Treasury 4b Bankruptcy process completed, loss written off by Treasury 104a Bankruptcy process completed, loss written off by Treasury 2,330b Bankruptcy process completed, loss written off by Treasury 810 Pacific Coast National Bancorp $204,895 Total Realized Loss, Write-Offs Sales and exchanges b $5,066 SSFI AIGd $13,485a Total Investment Total Realized Loss Total TARP Investment $29,307 $350,439 $67,835 Total Realized Loss, Write-Offs Total Write-Offs Sale of TARP common stock at a loss $13,485 $5,812 Total Realized Loss, Write-Offs $35,119 Notes: Numbers may not total due to rounding. a Includes investments reported by Treasury as realized losses. Treasury changed its reporting methodology in calculating realized losses, effective June 30, 2012. Disposition expenses are no longer included in calculating realized losses. b Includes investments reported by Treasury as write-offs. According to Treasury, in the time since some transactions were classified as write-offs, Treasury has changed its practices and now classifies sales of preferred stock at a loss as realized losses. c Includes $1.5 billion investment in Chrysler Financial, $413 million ASSP investment, and $641 million AWCP investment. d Treasury has sold a total of 1.66 billion AIG common shares at a weighted average price of $31.18 per share, consisting of 1,092,169,866 TARP shares and 562,868,096 non-TARP shares based upon the Treasury’s pro-rata holding of those shares. The non-TARP shares are those received from the trust created by the Federal Reserve Bank of New York for the benefit of the Treasury. Receipts for non-TARP common stock totaled $17.55 billion and are not included in TARP collections. The realized loss reflects the price at which Treasury sold common shares in AIG and TARP’s cost basis of $43.53 per common share. Sources: Treasury, Transactions Report, 9/29/2015; Treasury, Monthly Report to Congress, September 2015; Treasury Press Release, “Treasury Announces Agreement to Exit Remaining Stake in Chrysler Group LLC,” 6/2/2011, www.treasury.gov/press-center/press-releases/Pages/tg1199.aspx, accessed 10/1/2015; Treasury, response to SIGTARP data call, 10/5/2015; Treasury, Monthly TARP Update, 6/3/2013, 6/13/2013, 7/1/2014, 10/1/2014, 1/2/2015, 4/1/2015, 7/1/2015, and 10/1/2015. 132 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TARP PROGRAMS Some TARP programs are scheduled to last as late as 2023. Other TARP programs have no scheduled ending date; TARP money will remain invested until recipients pay Treasury back or until Treasury sells its investments in the companies. As of September 30, 2015, 91 institutions remain in TARP: 19 banks with remaining CPP principal investments; 10 CPP banks for which Treasury now holds only warrants to purchase stock; and 62 banks and credit unions in CDCI (Treasury applies all proceeds from the sale of warrants to CPP).26 Table 4.3 provides details on the status of continuing TARP programs. TABLE 4.3 STATUS OF CONTINUING TARP PROGRAMS Program Investment status as of 9/30/2015 Home Affordable Modification Program 2023 to pay incentives on modifications* Hardest Hit Fund 2017 for states to use TARP funds FHA Short Refinance Program 2022 for TARP-funded letter of credit Capital Purchase Program Remaining principal investments in 19 banks; warrants for stock in an additional 10 banks Community Development Capital Initiative Remaining principal investments in 62 banks/ credit unions *Note: In November 2014, Treasury extended by one year the period in which certain Home Affordable Modification Program incentives may be paid. Sources: Treasury, Transactions Report, 9/29/2015; Treasury, Monthly TARP Update, 10/1/2015; Treasury, response to SIGTARP data call, 10/5/2015. Housing Support Programs The stated purpose of TARP’s housing support programs is to help homeowners and financial institutions that hold troubled housing-related assets. Treasury obligated $45.6 billion to TARP’s housing programs, later reduced to $37.5 billion.27 As of September 30, 2015, $18 billion (48% of obligated funds) has been expended.28 • Making Home Affordable (“MHA”) Program — According to Treasury, this umbrella program for Treasury’s foreclosure mitigation efforts is intended to “help bring relief to responsible homeowners struggling to make their mortgage payments, while preventing neighborhoods and communities from suffering the negative spillover effects of foreclosure, such as lower housing prices, increased crime, and higher taxes.”29 MHA, for which Treasury has obligated $29.8 billion of TARP funds, includes the signature program, the Home Affordable Modification Program (“HAMP”), and other programs. As of September 30, 2015, MHA had expended $12.2 billion of TARP money (41% of the $29.8 billion).30 Of that amount, $10.2 billion was expended on HAMP, which includes $1.8 billion expended on homeowners’ HAMP SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 permanent modifications that later redefaulted.31 In addition, $1.0 billion was expended on the Home Affordable Foreclosure Alternatives (“HAFA”) program and $818 million on the Second Lien Modification Program (“2MP”).32 As of September 30, 2015, there were 478,621 active Tier 1 and 108,801 active Tier 2 permanent first-lien modifications under the non-GSE portion of HAMP, compared to 480,541 and 98,000, respectively, at June 30, 2015. In the past quarter, the number of active non-GSE Tier 1 permanent modifications decreased by 1,920, while the number of Tier 2 permanent modifications increased by 10,741.33 Tier 2 activity continues to increase relative to Tier 1 activity, as during the most recent quarter there were more new HAMP Tier 2 trial starts (14,952) and permanent modifications started (15,517) than HAMP Tier 1 trial and permanent modification starts (11,155 and 13,231, respectively). For more information, including participation numbers for each of the MHA programs and subprograms, see the “Housing Support Programs” discussion in this section. • Housing Finance Agency (“HFA”) Hardest Hit Fund (“HHF”) — The stated purpose of this program is to provide TARP funding for “innovative measures to help families in the states that have been hit the hardest by the aftermath of the housing bubble.”34 Treasury obligated $7.6 billion for this program.35 As of September 30, 2015, $5.7 billion had been drawn down by the states from HHF.36 However, as of June 30, 2015, the latest data available on state-level expenditures, only $4.2 billion had been spent assisting 234,497 homeowners and $76.8 million to eliminate blighted properties, with $553.2 million used for administrative expenses and the remaining $446.3 million as unspent cash-onhand.37,i For more information, see the “Housing Support Programs” discussion in this section. • FHA Short Refinance Program — Treasury has provided a TARP-funded letter of credit for up to $100 million in loss protection on first liens refinanced into FHA-insured mortgages. As of September 30, 2015, Treasury has paid $145,330 on claims for six defaults under the program.38 As of September 30, 2015, there have been 6,639 refinancings under the FHA Short Refinance program, an increase of 463 refinancings during the past quarter.39 For more information, see the “Housing Support Programs” discussion in this section. Financial Institution Support Programs Treasury invested capital directly into financial institutions, primarily banks and bank holding companies.40 • Capital Purchase Program (“CPP”) — Under CPP, Treasury directly purchased $204.9 billion of preferred stock or subordinated debentures in 707 qualifying financial institutions.41 As of September 30, 2015, 29 of those i F igures obtained from each state’s Quarterly Financial Report, which reconciles each type of cash disbursements to funds drawn from Treasury. As such, all expenses are based on actual cash disbursements. Additionally, cash-on-hand may include lien recoveries and borrower remittances. Subordinated Debentures: Form of debt security that ranks below other loans or securities with regard to claims on assets or earnings. 133 134 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Community Development Financial Institutions (“CDFIs”): Financial institutions eligible for Treasury funding to serve urban and rural low-income communities through the CDFI Fund. CDFIs were created in 1994 by the Riegle Community Development and Regulatory Improvement Act. institutions remained in TARP; in 10 of them, Treasury holds only warrants to purchase stock. Treasury does not consider these 10 institutions to be in TARP, although Treasury applies all proceeds from the sale of warrants in these banks to recovery amounts in TARP’s CPP program. As of September 30, 2015, 19 of the 29 institutions had outstanding CPP principal investments.42 As of September 30, 2015, taxpayers were still owed $5.3 billion related to CPP. According to Treasury, it had write-offs and realized losses of $5.1 billion in the program, leaving $267.9 million in TARP funds outstanding.43 According to Treasury, $197.4 billion of the CPP principal (or 96.3%) had been recovered as of September 30, 2015. For more information, see the “Capital Purchase Program” discussion in this section. • Community Development Capital Initiative (“CDCI”) — Under CDCI, Treasury used TARP money to buy preferred stock in or subordinated debt from 84 smaller banks, thrifts, and credit unions that qualify as Community Development Financial Institutions (“CDFIs”). Treasury intended for CDCI to “improve access to credit for small businesses in the country’s hardest-hit communities.”44 However, 28 of these institutions converted their existing CPP investment into CDCI ($363.3 million of the $570.1 million) and 10 of those that converted received combined additional funding of $100.7 million under CDCI.45 Only $106 million of CDCI money went to institutions that were not already TARP recipients. As of September 30, 2015, 62 institutions remained in CDCI.46 For more information, see the “Community Development Capital Initiative” discussion in this section. According to Treasury, as of September 30, 2015, 235 banks and credit unions have exited CPP or CDCI with less than a full repayment, including institutions whose shares have been sold for less than par value (36), or at a loss at auction (167), and institutions that are in various stages of bankruptcy or receivership (32).47 Twenty-three banks have been sold at auction at par value or for more than the par amount of taxpayers’ investment.48 Four CPP banks merged with other CPP banks.49 COST ESTIMATES On February 2, 2015, OMB issued the Administration’s fiscal year 2016 budget, which decreased TARP’s lifetime cost to $37.4 billion, based largely on figures from November 30, 2014.50 On March 18, 2015, CBO increased its TARP cost estimate by $1 billion, to $28 billion, based on data as of January 31, 2015, due to an increase in projected mortgage program spending, offset by a decrease in the automotive program. CBO estimated that only $28 billion of funds obligated for housing will be spent.51 On November 7, 2014, Treasury issued its September 30, 2014, fiscal year audited agency financial statements for TARP, which contained a cost estimate of SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 $37.5 billion, which assumes that all of the funds obligated for housing support programs will be spent.52 The most recent TARP program cost estimates from each agency are listed in Table 4.4. TABLE 4.4 COST (GAIN) OF TARP PROGRAMS ($ BILLIONS) CBO Estimate OMB Estimate Treasury Estimate, TARP Audited Agency Financial Statement 3/18/2015 1/31/2015 2/2/2015 11/30/2014 12/16/2014 9/30/2014 Housing Support Programs $28 $37.4 $37.5a Capital Purchase Program (16) (8.4) (16.1) Systemically Significant Failing Institutions 15 17.4 15.2 Targeted Investment Program and Asset Guarantee Program (8) (7.5) (8.0) Automotive Industry Support Programs 12 19.4 12.3 Term Asset-Backed Securities Loan Facility (1) (0.5) (0.6) Public-Private Investment Program (3) (2.5) (2.7) * * * $28 $55.6 $37.5 Program Name Report issued: Data as of: Otherb Total c Interest on Reestimates Adjusted Total e (18.1) $37.4d Notes: Numbers may not total due to rounding. a According to Treasury, the estimated lifetime cost for TARP housing programs represent the total commitment except for the FHA Refinance Program, which for under credit reform, has a lifetime estimate cost representing the total estimated subsidy cost. b Consists UCSB (approximately $9 million gain) and CDCI (which has less than $500 million in outstanding investments). c CBO estimate is before administrative costs and interest effects. OMB and Treasury estimates include interest on reestimates but exclude administrative costs. d The estimate includes interest on reestimates but excludes administrative costs. e Cumulative interest on reestimates is an adjustment for interest effects on changes in TARP subsidy costs from original subsidy estimates; such amounts are a component of the deficit impacts of TARP programs but are not a direct programmatic cost. Sources: OMB Estimate – OMB, “Analytical Perspectives, Budget of the United States Government, Fiscal Year 2016,” 2/2/2015, www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/spec.pdf, accessed 10/1/2015; CBO Estimate – CBO, “Report on the Troubled Asset Relief Program—March 2015,” www.cbo.gov/sites/default/files/cbofiles/attachments/50034-TARP.pdf, accessed 10/1/2015; Treasury Estimate – Treasury, “Office of Financial Stability–Troubled Asset Relief Program Citizens’ Report Fiscal Year 2014,” 12/16/2014, www.treasury.gov/initiatives/financial-stability/reports/Documents/Citizens%20Report_FY2014_ TARP_FINAL_%2012172014.pdf, accessed 10/1/2015. 135 136 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM HOUSING SUPPORT PROGRAMS Mortgage Servicers: Companies that perform administrative tasks on monthly mortgage payments until the loan is repaid. These tasks include billing, tracking, and collecting monthly payments; maintaining records of payments and balances; allocating and distributing payment collections to investors in accordance with each mortgage loan’s governing documentation; following up on delinquencies; and initiating foreclosures. Investors: Owners of mortgage loans or bonds backed by mortgage loans who receive interest and principal payments from monthly mortgage payments. Servicers manage the cash flow from homeowners’ monthly payments and distribute them to investors according to Pooling and Servicing Agreements (“PSAs”). Government-Sponsored Enterprises (“GSEs”): Private corporations created and chartered by the Government to reduce borrowing costs and provide liquidity in the market, the liabilities of which are not officially considered direct taxpayer obligations. On September 7, 2008, the two largest GSEs, the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), were placed into Federal conservatorship. They are currently being financially supported by the Government. On February 18, 2009, the Administration announced a foreclosure prevention plan that became the Making Home Affordable (“MHA”) program.53 MHA includes the following programs: • Home Affordable Modification Program (“HAMP”) — MHA’s signature program is HAMP, which uses TARP funds to provide incentives for mortgage servicers and investors to modify eligible first-lien mortgages currently in default or at imminent risk of default into affordable and sustainable loans. The Government-sponsored enterprises (“GSEs”) also participate in the HAMP program, using non-TARP funds to modify the loans they back.54,xxxii HAMP itself comprises two levels: Tier I and, since June 1, 2012, Tier 2, the latter of which expanded the pool of homeowners potentially eligible for HAMP assistance to include non-owner-occupied “rental” properties and homeowners with a wider range of debt-to-income ratios.55 Through September 30, 2015, 2,210,782 homeowners had started HAMP Tier 1 trial modifications, of which 1,409,972 had become permanent modifications (up 13,231 from the prior quarter). As of September 30, 2015, there were 876,583 active permanent HAMP Tier 1 modifications (down 10,418 from the prior quarter), of which 478,621 were under non-GSE HAMP and the remainder under the GSE portion of the program. In the quarter ended September 30, 2015, 11,155 homeowners started new HAMP Tier 1 trial modifications, compared to 14,657 who started in the previous quarter.56 As of September 30, 2015, 158,394 homeowners had started HAMP Tier 2 trial modifications, of which 132,071 had become permanent (up 15,517 from the prior quarter). As of that date, 108,801 Tier 2 permanent modifications remained active (up 10,741 from the prior quarter).57 In the quarter ended September 30, 2015, 14,952 homeowners started new HAMP Tier 2 trial modifications, compared to 16,344 who started in the previous quarter.58 Of Tier 2 permanent modifications started, 22,375 were previously HAMP Tier 1 permanent modifications, of which 17,598 remained active.59 The GSEs do not participate in the Tier 2 program. Additionally, as of September 30, 2015, 467,134 homeowners in HAMP Tier 1 permanent modifications had redefaulted (13,226 in the most recent quarter), and another 21,994 homeowners redefaulted out of HAMP Tier 2 permanent modifications (4,473 in the most recent quarter).60 Treasury over time expanded HAMP to include sub-programs, including the Principal Reduction Alternative (“PRA”), Home Affordable Unemployment Program (“UP”), and Home Price Decline Protection (“HPDP”) programs. xxxii In 2015, Treasry began using TARP funds to pay a homeowner incentive for GSE-backed HAMP modifications in certain cases. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 • Home Affordable Foreclosure Alternatives (“HAFA”) — HAFA provides incentives to servicers, investors, and homeowners to pursue short sales and deeds-in-lieu of foreclosure when the homeowner is unable or unwilling to enter or sustain a modification and the property is worth less than the outstanding amount of the mortgage.61 During the quarter ended September 30, 2015, 2,688 homeowners completed short sales or deeds-in-lieu under HAFA, compared to 6,320 the prior quarter, bringing the total number of homeowners assisted by the program to 205,562. As of August 31, 2015, (the most recent date for which detailed data is available) 12,051 of 203,286 HAFA transactions involved homeowners that had previously received permanent HAMP modifications.62 • Second-Lien Modification Program (“2MP”) — 2MP is intended to modify second-lien mortgages when a corresponding first lien is modified under HAMP by a participating servicer.63 As of September 30, 2015, there were 83,739 active permanently modified second liens in 2MP.64 • Agency-Insured Programs — These programs are similar in structure to HAMP, but apply to eligible first-lien mortgages insured by FHA or guaranteed by the Department of Agriculture’s Office of Rural Development (“RD”) and the Department of Veterans Affairs (“VA”).65 Treasury provides TARP-funded incentives to encourage modifications under the FHA and RD modification programs, but not for the VA modification program. As of September 30, 2015, there were 123 RD-HAMP active permanent modifications, 75,797 FHAHAMP active permanent modifications, and 576 VA-HAMP active permanent modifications.66 In addition to MHA, Treasury also allocated TARP funds to support two additional housing support efforts: • Housing Finance Agency Hardest Hit Fund (“HHF”) — A TARP-funded program, HHF is intended to fund foreclosure prevention programs run by housing finance agencies in 18 states and Washington, DC, which were hit hardest by the decrease in home prices and high unemployment rates.67 As of June 30, 2015, the latest data available, 234,497 homeowners had received assistance under HHF.68 • FHA Short Refinance Program — This program, which is partially supported by TARP funds, is intended to provide homeowners who are current on their mortgage an opportunity to refinance existing underwater mortgage loans that are not currently insured by FHA into FHA-insured mortgages with lower principal balances. Treasury has provided a TARP-funded letter of credit that, as of September 30, 2015, provided up to $100 million in loss coverage on these newly originated FHA loans.69 As of September 30, 2015, 6,639 loans had been refinanced under FHA Short Refinance.70 For additional discussion on HAFA, please see the discussion “Home Affordable Foreclosure Alternatives” (“HAFA”) in this section. Short Sale: Sale of a home for less than the unpaid mortgage balance. A homeowner sells the home and the investor accepts the proceeds as full or partial satisfaction of the unpaid mortgage balance, thus avoiding the foreclosure process. Deed-in-Lieu of Foreclosure: Instead of going through foreclosure, the homeowner voluntarily surrenders the deed to the home to the investor, as satisfaction of the unpaid mortgage balance. Underwater Mortgage: Mortgage loan on which a homeowner owes more than the home is worth, typically as a result of a decline in the home’s value. Underwater mortgages also are referred to as having negative equity. 137 138 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Status of TARP Funds Obligated to Housing Support Programs Treasury initially obligated $45.6 billion to housing support programs, which was reduced to $37.5 billion, of which $18 billion, or 48%, has been expended as of September 30, 2015.71 Of that, $1.5 billion was expended in the quarter ended September 30, 2015. However, some of the expended funds remain as cash-onhand or paid for administrative expenses at state housing finance agencies (“HFAs”) participating in the Hardest Hit Fund program. Treasury has capped the aggregate amount available to pay servicer, homeowner, and investor incentives under MHA programs at $29.8 billion, of which $12.2 billion (41%) has been spent as of September 30, 2015.72 Treasury allocated $7.6 billion to the Hardest Hit Fund. As of September 30, 2015, of the $7.6 billion in TARP funds available for HHF, states had drawn down $5.7 billion.73 As of June 30, 2015, the latest date for which spending analysis is available, the states had drawn down $5.2 billion, spending $4.2 billion (56% of the allocated funds) to assist 234,497 homeowners, $76.8 million (1%) on blight elimination programs, $553.2 million (7%) for administrative expenses, and holding $446.3 million (6%) as unspent cash-on-hand.74,xxxiii,xxxiv Treasury originally allocated $8.1 billion for FHA Short Refinance, but deobligated $7.1 billion in March 2013 and a further $900 million in March 2015.75 Of the $100 million currently allocated for FHA Short Refinance, $20 million has been spent, which includes $10 million held in a prefunded reserve account to pay future claims, $10 million spent on administrative expenses, and $145,330 spent on six refinanced mortgages that later redefaulted.76 Table 4.5 shows the breakdown in expenditures and estimated funding allocations for these housing support programs. Figure 4.1 also shows these expenditures, as a percentage of allocations. xxxiii According to Treasury, committed program funds are funds committed to homeowners who have been approved to participate in HHF programs that are anticipated to be disbursed over the duration of their participation; HFAs [states] vary as to when and how they capture and report funds as committed. HHF funds committed for homeowner assistance are recorded variously as homeowner assistance, cash-on-hand, or undrawn funds. xxxiv Figures obtained from each state’s Quarterly Financial Report, which reconciles each type of cash disbursement to funds drawn from Treasury. As such, all expenses are based on actual cash disbursements. Additionally, cash-on-hand may include lien recoveries and borrower remittances. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TABLE 4.5 TARP ALLOCATIONS AND EXPENDITURES BY HOUSING SUPPORT PROGRAMS, AS OF 9/30/2015 ($ BILLIONS) ALLOCATIONS EXPENDITURES MHA HAMPa First Lien Modification $19.1 $8.1 PRA Modification 2.0 1.7 HPDP 1.6 0.4 UP — —b $22.7 $10.2 HAFA HAMP Total 4.2 1.0 2MP 0.1 0.8 Treasury FHA-HAMP 0.2 RD-HAMP 0.2 —c — c FHA2LP 2.7 MHA Total — $29.8 $12.2 HHF (Drawdown by States) $7.6 $5.7 FHA Short Refinance $0.1e d Total $37.5 —f $18.0 Notes: Numbers may not total due to rounding. According to Treasury, these numbers are “approximate.” a Includes HAMP Tier 1 and HAMP Tier 2. b Treasury does not allocate TARP funds to UP. c Treasury has allocated $0.02 billion to the RD-HAMP program. As of September 30, 2015, $471,597 has been expended for RD-HAMP. d Not all of the funds drawn down by states have been used to assist homeowners. As of June 30, 2015, HFAs had drawn down approximately $5.2 billion, and, according to the latest data available, only $4.2 billion (56%) of TARP funds allocated for HHF have gone to help 234,497 homeowners. e This amount includes up to $25 million in fees Treasury will incur for the availability and usage of the $100 million letter of credit. f Treasury’s $20 million in program expenditures include a $10 million pre-funded reserve balance (In March 2013, Treasury funded a reserve account with $50 million for any future loss claim payments, $40 million of the reserve balance was returned to Treasury in March 2015), and $10 million in administrative expenses. Sources: Treasury, responses to SIGTARP data calls, 1/5/2012, 10/5/2015 and 10/22/2015; Treasury, Transactions ReportHousing Programs, 9/28/2015; Treasury, Monthly TARP Update, 10/1/2015. 139 140 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.1 TARP HOUSING SUPPORT FUNDS ALLOCATED AND SPENT, AS OF 9/30/2015 ($ BILLIONS) HAMP $22.7 billion 45% spent ($10.2 billion) 75% spent ($5.7 billion) Hardest Hit Fund $7.6 billion a 25% spent ($1.0 billion) HAFA $4.2 billion FHA2LP $2.7 billion Funds Allocated Funds Spent None spent 2MP $0.1 billion 629% spent ($0.8 billion) Treasury FHA–HAMP $0.2 billion 90% spent ($0.2 billion) FHA Short Refinance $0.1 billionb 20% spent ($0.02 billion) 0 5 10 15 20 25 Notes: Numbers may not total due to rounding. HAMP includes HAMP Tier 1, HAMP Tier 2, HPDP, and PRA. TARP funds are not used to support the UP program, which provides forbearance of a portion of the homeowner’s mortgage payment. RD-HAMP expenditures equal $471,597 as of September 30, 2015. As of December 31, 2013, the FHA2LP program closed without any payments. a In this figure, Hardest Hit Funds “spent” represents the amount of funds states had drawn down as of September 30, 2015. Treasury requires states to return any HHF funds drawn down but unspent after December 31, 2017. According to Treasury, committed program funds are funds committed to homeowners who have been approved to participate in HHF programs that are anticipated to be disbursed over the duration of their participation; states vary as to when and how they capture and report funds as committed. HHF funds committed for homeowner assistance are recorded variously as homeowner assistance, cash-on-hand, or undrawn funds. b On March 31, 2015, Treasury reduced the maximum amount of the FHA short loss coverage from $1 billion to $100 million by amending its letter of credit. Sources: Treasury, responses to SIGTARP data calls, 1/5/2012, 10/6/2015, and 10/22/2015; Treasury, Transactions Report-Housing Programs, 9/28/2015. As of September 30, 2015, Treasury had active agreements with 77 servicers.77 That compares with 145 servicers that had agreed to participate in MHA as of October 3, 2010.78 According to Treasury, of the $29.8 billion obligated to participating servicers under their Servicer Participation Agreements (“SPAs”), as of September 30, 2015, only $12.2 billion (41%) has been spent, broken down as follows: $10.2 billion on permanent first-lien modifications, including under HAMP Tier 1, HAMP Tier 2, PRA, and HPDP; $817.9 million on 2MP; and $1.0 billion on incentives for short sales or deeds-in-lieu of foreclosure under HAFA.79,xxxv Of the combined amount of incentive payments for all of the housing programs, according to Treasury, approximately $6.7 billion went to pay investor or lender incentives, $2.9 billion went to pay servicer incentives, and $2.6 billion went to pay homeowner incentives. For just HAMP Tier 1 incentives alone (excluding PRA and HPDP), Treasury has spent $7.8 billion, of which $3.5 billion has been spent on investor incentives, $2.3 billion has been spent on servicer incentives, and $2.0 billion has been spent on homeowner incentives.80 Table 4.6 shows the breakdown of TARP-funded expenditures related to housing support programs (not including the GSE-funded portion of HAMP). xxxv The $10.2 billion in incentives on permanent first lien modifications includes $80 million in Year 6 incentives on GSE backed modifications that Treasury pays. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TABLE 4.6 BREAKDOWN OF TARP EXPENDITURES, AS OF 9/30/2015 ($ MILLIONS) MHA TARP Expenditures HAMP HAMP First Lien Modification Incentives Servicer Incentive Payment Servicer Current Borrower Incentive Payment Annual Servicer Incentive Payment Investor Current Borrower Incentive Payment $775.9 $17.0 $1,480.2 $74.5 Investor Monthly Reduction Cost Share $3,451.1 Annual Borrower Incentive Payment $1,718.6 Borrower Sixth Year Bonus Payment $245.5 Tier 2 Incentive Payments $308.2 HAMP First Lien Modification Incentives Total $8,071.0 PRA $1,723.3 HPDP UP $380.9 $—a HAMP Program Incentives Total $10,175.2 HAFA Incentives Servicer Incentive Payment $292.6 Investor Reimbursement $232.3 Borrower Relocation $515.8 HAFA Incentives Total $1,040.7 Second-Lien Modification Program Incentives 2MP Servicer Incentive Payment $74.3 2MP Annual Servicer Incentive Payment $52.4 2MP Annual Borrower Incentive Payment $54.8 2MP Investor Cost Share $286.8 2MP Investor Incentive $349.7 Second-Lien Modification Program Incentives Total $817.9 Treasury/FHA-HAMP Incentives Annual Servicer Incentive Payment $105.7 Annual Borrower Incentive Payment $101.5 Borrower Sixth Year Bonus Payment Treasury/FHA-HAMP Incentives Total $—b $207.2 RD-HAMP $—c FHA2LP $— MHA Incentives Total HHF Disbursements (Drawdowns by State HFAs) FHA Short Refinance (Loss-Coverage) Total Expenditures $12,241.4 $5,729.0 $20.4 $17,990.8 Notes: Numbers may not total due to rounding. a TARP funds are not used to support the UP program, which provides forbearance of a portion of the homeowner’s mortgage payment. b Treasury/FHA HAMP expenditures on the “Borrower Sixth Year Bonus Payment” were $10,000 through September 30, 2015. c RD-HAMP expenditures equal $471,597 as of September 30, 2015. Source: Treasury, responses to SIGTARP data calls, 10/6/2015, and 10/22/2015. 141 142 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM HAMP According to Treasury, HAMP was intended “to help as many as three to four million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now and sustainable over the long term.”81 Although HAMP contains several subprograms, the term “HAMP” is most often used to refer to the HAMP First-Lien Modification Program, described below. Trial Modification: Under HAMP, a period of at least three months in which a borrower is given a chance to establish that he or she can make lower monthly mortgage payments and qualify for a permanent modification. Also called a Trial Period Plan, or “TPP.” HAMP First-Lien Modification Program The HAMP First-Lien Modification Program, which went into effect on April 6, 2009, modifies the terms of first-lien mortgages to provide homeowners with lower monthly payments. In designing HAMP, the Administration envisioned a “shared partnership” between the Government and investors to bring distressed homeowners’ first-lien monthly payments down to an “affordable and sustainable” level.82 A HAMP modification consists of two phases: a trial modification that was designed to last three months, followed by a permanent modification. If the homeowner makes all three modified mortgage payments on time during the trial period, the modification is supposed to become a permanent modification. Under a permanent modification, the modified mortgage interest rate and terms will remain fixed for five years, and then may increase by up to 1% per year until the interest rate reaches the level prevailing at the time the homeowner began the trial. Once in a permanent modification, if the homeowner falls three payments behind, they redefault out of HAMP and their mortgage reverts to its pre-modification terms.83 Treasury pays several incentives for active TARP (non-GSE) HAMP permanent modifications for six years. Treasury also pays a one-time homeowner incentive on GSE-backed HAMP permanent modifications that remain active through the 6th anniversary of their trial start date.84 According to Treasury’s official HAMP database, 5,820,622 homeowners applied for HAMP between December 2009 and August 2015, the latest data available. As Figure 4.2 shows, 4,071,218 homeowners, or 70 percent of those who applied, were turned away by their servicers. Another 389,791 fell out during trial, and another 357,104 redefaulted after they got into HAMP. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.2 HAMP APPLICATION OUTCOME SUMMARY, AS OF AUGUST 2015 5,820,622 Homeowners Applied for HAMP 1,749,404 Homeowners Were Offered HAMP Trial Modifications 1,312,938 Homeowners Obtained HAMP Permanent Modifications 910,811 Homeowners Remain in HAMP Application Denials (4,071,218 homeowners) Fell out during trial period (389,791 homeowners) Redefaulted and fell out of HAMP (357,104) Notes: Prior to December 2009, Treasury did not require servicers to report on HAMP denials. August 2015 is the most recent date detailed data on HAMP is made available by Treasury. Accordingly, this analysis is limited to the period between December 2009 and August 2015. Analysis includes HAMP Tier 1, HAMP Tier 2, Treasury/FHA HAMP, and Treasury/RD HAMP data as HAMP denials are not categorized by program type. Sources: Treasury, “HAMP 1MP: Trial Fallout and Denials - Vintage & Reason,” August 2015, accessed 10/19/2015; Treasury HAMP data. Applying for HAMP The first step for a homeowner seeking HAMP assistance is to request relief from their mortgage servicer, either on the homeowner’s own initiative or, if they fall two payments behind on their mortgage, they must be solicited by their servicer for HAMP.xxxvi Under applicable program guidance, the servicer must notify the borrower in writing whether their request was complete or not within five business days after the servicer receives any component of the application and, if incomplete, afford the borrower at least 30 calendar days to provide any identified missing documentation.85 Servicers are then required to review and evaluate the borrower for a HAMP trail modification within 30 calendar days of receiving a xxxvi Homeowners may request MHA assistance by contacting their mortgage servicer directly, calling 888-995-HOPE (4673), or visiting www.makinghomeaffordable.gov. For more homeowners who were denied HAMP assistance, see “Mortgage Servicers Have Denied Four Million Homeowner Applications for HAMP Assistance,” in SIGTARP’s July 2015 Quarterly Report to Congress, pages 97-117. 143 144 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM HAMP Tier 1 Modification “Waterfall”: Steps HAMP servicers apply to reduce homeowners principal and interest payments. The HAMP Tier 1 waterfall uses a series of incremental steps to obtain a targeted post modification payment. Net Present Value (“NPV”) Test: Compares the money generated by modifying the terms of the mortgage with the amount an investor can reasonably expect to recover in a foreclosure sale. For more on the HAMP application process, eligibility criteria, HAMP Waterfall, and basic differences between HAMP Tier 1 and HAMP Tier 2, see SIGTARP’s January 28, 2015 Quarterly Report, page 143-145 and 149-151. For more about the HAMP NPV test, see the June 18, 2012, SIGTARP audit report “The NPV Test’s Impact on HAMP.” completed application.86 However, 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 for any delay or incompleteness. Prior to offering HAMP, servicers pre-screen for basic eligibility: the mortgage must have been originated no later than January 1, 2009; the outstanding balance of the mortgage cannot exceed $729,750 (more for qualifying multi-unit properties); the property must not be condemned; and the servicer as well as the investor/lienholder must have agreed to participate.87 Once a homeowner submits a complete application,xxxvii the servicer will first determine whether the property, mortgage, and homeowner are all eligible for HAMP Tier 1. If so, the servicer will follow a prescribed sequence of steps (the HAMP Tier 1 Waterfall) to try to reduce the monthly mortgage payment to less than 31% of the homeowner’s monthly income: 1. Add any unpaid interest and fees to the outstanding mortgage balance; 2. Reduce the interest rate in incremental steps to as low as 2%; 3. Extend the term of the mortgage to a maximum of 40 years from the modification date; 4. At the servicer’s option, defer the due date and cease charging interest on a portion of the outstanding balance (principal forbearance).88 If these steps sufficiently reduce the homeowner’s payment and the modification passes the NPV test, the homeowner must be offered a HAMP Tier 1 Trial Period Plan.xxxviii If a homeowner is ineligible for HAMP Tier 1, they must be evaluated for HAMP Tier 2 (refer to “HAMP Tier 2” within this section), and if ineligible for both programs, servicers must provide homeowners with a “Non-Approval Notice” within 10 business days of rejecting them for a HAMP modification. This notification must specify the reason the homeowner was rejected and provide instructions for the homeowner to dispute the outcome (for example, if they believe one or more NPV test inputs is incorrect). Homeowners can also request reconsideration for HAMP if they experience a change in circumstances. Servicers must provide homeowners with 30 days to respond, and evaluate any documentation submitted by the homeowner that could overturn their denial decision, prior to conducting a foreclosure sale.89 Homeowners denied HAMP due to the NPV test result can double check their servicer’s calculation using Treasury’s web-based NPV calculator at www.CheckMyNPV.com. For more information on HAMP servicer obligations and homeowner rights, see SIGTARP’s April 2011 Quarterly Report, pages 67-76. xxxvii A complete homeowner application (a “Loss Mitigation Application”, or “LMA”) comprises four components: a completed “request for mortgage assistance” (“RMA”) form; copies of the most recent Federal tax returns (or transcript requests); paystubs or other income verification documentation; and a “Dodd-Frank certification” attesting that the homeowner has not been convicted of a real estate-related crime within the past 10 years. xxxviii Servicers may use principal forgiveness (PRA or otherwise) to reduce the homeowner’s payment, at any point during the HAMP Tier 1 or HAMP Tier 2 Waterfall, but are not required to do so. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 HAMP Applications – Timeliness of Application Processing Remains an Issue Each month, the largest HAMP servicers report their HAMP application activity to Treasury, which publishes monthly and program-to-date statistics on its website.90 According to Treasury, it does not validate the HAMP application activity data it reports on its website, although after SIGTARP raised concerns over servicers’ reported application data, Treasury stated that it had worked with servicers regarding the data they report to correct certain “misimpressions” about the number of HAMP previously reported as received.91 More Homeowners Continue to Apply for HAMP Relief Than Servicers Process Each Month In its July 2014 Quarterly Report, SIGTARP raised concerns over lengthy delays that homeowners faced in getting a decision on their HAMP application from their servicer. SIGTARP reported on delays by servicers of several months to even a year or more to review a HAMP application. Since that report, some servicers have decreased the wait times homeowner have experienced to get a decision, but others have not improved or even increased those delays. According to the most recent data available on Treasury’s website, servicers received an aggregate 52,105 requests for HAMP assistance in August 2015.92 However, servicers reported only processing (i.e., approving or denying) 49,147 applications in that month.93 This means that HAMP servicers received 2,958 more applications than they processed during the month (6% of the total received). So long as servicers continue to receive more applications than they process each month, increasing numbers of homeowners will face delays in getting action on their requests for HAMP assistance. According to data reported by Treasury as of August 2015, only 3 out of the 10 servicers who reported receiving the most applications in that month—Ocwen Loan Servicing, LLC (“Ocwen”), Nationstar Mortgage LLC, and Bayview Loan Servicing, LLC—succeeded in processing more applications than they received. Those servicers collectively processed only 1,356 more applications than they received. The remaining servicers reported they were unable to process substantial numbers of the applications that they received in the month, including 576 (12%) for Bank of America, NA (“Bank of America”), 363 (19%) for CitiMortgage, Inc. (“Citi”), 1,546 (26%) for JPMorgan Chase Bank, NA (“JPMorgan Chase”), 883 (11%) for Wells Fargo Bank, NA, 682 (16%) for Select Portfolio Services Inc., 290 (10%) for Specialized Loan Servicing LLC, and 13 (1%) for U.S. Bank National Association. Figure 4.3 shows the performance of the top HAMP servicers in August 2015 in reviewing the number of homeowner applications they received that month. For additional information about the HAMP application and modification process, please see the discussion, “How HAMP Works,” in SIGTARP’s Quarterly Report to Congress, July 29, 2015, pp. 165-170. 145 146 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.3 SERVICERS ABLE OR UNABLE TO PROCESS THE NUMBER OF HAMP APPLICATIONS RECEIVED THAT MONTH (AUGUST 2015) Processed More Than Number of Applications Received 1,000 935 750 500 349 250 72 0 (13) -250 Processed Fewer Than Number of Applications Received (290) -500 (576) -750 (363) (682) (883) -1,000 -1,250 -1,500 (1,546) -1,750 -2,000 Ocwen Loan Servicing, LLC Wells Fargo Bank, NA Nationstar Mortgage LLC JPMorgan Chase Bank, NA Bank of America, NA Select Portfolio Servicing, Inc. Specialized Loan Servicing LLC CitiMortgage Inc Bayview Loan Servicing, LLC U.S. Bank National Association Source: Treasury, “HAMP Application Activity by Servicer, As of August 2015,” www.treasury.gov/initiatives/financialstability/reports/Documents/HAMP%20Application%20Activity%20by%20Servicer%20Aug%202015.pdf, accessed 10/1/2015." On a program-to-date basis, the most recent data reported on Treasury’s website, as of August 2015, shows that servicers had received an aggregate of 8,997,346 applications since June 1, 2010, compared to an aggregate of 8,849,477 previously reported as having been received as of May 2015, an increase of 147,869 applications.94 However, the reliability of these figures is questionable, as two large servicers significantly revised upward the cumulative number of applications they reported having received in the March 2015 survey compared to the February 2015 survey: Ocwen reported it had received 561,133 more applications through March 2015 than it had through February, despite reporting only 13,073 new applications in the month of March 2015; JPMorgan Chase reported it had received 197,199 more applications through March 2015 than it had through February, despite reporting only 5,576 new applications in the month of March.95 Treasury’s data shows that 220,560 homeowners had not had their HAMP applications processed through August 2015, a slight improvement over the 223,338 homeowners who had not as of May 2015.96 Comparisons to prior periods may be unreliable, given the frequent and substantial revisions to previouslyreported data. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Timeliness of HAMP Application Processing by Servicer Despite occasional improvement, homeowners still face significant delays. At the processing rates reported in Treasury’s most recent data (August 2015), it would take 6 of the top 10 HAMP servicers longer than three months to process the number of homeowner applications that hadn’t yet received a decision, even were they to receive no additional applications; JP Morgan Chase, Bank of America, Citi, and Select Portfolio Servicing, Inc. would take longer than six months. Table 4.7 presents the latest data published by Treasury on the number of homeowner HAMP applications the top servicers report having processed in August 2015, as well as the total number of applications not yet processed as of that month. TABLE 4.7 MONTHS TO PROCESS OUTSTANDING APPLICATIONS AT MOST RECENT RATE BY SERVICER, AS OF 8/31/2015 Servicer Name JPMorgan Chase Bank, NA Applications Processeda Total Applications Unprocessedb Months to Process the Homeowners who have already appliedc 4,450 49,367 11.1 Bank of America, NA 4,247 39,110 9.2 CitiMortgage Inc 1,557 13,969 9.0 Select Portfolio Servicing, Inc. 3,643 22,452 6.2 11,521 47,652 4.1 6,818 26,403 3.9 Ocwen Loan Servicing, LLC Wells Fargo Bank, NA Ditech Financial LLC 925 2,472 2.7 Bayview Loan Servicing, LLC 1,716 3,327 1.9 Specialized Loan Servicing LLC 2,596 4,339 1.7 Nationstar Mortgage LLC 7,977 8,412 1.1 3,697 3,057 0.8 49,147 220,560 d Other TOTAL Notes: a Requests Processed in the most recent month, August 2015. b Program-to-Date Requests Received less Program-to-Date Requests Processed. Data subject to ongoing revision by servicers. c Total Applications Unprocessed divided by most recent month’s Applications Processed. d Formerly GreenTree Servicing LLC. Source: Treasury, “HAMP Application Activity by Servicer,” August 2015. Homeowners Denied HAMP—7 Out of Every 10 Homeowners Who Apply for HAMP Have Been Turned Away By Their Servicer Although the rate at which servicers have denied homeowners’ HAMP applications has decreased over the last several years, it remains high at 63% in 2015. Figure 4.4 shows the aggregate number and percent of homeowners whose HAMP applications were denied by year. 147 148 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.4 HOMEOWNERS WHOSE HAMP APPLICATIONS WERE DENIED, BY YEAR, AS OF AUGUST 2015 5,000,000 82% 4,000,000 72% 69% 67% 66% 3,000,000 63% 2,000,000 1,000,000 0 1,201,919 2,045,140 3,044,601 3,563,012 3,887,881 4,071,218 2010 2011 2012 2013 2014 2015 Cumulative Homeowners Denied Percent of Homeowners Denied by Year Note: Includes all denials dated through August 31, 2015. Source: Treasury, “HAMP 1MP: Trial Fallout and Denials - Servicer, Vintage & Reason,” August 2015, accessed 10/19/2015; Treasury HAMP Data. During the three months ended August 31, 2015, HAMP servicers processed 95,150 homeowner applications, of which 38,465 (40%) were offered trials and 56,685 (60%) were denied. Figure 4.5 shows the number of homeowners who were denied a HAMP trial modification, and the number who actually started a HAMP trial, by the seven top HAMP servicers Treasury currently reports on in its quarterly MHA Program Performance Report. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.5 HOMEOWNERS DENIED A HAMP TRIAL VS. HOMEOWNERS WHO STARTED A HAMP TRIAL, BY SERVICER, AS OF AUGUST 2015 1,200,000 187,608 324,008 1,000,000 448,796 175,736 800,000 281,756 600,000 400,000 48,734 182,600 200,000 100,166 0 348,223 968,506 687,602 756,281 421,072 221,662 96,534 571,338 CITIMORTGAGE INC. (88% DENIAL RATE) JPMORGAN CHASE BANK, N.A.b (84% DENIAL RATE) BANK OF AMERICA, N.A.c (80% DENIAL RATE) OCWEN LOAN SERVICING, LLCa (70% DENIAL RATE) WELLS FARGO BANK, N.A.d (60% DENIAL RATE) NATIONSTAR MORTGAGE LLCe (55% DENIAL RATE) SELECT PORTFOLIO SERVICING, INC. (49% DENIAL RATE) OTHER SERVICERS (56% DENIAL RATE) Homeowners Turned Down for HAMP Homeowners Starting a HAMP Trial Modification Notes: a Ocwen Loan Servicing, LLC includes the former Litton Loan Servicing, LLC, GMAC Mortgage, LLC, and Homeward Residential. b JPMorgan Chase Bank, NA includes EMC Mortgage Corporation. c Bank of America N.A. includes the former Countrywide Home Loans Servicing, BAC Home Loans Servicing LP, Home Loan Services, and Wilshire Credit Corporation. d Wells Fargo Bank, N.A. includes Wachovia Bank, NA and Wachovia Mortgage, FSB. e Nationstar Mortgage LLC includes MorEquity, Inc and the former Aurora Loan Services LLC. Source: Treasury, “HAMP 1MP: Trial Fallout and Denials - Servicer, Vintage & Reason,” August 2015, accessed 10/19/2015; Treasury HAMP Data. CitiMortgage, Inc. had the highest denial rate at 88%, or nearly 9 out of 10 homeowners. The only other servicers to deny 80% or more of homeowners seeking HAMP were JPMorgan Chase (84%) and Bank of America (80%). Ocwen, the servicer with the largest number of HAMP modifications, has denied 70% of homeowners that sought HAMP. Extended HAMP Trial Modifications and Trial Cancellations Trial modifications are supposed to last for three months. If the homeowner makes all three Trial Period Plan payments within the month the payments are due, they are supposed to transition into a permanent modification. However, according to Treasury, as of September 2015, 4,007 (13% of the 30,515 active HAMP Tier 1 trials) have lasted at least six months and, of those, 1,978 (6% of active HAMP Tier 1 trials) have lasted at least a year.97 Additionally, 785,511 of 2,210,782 HAMP Tier 1 trial starts were cancelled and did not convert to permanent modifications (along with 11,107 of 158,394 HAMP Tier 2 trail starts). 149 150 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Mortgage Recast: Re-amortization of the loan using the existing interest rates and remaining term, but reduced unpaid principal balance. This results in excess principal payments made prior to or concurrent with the recast being used to reduce the minimum monthly payment rather than to pay the loan off early. For additional information about the HAMP modification process see SIGTARP’s July 2015 quarterly report, pages 165 – 170. Active Permanent HAMP Modifications Declined for the Fifth Consecutive Quarter Once a homeowner is in a permanent modification, their modified loan will have fixed terms (other than escrow payments) for the first five years. Beginning in year six, most homeowners with permanent modifications will experience annual payment increases and other adjustments over a 2-3 year period until their interest rates reach the level prevailing at the time their HAMP trial began. In each of the first five years, homeowners who make monthly payments on time can earn an annual principal reduction of up to $1,000; homeowners remaining in HAMP on the sixth anniversary of their trial start date can earn an additional one-time principal reduction of $5,000 (and may be offered a mortgage recast of their mortgage to further reduce their monthly payments). As of September 30, 2015, a total of 876,583 mortgages were in active HAMP Tier 1 (“HAMP”) permanent modifications under both non-GSE and GSE HAMP, down from 887,001 as of June 30, 2015. In the most recent quarter, active non-GSE HAMP modifications decreased by 1,920, along with a decrease in GSE HAMP active modifications of 8,498. Some 15,299 homeowners were in active trial modifications. As of September 30, 2015, for homeowners receiving permanent modifications, 95.8% received an interest rate reduction, 59.7% received a term extension, 30.9% received principal forbearance, and 14.8% received principal forgiveness.98 Table 4.8 shows HAMP modification activity, broken out by non-GSE and GSE loans. For more detail on redefaulted modifications over the life of HAMP, see Table 4.13 and Figure 4.8. For more detail on HAMP modification activity, broken out by non-GSE and GSE loans, see Table 4.28 on page 184. TABLE 4.8 CUMULATIVE HAMP TIER 1 MODIFICATION ACTIVITY BY TARP/GSE, AS OF 9/30/2015 Non-GSE Trials Started Trials Cancelled Trials Active Trials Converted to Permanent Permanents Redefaulted Permanents Paid Off Permanents Active 1,126,941 353,923 11,521 761,497 261,716 19,807 478,621 GSE 1,083,841 431,588 3,778 648,475 205,418 44,188 397,962 Total 2,210,782 785,511 15,299 1,409,972 467,134 63,995 876,583 Source: Treasury, “HAMP 1MP: Program Volumes - Program Type & Payor by Tier - September 2015,” accessed 10/21/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 During this quarter, 11,155 homeowners started new trial modifications (down from 14,657 last quarter) and 13,231 started new permanent modifications (down from 17,886 last quarter). As 13,226 homeowners re-defaulted in HAMP during the quarter, and another 9,122 paid off their modified loans, the number of active HAMP permanent modifications decreased by 10,418.99 As shown in Figure 4.6, which shows permanent modifications started, by quarter, the number of new HAMP modifications continues to decline quarter over quarter. FIGURE 4.6 HAMP TIER 1 PERMANENT MODIFICATIONS STARTED, BY QUARTER, 2009-2015 180,000 160,000 140,000 120,000 100,000 13,231 HAMP permanent modifications were started in the quarter ended 9/30/2015. 80,000 60,000 40,000 20,000 0 Q1 Q2 Q3 2009 Q4 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 2012 Q4 Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 2014 Q4 Q1 Q2 Q3 2015 Note: Includes TARP and GSE permanent modifications. Sources: Treasury, “Making Home Affordable Program Performance Report,” 1/19/2010, 4/20/2010, 7/19/2010, 10/25/2010, 1/31/2011, 5/6/2011, 8/5/2011, 11/3/2011, 2/6/2012, 5/4/2012, 8/3/2012, 11/9/2012, 2/8/2013, 5/10/2013, 8/9/2013, and 11/8/2013; Treasury, responses to SIGTARP data calls, 2/28/2013, 1/23/2014, 1/24/2014, and 7/24/2014; Treasury, “HAMP 1MP: Program Volumes - Program Type & Payor by Tier - September 2015,” accessed 10/21/2015; Fannie Mae, responses to SIGTARP data calls, 1/23/2014, 4/24/2014, and 7/24/2014. During this quarter, there were 4,655 fewer loans permanently modified under HAMP than in the previous quarter, but 153,989 fewer than the second quarter of 2010, the quarter when the most HAMP permanent modifications were started.100 HAMP Mortgage Servicing Transfers In its October 2014 Quarterly Report,xxxix SIGTARP reported on homeowners in and seeking HAMP who got “lost in the shuffle” when their mortgage servicers transferred their loans to other servicers, but their HAMP application or modification gets lost or delayed in the transfer. Delays, omissions, or miscommunications between transferring servicers and new servicers during the transfer can seriously delay, deny, or decrease relief provided to HAMP-eligible homeowners. Homeowners applying for HAMP may be required to submit new applications months later, requiring all new documentation because the past xxxix SIGTARP, “Quarterly Report to Congress,” 10/29/2014, www.sigtarp.gov/Quarterly%20Reports/October_29_2014_Report_to_ Congress.pdf. 151 152 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM For more details, see SIGTARP’s report, “Homeowners Can Get Lost in the Shuffle and Suffer Harm When Their Servicer Transfers Their Mortgage But Not the HAMP Application or Modification,” in SIGTARP’s October 2014 Quarterly Report, pages 99-112. documentation may become stale. Many struggling homeowners who could not afford their original mortgage payment may fall further behind in their mortgage payments during a new, extended application period, which may put their homes at risk or hurt their chances of receiving a HAMP modification. Homeowners already in a HAMP trial or permanent modification are harmed if the new servicer is not timely informed or does not honor the modification. Even when the homeowner makes the modified HAMP payments on time, if the new servicer does not understand that they are in a HAMP modification before the first monthly payment is due, the new servicer will only see the original terms of the mortgage and deem that homeowner as delinquent on the original terms. New servicers also may recalculate income or payments in a way that disadvantages homeowners. SIGTARP has received homeowner complaints in each of these scenarios, which it shares with Treasury. In SIGTARP’s criminal investigation of TARP recipient SunTrust, which went public in a July 2014 non-prosecution agreement with the Department of Justice, SIGTARP found problems with SunTrust Mortgage’s administration of HAMP related to servicing transfers. That agreement discusses that SunTrust Mortgage harmed hundreds of homeowners in the GSE-version of HAMP by transferring their mortgages to NationStar for servicing in 2010, but not their HAMP modifications. The homeowners were required by their new servicer to reapply for HAMP, sometimes resulting in a new HAMP trial modification with a higher interest rate, denial of HAMP with a non-HAMP modification with a higher interest rate, or denial of any assistance leading to them losing their home.101 SIGTARP is not the only one expressing concern in this area. In 2013, the Consumer Financial Protection Bureau (“CFPB”) also issued a bulletin on heightened concerns about homeowner complaints they received on transfers that resulted in lost trial modifications.102 Later in 2013, the largest HAMP servicer, Ocwen, agreed to provide $2 billion in relief to homeowners to settle charges by CFPB and 49 state attorneys general that it “took advantage of borrowers at every stage,” including failing to honor previously agreed-upon trial modifications with prior servicers.103 In 2014, CFPB issued a second bulletin based on similar findings made in their examinations of servicers.104 More recently, in April 2015, HAMP servicer Green Tree Servicing agreed to pay $63 million and take additional actions to protect homeowners to settle charges by the Federal Trade Commission and CFPB that the servicer harmed homeowners with illegal loan servicing and debt collection practices, which included failing to honor homeowners’ modifications in process when the loan was transferred, requiring homeowners to be re-evaluated for modifications after completing trial modifications, seeking payments under the pre-modification terms even when it knew or had reason to know the loan had been modified by a previous servicer, and failing to ensure it had complete and accurate modification status information when they acquired loan servicing.105 Treasury’s HAMP rules require that HAMP applications, modifications, and related information be transferred with the mortgages, and that servicers report any transfers of HAMP mortgages to Treasury.106 Thousands of HAMP homeowners have had their mortgage servicing transferred, with almost 75% acquired by a SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 handful of HAMP servicers. Figure 4.7 presents Treasury’s data on the number of HAMP modifications (trial and permanent) transferred between mortgage servicers since the program began.xl FIGURE 4.7 CUMULATIVE HAMP SERVICING TRANSFERS – TRIAL AND PERMANENT MODIFICATIONS TRANSFERRED 300,000 250,000 239,462 253,897 203,156 200,000 150,000 94,352 100,000 53,592 50,000 29,005 1,526 0 2009 2010 2011 2012 2013 2014 2015 Note: Analysis excludes 7,528 intracompany transfers. Source: SIGTARP analysis of Treasury HAMP Servicing Transfer Data. Through September 2015, Treasury data show that 253,897 mortgages in a HAMP trial or permanent modification had been transferred. Only 1,526 HAMP modifications were transferred during 2009, the first year of the program, but 29,002 HAMP modifications were transferred by the end of the second year. The number of HAMP modifications transferred increased over the next four years, totaling 237,874 by the end of 2014. According to Treasury’s data, the firms most active in acquiring HAMP mortgage servicing through transfers have changed over time. In the first two years of the program, large bank servicers were among the most active acquirers of HAMP mortgage servicing. In 2009 and 2010, Wells Fargo Bank, NA and Bank of America, NA, respectively, led all servicers in the acquisition of HAMP mortgage servicing; by contrast, non-bank servicer Ocwen Loan Servicing, LLC (“Ocwen”) was the most active receiver of HAMP mortgage servicing transfers in each of the next four years through 2014. According to Treasury data, Bayview Loan Servicing, LLC has been the most active acquirer of HAMP mortgage servicing transfers thus far in 2015. xl “HAMP Modification” herein refers to trial and permanent modifications under HAMP (Tier 1 and Tier 2), FHA HAMP, and RD HAMP. Treasury does not collect detailed information on VA HAMP, as its incentives are not paid using TARP funds. For more details on HAMP mortgage servicing transfers, see “HAMP Mortgage Servicing Transfers,” in SIGTARP’s April 2015 Quarterly Report, pages 142-147. 153 154 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM According to Treasury’s data, three firms—Ocwen, Nationstar Mortgage, LLC, and Select Portfolio Servicing, Inc.—acquired the servicing for 176,961 HAMP loans, or 70% of the total number transferred. Ocwen, alone, acquired over 117,226 HAMP loans, 46% of the total number transferred. Table 4.9 provides further detail on HAMP mortgage servicing transfers, showing the number of transfers between the top ten selling and acquiring servicers. TABLE 4.9 al To t tg ag S e Se ele LL rv ct C ic Po in r g, tfo In lio c. B As ank so o ci f A at m io e n ri ca Ba ,N Se yv at rv iew io na ic in Lo l g a LL n C JP M or ga n Ch as e Sp Ba Se ec nk rv ia ,N ic liz in ed A g, LL Loa C n R M ush an m ag or em e L en oa Fa tS n y er Se vi ce rv ic s in LL g, C LL C N db ew Se a P rv Sh en ic el n F in lp i g oi na nt nc O th M ia er or l, tg LL ag C e of e ag nt ta ns 10,771 — 1,529 2 3,560 243 23 1,070 7,039 40,984 16% American Home Mortgage Servicing, Inc. 27,665 — — — 11 — 7 9 11 — 64 27,767 11% GMAC Mortgage, LLC 24,302 — 52 5 138 3 840 3 16 — 2,323 27,682 11% Pe al To t N O BU rc e io 15,679 at 1,068 cw Bank of America, National Association YE en RS Lo r an M or Se rv ic in g, LL C HAMP SERVICING TRANSFERS – TOP TEN BUYERS AND SELLERS SELLERS JPMorgan Chase Bank, NA 10,950 69 7,736 — 412 — 93 12 27 — 494 19,793 8% OneWest Bank 18,346 — — — — — 1,162 — — — 3 19,511 8% Saxon Mortgage Services, Inc. 17,254 — 28 — 29 — 378 — — — 50 17,739 7% Litton Loan Servicing, LP 11,592 — — — — — 100 — — — 78 11,770 5% — 10,818 192 — 11 — — — — — 65 11,086 4% Aurora Loan Services, LLC Wilshire Credit Corporation — 9 — 8,938 — — — — — — 31 8,978 4% CitiMortgage, Inc. 12 1 19 2 3,449 — 29 2,367 609 — 2,083 8,571 3% 24% Other Grand Total Percentage of Total 6,037 4,454 9,907 7,386 5,488 7,349 629 2,208 2,758 2,189 11,611 60,016 117,226 31,030 28,705 16,331 11,067 7,354 6,798 4,842 3,444 3,259 23,841 253,897 46% 12% 11% 6% 4% 3% 3% 2% 1% 1% 9% Note: Analysis excludes 7,528 intracompany transfers registered in Treasury’s servicing transfers data. Source: SIGTARP Analysis of Treasury HAMP Data. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Payment Increases on HAMP–Modified Mortgages Most homeowners who received HAMP permanent mortgage modifications saw the interest rates on their loans cut in order to reduce their monthly payments and make their mortgages more affordable and sustainable over the long term.107 Starting with those who received modifications in 2009, homeowners in HAMP began in 2014 to see their interest rates rise and monthly mortgage payments go up this year, and will continue to see increases for up to another three years. Some homeowners may eventually see their monthly payment increase by as much as $1,788 per month.108 Homeowners that received HAMP permanent mortgage modifications had their monthly mortgage payments reduced to 31% of their gross monthly income through a series of steps including extending the term of the mortgage, reducing the principal owed, or cutting the interest rate to as low as 2%.109 The terms of HAMP permanent modifications remain fixed for five years.110 However, after five years, a homeowner’s mortgage interest rate can increase if the modified interest rate had been reduced below where the national average rate was for a 30-year conforming fixed-rate mortgage on the date of the modification.111 The average interest rate over the last five years has generally been between 3.5% and 5.4%, and most modifications cut rates well below that benchmark.112 After five years, the interest rate on the modified loan can step up incrementally by up to 1% per year until it reaches that benchmark.113 Table 4.10 shows before-modification, after-modification, and after all modification increases, median interest rates, interest rate increases, payments, and payment increases for homeowners who face interest rate and payment increases on HAMP mortgage modifications, by year. 155 156 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.10 HAMP TIER 1 PERMANENT MODIFICATIONS WITH SCHEDULED PAYMENT INCREASES BY YEAR, AS OF 8/31/2015 Year Modified 2009 2010 2011 2012 2013 2014 2015 All Years Total Active Permanent Modifications Permanent Modifications with Scheduled Payment Increases 28,544 268,668 210,815 140,794 117,244 73,576 40,752 880,393 26,776 250,398 188,067 103,859 79,709 51,811 26,484 727,104 Interest Ratea Median Increase Monthly Paymenta Modification Status Median Before Modification 6.50% $1,431 After Modification 2.00% $748 After All Increases 5.00% Before Modification 6.50% After Modification 2.00% After All Increases 5.00% Before Modification 6.38% 3.00% Median $1,022 $773 2.75% $1,034 2.00% 4.63% Before Modification 6.25% $1,453 After Modification 2.00% $793 After All Increases 3.88% Before Modification 6.00% 2.00% 3.50% Before Modification 6.13% $808 2.50% 1.63% $1,050 $959 $940 2.00% Before Modification 6.00% $1,271 After Modification 2.00% $740 After All Increases 3.88% Before Modification 6.38% 2.00% $762 2.25% 1.75% $961 $898 $188 $149 $1,427 $782 2.25% $1,006 Notes: SIGTARP learned in October 2015 that Treasury allowed servicers to modify loans with non-standard terms, resulting in some HAMP modifications that should have had scheduled payment increases, but did not. a Analysis of HAMP permanent modifications with scheduled interest rate and payment increases excludes 58,513 HAMP permanent modifications with incomplete records. Source: SIGTARP analysis of Treasury HAMP data. $148 $1,309 4.25% 4.50% $156 $777 1.50% After Modification After Modification $228 $1,402 After All Increases After All Increases $247 $1,448 After Modification After Modification $260 $1,453 After All Increases After All Increases Median Increase $206 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 As shown in Table 4.10, 727,104 of the 880,393 (83%) homeowners who had active HAMP Tier 1 permanent modifications as of August 31, 2015 are scheduled for or have experienced these interest rate and payment increases.114 That means just 153,289 homeowners, or 17%, will not experience payment increases.115 Among homeowners scheduled to have mortgage interest rate and payment increases, the median interest rate for these loans was 6.38% before modification; the median monthly payment was $1,427.116 HAMP permanent modifications reduced the median interest rate for these homeowners’ loans to 2% and their median monthly payment to $782.117 The scheduled payment increases will cause their median interest rate to rise to 4.5% and their median payment to increase to $1,006.118 Their median rate increase will be 2.25% and their median payment increase will be $206.119 Some homeowners could eventually see their mortgage payments increase by $1,788 per month; and after all payment increases, the highest mortgage payment any homeowner would pay per month would be $8,276. As of September 30, 2015, according to Treasury data, 239,285 homeowners in active HAMP modifications passed the date of their first scheduled payment increase, and an additional 34,775 homeowners are scheduled for payment increases by the end of the year.120 Table 4.11 provides additional detail about interest rate and payment increases by year. 157 28,544 28,538 28,526 2015 2016 2017 HAMP Permanent Modifications Started in 2011 HAMP Permanent Modifications Started in 2012 6,262 20,739 23,425 25,097 5.3% 5.0% 4.0% 3.0% 0.3% 1.0% 1.0% 1.0% 1,039 1,006 934 844 $19 $91 $95 $93 268,199 268,499 268,618 268,663 28,980 181,303 206,164 223,050 5.1% 5.0% 4.0% 3.0% 0.1% 0.9% 1.0% 1.0% 1,014 1,019 958 871 $16 $77 $96 $95 209,184 209,971 210,490 210,718 110 122,723 149,865 165,774 5.1% 4.6% 4.0% 3.0% 0.1% 0.6% 1.0% 1.0% 991 1,042 998 909 $10 $57 $99 $97 137,350 138,643 139,679 140,342 HAMP Permanent Modifications Started in 2014 HAMP Permanent Modifications Started in 2015 114,718 113,187 111,340 2019 2020 2021 32 21,593 70,232 79,125 5.9% 4.4% 3.5% 3.0% 0.6% 0.4% 0.5% 1.0% 1,752 984 920 871 $66 $34 $56 $90 64,793 66,992 69,040 70,750 19 38,849 46,771 51,471 4.4% 4.3% 4.0% 3.0% 0.5% 0.3% 1.0% 1.0% 893 959 939 853 $39 $24 $92 $88 36,004 26,425 1,207 1 29,074 23,619 31,514 33,843 3.0% 1.0% 0.1% 0.4% 4.0% 0.8% 4.1% 3.9% 829 621 894 901 $86 $20 $13 $73 3.0% 5.1% 4.1% 3.9% 1.0% 0.1% 0.1% 0.8% 891 1,145 859 950 Source: SIGTARP analysis of Treasury HAMP data. *The sum of median monthly payment increases does not agree to the median monthly payment increases shown on Table 4.10, as a significant portion of the modifications with payment increases do not have all incremental increases. Notes: a Analysis of HAMP permanent modifications with scheduled payment increases excludes 58,513 permanent modifications with incomplete records. 2023 2022 115,925 2018 2017 2016 2015 2014 Permanent Permanent Permanent Modifications Modifications Interest Ratea Monthly Paymenta Modifications Interest Ratea Monthly Paymenta Interest Ratea Monthly Paymenta with with with Total Active Total Active Scheduled Scheduled Scheduled Total Active Median Median Median Median Permanent Permanent Payment Median Payment Payment Permanent Median Year of Increasesa Median Increase Median Increase Modifications Increasesa Median Increase Median Increase Modifications Increasesa Median Increase Median Increase Increase Modifications HAMP Permanent Modifications Started in 2013 14 2,298 85,834 97,649 $22 $13 $70 $94 Permanent Permanent Permanent Permanent Modifications Interest Ratea Monthly Paymenta Modifications Interest Ratea Monthly Paymenta Modifications Interest Ratea Monthly Paymenta Modifications Interest Ratea Monthly Paymenta with with with with Total Active Total Active Total Active Scheduled Scheduled Scheduled Scheduled Median Median Median Median Median Median Median Median Permanent Permanent Permanent Payment Payment Payment Payment Increasesa Median Increase Median Increase Modifications Increasesa Median Increase Median Increase Modifications Increasesa Median Increase Median Increase Increasesa Median Increase Median Increase Modifications HAMP Permanent Modifications Started in 2010 HAMP PERMANENT MODIFICATIONS WITH SCHEDULED PAYMENT INCREASES, ANNUAL, AS OF 8/31/2015 (CONTINUED) 2023 2022 2021 2020 2019 2018 28,544 2014 Total Active Permanent Year of Increase Modifications HAMP Permanent Modifications Started in 2009 HAMP PERMANENT MODIFICATIONS WITH SCHEDULED PAYMENT INCREASES, ANNUAL, AS OF 8/31/2015 TABLE 4.11 158 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Homeowners in All States Will Be Affected by Payment Increases Table 4.12 shows, as of August 31, 2015, all active HAMP permanent modifications with scheduled monthly mortgage payment increases, by state. TABLE 4.12 HAMP TIER 1 PERMANENT MODIFICATIONS WITH SCHEDULED PAYMENT INCREASES, AS OF 8/31/2015 Total Active Permanent Modifications Total Active Permanent Modifications With Scheduled Payment Increases Percentage of Active Permanent Modifications With Scheduled Payment Increase Median Payment Increase After All Increasesa Maximum Payment Increase After All Increasesa 4,560 3,113 68.3% $99 $1,291 386 290 75.1% 178 756 31,050 26,438 85.2% 192 1,058 Arkansas 1,800 1,339 74.4% 98 746 California 228,038 199,260 87.4% 311 1,788 Colorado 11,568 9,382 81.1% 179 1,128 Connecticut 11,740 9,436 80.4% 199 1,265 2,603 2,038 78.3% 170 825 Florida 113,824 93,281 82.0% 170 1,408 Georgia 30,530 23,963 78.5% 138 1,049 Guam 8 6 75.0% 57 167 Hawaii 3,575 3,001 83.9% 378 1,258 Idaho 3,115 2,545 81.7% 163 879 Illinois 45,347 37,752 83.3% 179 1,556 Indiana 7,757 5,574 71.9% 94 1,108 Iowa 1,821 1,371 75.3% 93 667 Kansas 1,923 1,434 74.6% 109 1,236 Kentucky 3,106 2,276 73.3% 94 804 Louisiana 4,740 3,378 71.3% 101 924 Maine 2,391 1,924 80.5% 144 709 Maryland 28,033 22,882 81.6% 250 1,378 Massachusetts 20,788 17,406 83.7% 239 1,245 Michigan 24,033 19,394 80.7% 124 1,301 Minnesota 12,622 10,669 84.5% 177 1,218 Mississippi 2,816 1,854 65.8% 89 800 Missouri 7,906 5,854 74.0% 110 894 State Alabama Alaska Arizona Delaware Continued on next page 159 160 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM HAMP TIER 1 PERMANENT MODIFICATIONS WITH SCHEDULED PAYMENT INCREASES, AS OF 8/31/2015 (CONTINUED) Total Active Permanent Modifications Total Active Permanent Modifications With Scheduled Payment Increases Percentage of Active Permanent Modifications With Scheduled Payment Increase Median Payment Increase After All Increasesa Maximum Payment Increase After All Increasesa 956 772 80.8% $168 $1,009 1,062 779 73.4% 91 673 18,359 15,748 85.8% 219 1,114 3,649 3,028 83.0% 181 852 New Jersey 29,926 25,356 84.7% 238 1,564 New Mexico 2,993 2,346 78.4% 144 970 New York 50,065 42,847 85.6% 298 1,586 North Carolina 15,094 11,512 76.3% 117 986 125 96 76.8% 112 465 17,576 13,339 75.9% 100 1,002 Oklahoma 1,898 1,331 70.1% 86 667 Oregon 9,803 8,253 84.2% 197 1,682 Pennsylvania 18,602 14,032 75.4% 130 1,014 Puerto Rico 3,118 2,843 91.2% 94 987 Rhode Island 4,253 3,538 83.2% 196 888 South Carolina 7,808 5,844 74.8% 120 1,094 267 210 78.7% 123 822 8,250 5,712 69.2% 101 1,082 Texas 22,994 16,223 70.6% 99 1,138 Utah 7,005 5,877 83.9% 206 1,157 771 615 79.8% 152 1,033 11 8 72.7% 157 229 Virginia 20,111 16,532 82.2% 235 1,425 Washington 19,018 16,007 84.2% 229 1,160 District of Columbia 1,520 1,289 84.8% 261 1,002 West Virginia 1,093 864 79.0% 126 586 Wisconsin 7,625 5,974 78.3% 126 979 361 269 74.5% 166 869 880,393 727,104 82.6% $206 $1,788 State Montana Nebraska Nevada New Hampshire North Dakota Ohio South Dakota Tennessee Vermont Virgin Islands Wyoming Total a Analysis of HAMP permanent modifications with scheduled interest rate and payment increases excludes 58,513 HAMP permanent modifications with incomplete records. Source: SIGTARP analysis of Treasury HAMP data. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 As shown in Table 4.12 above, homeowners in four states account for more than half of the HAMP permanent modifications scheduled for interest rate and payment increases: California, Florida, New York, and Illinois.121 Homeowners in 11 jurisdictions face mortgage payment increases that are more than the $206 national median: California, Hawaii, Maryland, Massachusetts, Nevada, New Jersey, New York, Utah, Virginia, Washington, and Washington, DC.122 While 83% of homeowners nationally with HAMP-modified mortgages face scheduled interest rate and payment increases, that percentage is even higher in 16 jurisdictions: Arizona, California, Hawaii, Illinois, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, New York, Oregon, Puerto Rico, Rhode Island, Utah, Washington, and Washington, DC.123 Homeowners Who Have Redefaulted on HAMP Permanent Modifications or Are at Risk of Redefaultingxli As of September 30, 2015, more than 1,409,972 homeowners got help to start a permanent HAMP mortgage modification, of which 467,134 homeowners (or 33%) fell three months behind in payments and, thus, redefaulted out of the program – often into a less advantageous private sector modification or, even worse, into foreclosure.124,xlii This is an increase from the 453,908 homeowners who had redefaulted through the end of the previous quarter, as this quarter alone 13,226 homeowners redefaulted in HAMP. As of September 30, 2015, taxpayers lost $1.8 billion in TARP funds paid to servicers and investors as incentives for 261,716 homeowners who received non-GSE HAMP permanent modifications and later redefaulted, which is an increase of 8,798 from the last quarter.125 Also, 78,625 (9% of active HAMP permanent modifications) had missed one to two monthly mortgage payments and, thus, are at risk of redefaulting out of the program.126 The longer a homeowner remains in HAMP, the more likely he or she is to redefault out of the program, with homeowners redefaulting on the oldest HAMP permanent modifications at a rate of 52.7%.xliii The likelihood of homeowners redefaulting on their HAMP modifications increases as their modifications age. Nearly half of all homeowners who received a HAMP permanent modification received it in 2009 and 2010.127 Homeowners who received HAMP permanent modifications in 2009 redefaulted at rates ranging from 47.5% to 52.7% at the time they reached 60 months, the latest aging for which Treasury’s monitoring report provides data, while homeowners who received HAMP permanent modifications in 2010 redefaulted at rates ranging from 42.4% to 47.2% (compared to 41.3% to 48.4% reported last quarter).128,xliv Homeowners who redefaulted fell out of the HAMP program, and their HAMP permanent modification was not sustainable. Once again, they risked losing their homes and some may have lost their homes. Treasury reported that of the homeowners with redefaulted loans reported by 20 servicers that participated xli In this section, “HAMP” refers to the original HAMP First-Lien Modification Program, which Treasury later named HAMP Tier 1. xlii The percentage of homeowners that redefaulted in HAMP (cumulative redefault rate) includes all homeowners who received HAMP permanent modifications since the start of the program. xliii According to Treasury, Treasury’s calculation of redefault rates may exclude some modifications due to missing or invalid data. xliv The most recent HAMP redefault data provided to SIGTARP by Treasury only covers through June 2015 and does not account for modifications that redefaulted after 60 months. For more on homeowners who have redefaulted on HAMP permanent mortgages or are at risk of defaulting, see SIGTARP’s July 2013 Quarterly Report, pages 161-184. Cumulative Redefault Rate: The total number of HAMP permanent modifications that have redefaulted (as of a specific date) divided by the total number of HAMP permanent modifications started (as of the same specific date). 161 162 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM in a survey, as of August 31, 2015, the latest data provided by Treasury, 23% of homeowners moved into the foreclosure process, 12% of homeowners lost their home via a short sale or deed-in-lieu of foreclosure, and 28% of homeowners who redefaulted received an alternative modification, usually a private sector modification.129 Table 4.13 shows the number homeowners that received HAMP modifications and the number and percentage of homeowners who have redefaulted by year for GSE and non-GSE loans. TABLE 4.13 HAMP TIER 1 PERMANENT MODIFICATION REDEFAULT ACTIVITY, AS OF 9/30/2015 Year Modified Non-GSE GSE Total Permanents Started Permanents Redefaulted Annual Cumulative Annual Cumulative Redefault Rate Cumulative 2009 23,633 23,633 129 129 1% 2010 243,262 266,895 29,015 29,144 11% 2011 185,254 452,149 59,080 88,224 20% 2012 114,745 566,894 58,860 147,084 26% 2013 98,423 665,317 49,413 196,497 30% 2014 59,967 725,284 41,306 237,803 33% 2015 36,213 761,497 23,913 261,716 34% Total 761,497 — 261,716 — 2009 43,305 43,305 339 339 1% 2010 269,450 312,755 27,730 28,069 9% 2011 168,423 481,178 51,287 79,356 16% 2012 87,280 568,458 49,229 128,585 23% 2013 43,497 611,955 33,990 162,575 27% 2014 26,229 638,184 27,122 189,697 30% 2015 10,291 648,475 15,721 205,418 32% Total 648,475 — 205,418 — 2009 66,938 66,938 468 468 1% 2010 512,712 579,650 56,745 57,213 10% 2011 353,677 933,327 110,367 167,580 18% 2012 202,025 1,135,352 108,089 275,669 24% 2013 141,920 1,277,272 83,403 359,072 28% 2014 86,196 1,363,468 68,428 427,500 31% 2015 46,504 1,409,972 39,634 467,134 33% Total 1,409,972 — 467,134 — Notes: Data is as of December 31, 2009; December 31, 2010; December 31, 2011; December 31, 2012; December 31, 2013, December 31, 2014, and September 30, 2015. Sources: Treasury responses to SIGTARP data calls, 1/21/2011, 1/20/2012, 1/22/2013, 2/28/2013, 7/19/2013, 10/21/2013, 10/23/2013, 1/23/2014, and 1/24/2014; Fannie Mae, responses to SIGTARP data calls 10/21/2013 and 1/23/2014; Treasury, “HAMP 1MP Program Volumes – Program Type and Payor by Tier – September 2015,” accessed 10/21/2015; SIGTARP Quarterly Report to Congress, 1/30/2010; SIGTARP Quarterly Report to Congress, 1/26/2011; SIGTARP Quarterly Report to Congress, 1/26/2012; SIGTARP Quarterly Report to Congress, 1/30/2013 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 During the current year there were only 46,504 new modifications, while there were 39,634 redefaults. Redefaults are likely to continue increasing unless Treasury finds a way to increase participation in the program. Figure 4.8 provides detail on the status (active and redefaulted) over time of homeowners’ HAMP permanent modifications by the year they originated. FIGURE 4.8 ACTIVE AND REDEFAULTED HAMP MODIFICATIONS BY YEAR OF MODIFICATION, AS OF 9/30/2015 600,000 500,000 400,000 300,000 200,000 100,000 0 2009 2010 2011 2012 2013 2014 2015 Modifications Redefaulted Modifications Active Source: Fannie Mae, response to SIGTARP data call, 10/21/2015. Over time the rate at which homeowners redefault on their HAMP modifications increases, as illustrated in Figure 4.8. More than 45% of the homeowners that obtained permanent modifications in 2009 and 2010 have since redefaulted, compared to only 10% of the homeowners that received HAMP modifications in 2014 and 2015.130 163 164 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Servicer Redefault Rates As of September 30, 2015, of 1,330,313 homeowners’ HAMP permanent modifications currently serviced by 10 of the largest servicers, 412,784, or 31%, subsequently redefaulted. Table 4.14 provides data on homeowners’ HAMP permanent modifications by servicers participating in HAMP and currently servicing the modifications listed. TABLE 4.14 HOMEOWNERS’ HAMP PERMANENT MODIFICATIONS AND REDEFAULTS CURRENTLY WITHIN SERVICERS’ PORTFOLIOS, BY SERVICER, AS OF 9/30/2015 Permanent Modifications Permanent Modifications Redefaulted Percentage of Permanent Modifications Redefaulted Ocwen Loan Servicing, LLCa 316,353 107,162 33.9% Wells Fargo Bank, N.A.b 210,802 59,122 28.0% 176,531 47,861 27.1% JPMorgan Chase Bank, N.A. 176,141 47,685 27.1% Select Portfolio Servicing, Inc. 101,381 40,815 40.3% Bank of America, N.A. 103,867 33,485 32.2% Seterus Incorporated 72,642 27,115 37.3% Ditech Financial LLC 106,525 26,203 24.6% 43,449 14,011 32.2% Nationstar Mortgage LLC c d e CitiMortgage Inc Specialized Loan Servicing LLC 22,622 9,325 41.2% Other 211,730 76,344 36.1% Total 1,542,043 489,128 31.7% Notes: HAMP include HAMP Tier 1 and Tier 2 modifications, including those that received assistance under the Home Price Decline Protection (“HPDP”) and Principal Reduction Alternative (“PRA”) programs. Includes both TARP and GSE modifications. Includes modifications listed by the current servicer of the loan. a Ocwen Loan Servicing, LLC includes the former Litton Loan Servicing, LLC, GMAC Mortgage, LLC, and Homeward Residential. b Wells Fargo Bank, N.A. includes Wachovia Bank, NA and Wachovia Mortgage, FSB. c JPMorgan Chase Bank, N.A. includes EMC Mortgage Corporation. d Bank of America includes the former BAC Home Loans Servicing LP, Home Loan Services, and Wilshire Credit Corporation. e Formerly GreenTree Servicing LLC. Source: Treasury, “HAMP 1MP: Program Volumes - Combined Tier 1/Tier 2: Top 25 HAMP Servicers – September 2015,” accessed 10/21/2015. Four servicers account for more than half of homeowners’ HAMP permanent modifications that redefaulted: Ocwen Loan Servicing, LLC, with 107,162 homeowners’ permanent modifications redefaulted; Wells Fargo Bank, N.A., with 59,122 homeowners’ permanent modifications redefaulted, Nationstar Mortgage LLC, with 47,861 homeowners’ permanent modifications redefaulted and JPMorgan Chase Bank, NA, with 47,685 homeowners’ permanent modifications redefaulted.131 Of the 10 largest servicers participating in HAMP, the three with the highest percentage of homeowners’ HAMP permanent modifications that redefaulted were Specialized Loan Servicing LLC, with 41.2% of homeowners’ permanent modifications redefaulted; Select Portfolio Servicing, Inc., with 40.3% SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 of homeowners’ permanent modifications redefaulted; and Seterus Incorporated, with 37.3% of homeowners’ permanent modifications redefaulted, as compared with the average for the 10 of 31%.132 Redefaults: Impact on Taxpayers Funding TARP Taxpayers have lost about $1.8 billion in TARP funds paid to servicers and investors as incentives for 261,716 homeowners’ non-GSE, HAMP (Tier 1) permanent mortgage modifications that redefaulted.133 As of September 30, 2015, Treasury has distributed $9.6 billion in TARP funds for 761,497 homeowners’ non-GSE, HAMP (Tier 1) permanent modifications.134 According to Treasury, $5.4 billion of that was designated for investor incentives, $2.3 billion for servicer incentives, and $1.9 billion for homeowner incentives.135 (Homeowner incentives are paid to servicers that, in turn, apply the payment to a homeowner’s mortgage). According to Treasury, 19% of those funds were paid for incentives on homeowners’ HAMP permanent modifications that later redefaulted.136 Table 4.15 shows payments for homeowners’ HAMP permanent modifications (active, redefaulted, and paid off mortgages) that are currently within servicers’ portfolios. 165 166 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.15 TARP INCENTIVE PAYMENTS ON HOMEOWNERS’ HAMP PERMANENT MODIFICATIONS CURRENTLY WITHIN SERVICERS’ PORTFOLIOS, AS OF 9/30/2015 Servicer Name TARP Incentive Payments for Permanents Active TARP Incentive Payments for Permanents Redefaulted TARP Incentive Payments for Permanents Paid Off Total TARP Incentive Payments for Permanents All Percentage of Total TARP Incentive Payments for Permanents Redefaulted Ocwen Loan Servicing, LLCa $2,164,499,275 $563,335,594 $56,412,538 $2,795,383,134 20% 595,778,997 257,150,076 13,822,594 866,769,043 30% Wells Fargo Bank, N.A.d Select Portfolio Servicing, Inc. 1,265,173,565 229,739,457 50,568,957 1,547,843,644 15% JPMorgan Chase Bank, NAb 1,264,211,168 174,748,720 34,377,377 1,476,766,114 12% Nationstar Mortgage LLCe 563,510,059 124,911,927 16,143,810 704,586,918 18% Bank of America, N.A. 624,141,258 104,275,129 21,838,312 750,720,855 14% 97,481,581 54,009,433 2,320,926 153,820,523 35% CitiMortgage Inc 222,033,422 42,591,904 11,723,959 276,622,663 15% Bayview Loan Servicing LLC 178,306,211 38,701,409 12,020,342 229,757,495 17% 59,844,921 24,493,195 1,675,063 86,033,174 28% c Specialized Loan Servicing LLC Carrington Mortgage Services, LLC Other 466,916,332 175,863,400 26,473,288 669,461,250 26% Total $7,501,896,790 $1,789,820,244 $247,377,164 $9,557,764,814f 19% Notes: Total incentive payments by the current status of the permanent modification (active, redefaulted, or paid off) is broken out in the table by the current servicer of the loan. The incentive payment totals may not tie to the actual amount paid to the servicer as servicing transfers are not taken into account when the current servicer on the loan is used. Totals shown here exclude payments and/or drafts performed for modifications that are not currently Permanent Modifications. Totals shown here include payments under the HAMP Tier 1, Home Price Decline Protection (“HPDP”) and Principal Reduction Alternative (“PRA”) programs tied to these loans. Figures do not include TARP funded incentives on GSE loans. a Ocwen Loan Servicing, LLC includes the former Litton Loan Servicing, LLC, GMAC Mortgage, LLC, and Homeward Residential. b JPMorgan Chase Bank, NA includes EMC Mortgage Corporation. c Bank of America N.A. includes the former Countrywide Home Loans Servicing, BAC Home Loans Servicing LP, Home Loan Services, and Wilshire Credit Corporation. d Wells Fargo Bank, N.A. includes Wachovia Bank, NA and Wachovia Mortgage, FSB. e Nationstar Mortgage LLC includes MorEquity, Inc and the former Aurora Loan Services LLC. f Totals include $18,670,626 on modifications that the servicer classified as “withdrawals.” Source: Treasury, response to SIGTARP data call, 10/9/2015. More than half of TARP funds that Treasury spent for HAMP permanent modifications that redefaulted were for mortgages currently serviced by three servicers, Ocwen Loan Servicing, LLC, Select Portfolio Servicing, Inc., and Wells Fargo Bank, N.A. (listed in Table 4.15).137,xlv More than 90% of TARP funds Treasury spent for HAMP permanent modifications that redefaulted were for mortgages currently serviced by 10 servicers (listed in Table 4.15).138 Redefaults: Impact on States Homeowners are redefaulting throughout the nation. In most states at least 35% of homeowners in the HAMP program have redefaulted on their modifications.139 Tables 4.16 – 4.22 and Figure 4.9 show regional and state breakdowns of the number of homeowners with HAMP permanent modifications, the number of homeowners with active permanent modifications, the number who have redefaulted on modifications, and the redefault rates. xlv Total incentive payments by the current status of the permanent modification (active, redefaulted, or paid off) is broken out in the table by the current servicer of the loan. The incentive payment totals may not tie to the actual amount paid to the servicer as servicing transfers are not taken into account when the current servicer on the loan is used. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TABLE 4.16 REDEFAULTED HOMEOWNERS’ HAMP PERMANENT MODIFICATIONS, BY REGION, CUMULATIVE AS OF 9/30/2015 Permanent Modifications Active Modifications Redefaulted Modifications 379,014 259,476 100,841 27% 75,190 44,382 25,229 34% Southwest/South Central 113,680 65,101 41,746 37% Midwest 218,821 127,208 81,282 37% Mid-Atlantic/Northeast 321,339 195,096 113,875 35% West Mountain West/Plains Southeast TOTAL Redefault Rate 301,928 185,320 104,161 34% 1,409,972 876,583 467,134 33% Notes: Includes GSE and non-GSE modifications. Of HAMP permanent modifications, 63,995 loans have been paid off. Source: Treasury, “HAMP 1MP: Program Volumes Supplemental - Tier 1: State – September 2015,” accessed 10/21/2015. FIGURE 4.9 REDEFAULTED HAMP PERMANENT MODIFICATIONS, BY REGION, CUMULATIVE AS OF 9/30/2015 AK MOUNTAIN WEST/ PLAINS 25,229 WA MT OR ID WEST 100,841 CA NV ND WY MN WI SD CO IL KS MO HI AZ GU OK NM AR NY OH IN PA WV VA KY NH MA CT RI NJ DE MD DC NC TN MS AL TX MID-ATLANTIC/ NORTHEAST VT ME 113,875 MI IA NE UT MIDWEST 81,282 SC GA SOUTHEAST 104,161 LA FL PR SOUTHWEST/ SOUTH CENTRAL 41,746 WEST MOUNTAIN WEST/PLAINS SOUTHWEST/SOUTH CENTRAL MIDWEST MID-ATLANTIC/NORTHEAST SOUTHEAST VI 167 168 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM West TABLE 4.17 REDEFAULTED HAMP PERMANENT MODIFICATIONS, BY STATE, CUMULATIVE AS OF 9/30/2015 WA AK OR GU Permanent Modifications Redefaulted Modifications Redefault Rate AK 671 385 216 32% CA 327,560 226,842 85,037 26% GU CA Active Modifications 13 8 3 23% HI 5,354 3,557 1,469 27% OR 15,511 9,762 4,713 30% WA 29,905 18,922 9,403 31% 379,014 259,476 100,841 27% Total Notes: Includes GSE and non-GSE modifications, excludes permanent modifications paid off. HI Source: Treasury, “HAMP 1MP: Program Volumes Supplemental - Tier 1: State - September 2015,” accessed 10/21/2015. WEST Percentage of Redefaults on HAMP Permanent Modifications >27% 25-27% <25% Mountain West/Plains TABLE 4.18 REDEFAULTED HAMP PERMANENT MODIFICATIONS, BY STATE, CUMULATIVE AS OF 9/30/2015 MT ID NV ND WY SD NE UT CO MOUNTAIN WEST/ PLAINS Percentage of Redefaults on HAMP Permanent Modifications KS >27% 25-27% <25% Permanent Modifications Active Modifications Redefaulted Modifications Redefault Rate CO 18,600 11,464 5,168 28% ID 5,127 3,092 1,635 32% KS 3,564 1,904 1,385 39% MT 1,568 939 452 29% ND 225 122 73 32% NE 2,062 1,056 824 40% NV 31,224 18,246 11,697 37% SD 517 267 176 34% UT 11,631 6,933 3,588 31% WY Total 672 359 231 34% 75,190 44,382 25,229 34% Notes: Includes GSE and non-GSE modifications, excludes permanent modifications paid off. Source: Treasury, “HAMP 1MP: Program Volumes Supplemental - Tier 1: State - September 2015,” accessed 10/21/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Southwest/South Central TABLE 4.19 REDEFAULTED HAMP PERMANENT MODIFICATIONS, BY STATE, CUMULATIVE AS OF 9/30/2015 Permanent Modifications AZ OK NM AR LA TX SOUTHWEST/ SOUTH CENTRAL >27% 25-27% <25% Percentage of Redefaults on HAMP Permanent Modifications Active Modifications Redefaulted Modifications Redefault Rate AR 3,312 1,795 1,284 39% AZ 52,556 30,866 18,750 36% LA 8,929 4,700 3,786 42% NM 4,939 2,977 1,703 34% OK 3,623 1,886 1,473 41% TX 40,321 22,877 14,750 37% 113,680 65,101 41,746 37% Total Notes: Includes GSE and non-GSE modifications, excludes permanent modifications paid off. Source: Treasury, “HAMP 1MP: Program Volumes Supplemental - Tier 1: State - September 2015,” accessed 10/21/2015. Midwest TABLE 4.20 REDEFAULTED HAMP PERMANENT MODIFICATIONS, BY STATE, CUMULATIVE AS OF 9/30/2015 Permanent Modifications MN WI MI IA IL IN MO MIDWEST Percentage of Redefaults on HAMP Permanent Modifications OH KY >27% 25-27% <25% Active Modifications Redefaulted Modifications Redefault Rate IA 3,601 1,804 1,492 41% IL 74,815 45,160 27,494 37% IN 14,012 7,724 5,480 39% KY 5,694 3,091 2,260 40% MI 39,909 23,897 13,619 34% MN 21,508 12,530 7,704 36% MO 14,782 7,852 6,094 41% OH 30,524 17,558 11,499 38% WI 13,976 7,592 5,640 40% 218,821 127,208 81,282 37% Total Notes: Includes GSE and non-GSE modifications, excludes permanent modifications paid off. Source: Treasury, “HAMP 1MP: Program Volumes Supplemental - Tier 1: State - September 2015,” accessed 10/21/2015. 169 170 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Mid-Atlantic/Northeast TABLE 4.21 REDEFAULTED HAMP PERMANENT MODIFICATIONS, BY STATE, CUMULATIVE AS OF 9/30/2015 ME VT NH MA NY CT NJ DE MD DC PA WV VA WV MID-ATLANTIC/ NORTHEAST Percentage of Redefaults on HAMP Permanent Modifications RI >27% 25-27% <25% Permanent Modifications Active Modifications Redefaulted Modifications Redefault Rate CT 19,769 11,723 7,427 38% DC 2,493 1,503 826 33% DE 4,668 2,606 1,890 40% MA 34,354 20,686 11,998 35% MD 46,318 27,930 16,649 36% ME 4,312 2,377 1,707 40% NH 6,471 3,636 2,468 38% NJ 51,259 29,842 19,785 39% NY 75,717 50,137 23,423 31% PA 33,159 18,555 13,214 40% RI 7,164 4,238 2,687 38% VA 32,365 20,010 10,576 33% VT 1,320 767 465 35% WV Total 1,970 1,086 760 39% 321,339 195,096 113,875 35% Notes: Includes GSE and non-GSE modifications, excludes permanent modifications paid off. Source: Treasury, “HAMP 1MP: Program Volumes Supplemental - Tier 1: State - September 2015,” accessed 10/21/2015. Southeast TABLE 4.22 REDEFAULTED HAMP PERMANENT MODIFICATIONS, BY STATE, CUMULATIVE AS OF 9/30/2015 Permanent Modifications NC TN MS AL SC GA PR FL SOUTHEAST Percentage of Redefaults on HAMP Permanent Modifications VI >27% 25-27% <25% Active Modifications Redefaulted Modifications Redefault Rate AL 8,756 4,536 3,735 43% FL 175,394 113,514 55,764 32% GA 51,372 30,374 18,787 37% MS 5,534 2,806 2,461 44% NC 26,970 15,020 10,421 39% PR 4,383 3,094 1,145 26% SC 13,802 7,768 5,265 38% TN 15,704 8,196 6,582 42% 13 12 1 8% 301,928 185,320 104,161 34% VI Total Notes: Includes GSE and non-GSE modifications, excludes permanent modifications paid off. Source: Treasury, “HAMP 1MP: Program Volumes Supplemental - Tier 1: State - September 2015,” accessed 10/21/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 As shown in the preceding tables, only 27% of homeowners in the West Coast have redefaulted in HAMP. This redefault rate is driven primarily by California, where only 26% of homeowners have redefaulted (only Guam and the Virgin Islands have lower rates of redefault). Conversely, homeowners in the Midwest and Deep South have fared the worst in HAMP. In the Midwest, 37% of participating homeowners have redefaulted on their HAMP modification, the highest of any region. In the Deep South, 44% of Mississippi homeowners participating in HAMP have redefaulted, the highest redefault rate in the nation, while 43% of homeowners in Alabama, and 42% of homeowners in Louisiana and Tennessee, have redefaulted. California has the highest number of homeowners who redefaulted on HAMP permanent modifications with 85,037, followed by Florida, Illinois, and New York with 55,764, 27,494, and 23,423, respectively. Homeowners in each of these states have redefaulted at rates lower than their regional average, but these states have significantly more homeowners in HAMP modifications than any others. Modification Incentives Treasury provides servicers with an up front incentive for modifying loans that is based on the extent of the loans delinquency upon entry into a HAMP TPP. For loans less than or equal to 120 days delinquent, servicers receive $2,000. For loans 121-210 days delinquent, servicers receive $1,600. For loans more than 210 days delinquent, servicers receive $1,200. For homeowners whose monthly mortgage payment was reduced through HAMP by 6% or more, servicers also receive incentive payments of up to $1,000 annually for three years if the homeowner remains in good standing (defined as less than three full monthly payments delinquent).140 For HAMP Tier 1, homeowners whose monthly mortgage payment is reduced through HAMP by 6% or more and who make monthly payments on time earn an annual principal reduction of up to $1,000.141 The principal reduction accrues monthly and is payable for each of the first five years as long as the homeowner remains in good standing.142 In addition, homeowners still active in HAMP on the sixth anniversary of their trial start date will receive a one time principal reduction of $5,000, after which servicers will be required to offer a loan recast, unless prohibited by investor guidelines.143 Under both HAMP Tier 1 and HAMP Tier 2, the investor is entitled to five years of incentives that make up part of the difference between the homeowner’s new monthly payment and the old one. HAMP Tier 2 incentives are the same as those for HAMP Tier 1, with some exceptions, notably that HAMP Tier 2 modifications do not pay annual homeowner or servicer incentives, with the exception of a $5,000 principal reduction payment paid on the 6th anniversary of the trial start date for homeowners that remain active in the program.144 As of September 30, 2015, of the $29.8 billion in TARP funds allocated to the 77 servicers participating in MHA, 90% was allocated to 10 servicers.145 Table 4.23 shows incentive payments made to these servicers. 171 172 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.23 TARP INCENTIVE PAYMENTS BY 10 SERVICERS, ALL MHA PROGRAMS, AS OF 9/30/2015 SPA Cap Limit Incentive Payments to Borrowers Incentive Payments to Investors Incentive Payments to Servicers Total Incentive Payments $7,144,221,653 $548,601,651 $1,769,206,818 $655,679,725 $2,973,488,194 JPMorgan Chase Bank, NAb 4,180,356,154 474,173,623 1,251,085,389 500,900,039 2,226,159,051 Wells Fargo Bank, N.A.d 4,681,203,503 448,878,376 1,067,150,825 490,602,385 2,006,631,586 Bank of America, N.A.c 4,376,483,917 421,913,769 835,562,287 453,042,760 1,710,518,816 Select Portfolio Servicing, Inc. 1,739,631,639 180,049,255 329,122,809 180,777,675 689,949,738 Nationstar Mortgage LLCe 2,155,290,833 147,008,681 353,800,618 159,685,884 660,495,183 CitiMortgage Inc 1,026,222,572 110,289,370 328,916,797 134,948,041 574,154,209 Ocwen Loan Servicing, LLCa CIT Bank, N.A. 890,889,926 66,919,213 231,693,120 89,943,567 388,555,900 Bayview Loan Servicing LLC 456,945,127 38,625,129 77,817,104 33,025,910 149,468,143 U.S. Bank National Association 262,349,198 24,637,385 46,442,262 30,191,363 101,271,011 2,868,329,277 175,300,332 364,519,574 221,263,716 761,083,622 $29,781,923,798 $2,636,354,180 $6,655,119,329 $2,949,967,814 $12,241,441,322 f Other Servicers Total Notes: Numbers may not total due to rounding. On July 1, 2012, Saxon Mortgage Services, Inc. ceased servicing operations by selling its mortgage servicing rights and transferring the subservicing relationships to third-party servicers. The remaining SPA Cap Limit stated above represents the amount previously paid to Saxon Mortgage Services, Inc. prior to ceasing servicing operations. a Ocwen Loan Servicing, LLC includes the former Litton Loan Servicing, LLC, GMAC Mortgage, LLC, and Homeward Residential. b JPMorgan Chase Bank, NA includes EMC Mortgage Corporation. c Bank of America N.A. includes the former Countrywide Home Loans Servicing, BAC Home Loans Servicing LP, Home Loan Services, and Wilshire Credit Corporation. d Wells Fargo Bank, N.A. includes Wachovia Bank, NA and Wachovia Mortgage, FSB. e Nationstar Mortgage LLC includes MorEquity, Inc and the former Aurora Loan Services LLC. f Formerly OneWest Bank. Source: Treasury, Transactions Report-Housing Programs, 9/28/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 As shown in Table 4.23, Ocwen Loan Servicing, LLC, received $2,973,488,194 in total incentive payments, the most of any servicer. The four largest HAMP servicers (Ocwen Loan Servicing, LLC; JPMorgan Chase Bank, NA; Wells Fargo Bank, N.A; and Bank of America, N.A.) received 73% of all incentives paid out. Only 18% of the incentives paid to Ocwen Loan Servicing, LLC went to homeowners, least among the four largest servicers. Conversely, 25% of incentives paid to Bank of America, N.A. went to homeowners, the highest among the four largest servicers. Of the $12.2 billion in total incentives paid to all servicers, 22% went to homeowners, 54% went to investors, and the remaining 24% went to the servicers. Table 4.24 below shows similar incentives information, but limited to HAMP incentives. Of the $10.2 billion in total HAMP incentives paid, 19% went to homeowners, 57% went to investors, and the remaining 24% went to the servicers. TABLE 4.24 TARP INCENTIVE PAYMENTS BY 10 SERVICERS, HAMP ONLY, AS OF 9/30/2015 Ocwen Loan Servicing, LLCa Incentive Payments to Borrowers Incentive Payments to Investors Incentive Payments to Servicers Total Incentive Payments $474,194,054 $1,725,767,072 $608,143,594 $2,808,104,719 354,337,021 1,031,066,655 398,682,220 1,784,085,895 Wells Fargo Bank, N.A.d 312,034,116 947,544,372 386,066,478 1,645,644,966 Bank of America, N.A. JPMorgan Chase Bank, NA b 248,581,085 614,205,109 322,279,874 1,185,066,069 Select Portfolio Servicing, Inc. 133,850,203 302,654,885 154,156,304 590,661,393 Nationstar Mortgage LLCe 124,667,014 319,654,413 140,219,770 584,541,197 c CitiMortgage Inc 98,535,422 225,019,938 115,944,593 439,499,953 CIT Bank, N.A.f 50,844,359 198,054,016 77,903,567 326,801,942 Bayview Loan Servicing LLC 25,647,453 69,365,594 22,439,129 117,452,176 U.S. Bank National Association 24,571,385 46,434,488 30,158,363 101,164,237 116,810,891 306,509,399 168,824,667 592,144,958 $1,964,073,003 $5,786,275,941 $2,424,818,560 $10,175,167,504 Other Servicers Total Notes: Numbers may not total due to rounding. Includes HAMP Tier 1, HAMP Tier 2, HPDP, and PRA Incentives. a Ocwen Loan Servicing, LLC includes the former Litton Loan Servicing, LLC, GMAC Mortgage, LLC, and Homeward Residential. b JPMorgan Chase Bank, NA includes EMC Mortgage Corporation. c Bank of America N.A. includes the former Countrywide Home Loans Servicing, BAC Home Loans Servicing LP, Home Loan Services, and Wilshire Credit Corporation. d Wells Fargo Bank, N.A. includes Wachovia Bank, NA and Wachovia Mortgage, FSB. e Nationstar Mortgage LLC includes MorEquity, Inc and the former Aurora Loan Services LLC. f Formerly OneWest Bank. Source: Treasury, Program to Date Cash Disbursement Summary Report, September 2015. 173 174 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM HAMP Tier 2 Waterfall: The HAMP Tier 2 waterfall is a consistent set of actions that are applied to the loan to get it within a targeted post modification payment range. HAMP Tier 2 Effective June 1, 2012, HAMP Tier 2 expanded HAMP to allow for modifications on mortgages of non-owner-occupied “rental” properties that are tenant-occupied or vacant.146 HAMP Tier 2 also allows homeowners with a wider range of debtto-income situations to receive modifications, and may be used to provide assistance to homeowners that have, or are at risk of, redefaulting in HAMP Tier 1 Modifications.147 Treasury’s stated policy objectives for HAMP Tier 2 are that it “will provide critical relief to both renters and those who rent their homes, while further stabilizing communities from the blight of vacant and foreclosed properties.”148 Homeowners that meet basic eligibility criteria, but are not eligible for a HAMP Tier 1 modification, are evaluated for HAMP Tier 2 if their servicer and investor/ lienholder participates. When considering a mortgage for HAMP Tier 2, the servicer will apply the following actions (the HAMP Tier 2 Waterfall) to determine whether the modification will result in a payment that is between 25–42% of the homeowner’s monthly income and is no greater than the homeowner’s payment before the modificationxlvi: 1. Add any unpaid interest and fees to the outstanding balance; 2. Change the interest rate to the prevailing rate for a 30-year conforming fixed interest rate mortgage less 50 basis points;xlvii 3. Extend the term to up to 40 years; 4. At the servicer’s option, defer the due date and cease charging interest on a portion of the outstanding balance (principal forbearance) so that the interest bearing portion of the mortgage is no more than 115% of market value of the property at the time of the evaluation. For SIGTARP’s recommendations for the improvement of HAMP Tier 2, see SIGTARP’s April 2012 Quarterly Report, pages 185-189. If these steps sufficiently reduce the homeowner’s payment and the modification passes the NPV test, the homeowner would be offered a HAMP Tier 2 Trial Period Plan.149 According to Treasury, as of September 30, 2015, a total of 60 of the 77 servicers with active MHA servicer agreements had fully implemented HAMP Tier 2, including all of the 10 largest servicers.150 According to Treasury, as of September 30, 2015, it had paid $537.6 million in incentives in connection with 132,071 HAMP Tier 2 permanent modifications, 108,801 of which remain active.151 Approximately 17,598 of homeowners in active HAMP Tier 2 permanent modifications were previously in HAMP Tier 1 permanent modifications.152 HAMP Tier 2 mortgage modification activity and property occupancy status is shown in Table 4.25. xlvi Servicers may modify loans with a post modification payment as low as 10% or as high as 55% under HAMP Tier 2, as long as the threshold is consistently applied across all loans they service. xlvii Prior to July 1, 2014 the post modification interest rate used on HAMP Tier 2 modifications was the 30-year conforming fixed interest rate mortgage plus 50 basis points, effective July 1, 2014 Treasury reduced this by 50 basis points, effective January 1, 2015 the rate was further reduced by 50 basis points. As a result, the post modification interest rate for Tier 2 modifications is now the 30-year conforming fixed interest rate mortgage less 50 basis points. Treasury, “Supplemental Directive 12-04: MHA Dodd-Frank Certification, Borrower Identity and Owner-Occupancy Verification,” 7/13/2012, www.hmpadmin.com/portal/news/docs/2012/ hampupdate071312.pdf, accessed 10/1/2015; Treasury, “Supplemental Directive 12-02, MHA Extension and Expansion,” 3/9/2013, www.hmpadmin.com/portal/programs/docs/hamp_servicer/sd1202.pdf, accessed 10/1/2015; Treasury, “Making Home Affordable Program Handbook for Servicers of Non-GSE Mortgages, Version 4.5,” 6/1/2015, www.hmpadmin.com//portal/ programs/docs/hamp_servicer/mhahandbook_45.pdf, accessed 10/1/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TABLE 4.25 HAMP TIER 2 FIRST LIEN MODIFICATION ACTIVITY AND OCCUPANCY STATUS, AS OF 9/30/2015 Trials Started Trials Cancelled Trials Active Trials Converted Permanent Permanents Disqualified Permanents Paid-Off Permanents Active 148,579 10,472 14,099 124,008 20,814 1,184 102,002 Tenant Occupied 8,564 542 978 7,044 1,021 72 5,951 Vacant 1,251 93 139 1,019 159 12 848 158,394 11,107 15,216 132,071 21,994 1,268 108,801 Property Type Borrower Occupied Total Source: Treasury, “HAMP 1MP Program Volumes – Tier 2 Property Type – September 2015,” accessed 10/21/2015. According to Treasury data, of the 158,394 HAMP Tier 2 trial mortgage modifications started, 148,579 (94%), were for owner-occupied properties; 8,564 (5%), were for tenant-occupied properties (as represented by homeowner at time of application), and 1,251 (1%) were for vacant properties. Of the 148,579 owneroccupied HAMP Tier 2 trials started, 14,099 (9%) remained active, 10,472 (7%) were cancelled, and 124,008 (83%) were converted to permanent. Of the 124,008 owner-occupied HAMP Tier 2 permanent modifications started, 102,002 (82%) remained active and 20,814 (17%) redefaulted. Of the 8,564 HAMP Tier 2 trials started on properties the homeowner represented as tenant-occupied, 978 (11%) remained active, 542 (6%) were cancelled, and 7,044 (82%) were converted to permanent. Of the 7,044 HAMP Tier 2 permanent modifications started on properties the homeowner represented as tenant-occupied, 5,951 (84%) remained active and 1,021 (14%) redefaulted. Of the 1,251 HAMP Tier 2 trials started for vacant properties, 139 (11%) remained active, 93 (7%) were cancelled, and 1,019 (81%) were converted to permanent. Of the 1,019 HAMP Tier 2 permanent modifications started for vacant properties, 848 (83%) remained active and 159 (16%) redefaulted.153 In the quarter ending September 30, 2015, 14,952 Tier 2 trials were started (down from 16,344 in the preceding quarter), 15,517 trials converted to permanent modifications (down from 17,852 in the preceding quarter), and 4,473 Tier 2 modifications redefaulted (up from 3,019 in the preceding quarter). As of September 30, 2015 there were 15,216 homeowners active in HAMP Tier 2 trial modifications, compared to 16,968 at the previous quarter end. Of the 132,071 homeowners that received a permanent HAMP Tier 2 modification, 41,908 (32%) received principal reduction through PRA, and another 802 (1%) received non PRA principal reduction. Among the largest servicers, Ocwen was the most likely to provide principal forgiveness, providing forgiveness on about 58% of its HAMP Tier 2 modifications, while Bank of America only provided forgiveness on less than 1% on its Tier 2 modifications.154 175 176 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM For more on Streamline HAMP as announced by Treasury, see SIGTARP’s July 2015 Quarterly Report, pages 138-139. For more information on HAMP UP, see ‘Home Affordable UP: A Highly Underutilized Program,’ in SIGTARP’s October 2014 Quarterly Report, pages 136-137, and SIGTARP’s October 2013 Quarterly Report, pages 95-96. Streamline HAMP On July 1, 2015, Treasury announced “Streamline HAMP”xlviii for homeowners already 90 days’ delinquent on their mortgage.xlix Required for the largest HAMP servicers, and optional for other servicers, Streamline HAMP keeps some of the same HAMP eligibility requirements and removes others, including income and front-end debt-to-income ratios, and does not require the homeowner to submit a complete HAMP application package. According to Treasury, the new Streamline HAMP, which will be effective January 1, 2016, is modeled after similar programs offered by the GSEs and intended to reach more homeowners, and get them into HAMP more efficiently, than Treasury has been able to do under existing HAMP. As of September 30, 2015, Treasury has not reported any Streamline HAMP activity undertaken by participating servicers voluntarily prior to the effective date. Home Affordable Unemployment Program (“UP”) In July 2010, Treasury created UP, under which eligible unemployed homeowners seeking HAMP assistance can have their mortgage payments, for up to 12 months, temporarily postponed or reduced to no more than 31% of their monthly gross income (including unemployment benefits).155 Homeowners who are approved to receive unemployment benefits and who also request assistance under HAMP must be evaluated for and offered UP if eligible, regardless of the borrower’s monthly mortgage payment ratio or a prior payment default on a HAMP trial or permanent modification. Servicers are not required to offer an UP forbearance plan to borrowers who are more than 12 months delinquent at the time of the UP request.156 Alternatively, servicers may evaluate unemployed borrowers for HAMP and offer a HAMP trial period plan instead of an UP forbearance plan if, in the servicer’s business judgment, HAMP is the better loss mitigation option.157 Re-employed borrowers with reduced income still facing a hardship must be considered for HAMP. If the borrower is eligible, any payments missed prior to and during the period of the UP forbearance plan are capitalized as part of the normal HAMP modification process.158 If the UP forbearance period expires and the borrower is ineligible for HAMP, the borrower may be eligible for MHA foreclosure alternatives, such as HAFA.159 As of August 31, 2015, which is the latest data available from Treasury, 44,405 homeowners had started a UP forbearance plan—less than one-third of the 160,939 homeowners who had applied for UP relief.160 As of August 31, 2015, 1,545 homeowners (fewer than 4% of those who had started an UP plan) were actively participating in the program.161 The number of homeowners in an active UP plan has declined in 10 of the last 12 months and, as of August 31, 2015, was about one-fifth of the corresponding number as of December 31, 2012.162 xlviii Treasury, “Supplemental Directive 15-06 – Streamlined Modification Process,” 7/1/2015. Unless otherwise noted, all details regarding the announced Streamline HAMP program described herein are drawn from SD 15-06. xlix Streamline HAMP will also apply to homeowners who already completed five years in HAMP, are seeing the first year of their interest rate rise, and have become 60 days delinquent. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TABLE 4.26 CUMULATIVE HOMEOWNER HAMP UP ACTIVITY, AS OF 8/31/2015 Homeowners Requesting UP Assistancea UP Forbearance Plans Started Completed UP Forbearance Plansb Active UP Forbearance Plans Dec. 2010 Dec. 2011 Dec. 2012 Dec. 2013 Dec. 2014 Aug. 2015 24,402 66,842 98,270 125,557 145,622 160,939 6,961 18,403 30,525 38,445 42,142 44,405 584 8,835 14,583 20,250 22,628 23,445 5,967 6,113 7,786 5,482 3,671 1,545 Notes: a “Homeowners Requesting UP Assistance” is the sum of “Total UP Forbearance Plans Started” and “Total UP Forbearance Requested & Denied” as reported by Treasury. b Under Treasury guidance, “completed” UP plans include situations where the “forbearance plan term (including any extensions) have expired, where the borrower has been re-employed, or where the borrower has moved into another forbearance plan, such as a Federal Declared Disaster (FDD) or Hardest Hit Fund plan.” Source: Treasury, Home Affordable Unemployment Program Non-GSE Forbearance Plans Worksheets, various dates. As shown in Table 4.26, as of August 31, 2015, approximately half (53%, or 23,445) of homeowners completed their UP forbearance plan successfully, while 44% (19,415) fell out of UP.163 According to Treasury data, fewer than one out of every six homeowners who started an UP plan went on to receive a HAMP modification (including 4,952 homeowners who successfully completed their UP plans, and 1,814 who did not).164 Servicer participation in UP is voluntary—there is no TARP funding for UP, and HAMP servicers are not paid for participating— which may in part explain the program’s low utilization. Through August 31, 2015, only 2,742 of the homeowners who sought UP assistance had previously been in a HAMP modification.165 Home Affordable Foreclosure Alternatives (“HAFA”) Starting in April 5, 2010,l Treasury began providing incentives to servicers, homeowners, and investors to encourage short sales or deeds-in-lieu of foreclosure as alternatives to foreclosure.166 Under HAFA, the servicer forfeits the ability to pursue a deficiency judgment against a borrower when the proceeds from the short sale or deed-in-lieu are less than the outstanding amount on the mortgage. In October 2014, Treasury announced an increase from $3,000 to $10,000 in the relocation assistance payable to eligible homeowners and tenants who are required to vacate the property as a condition to the short sale or deed-in-lieu transaction for HAFA transactions closing after February 1, 2015.167 In exchange for facilitating a HAFA transaction, the program also pays servicers up to $1,500, and reimburses investors up to $8,000 for a portion (currently two-thirds) of payments made to subordinate lienholders in exchange for releasing the lien and the borrower’s liability.168 Relocation assistance may be paid to qualifying homeowners or tenants as long as the homeowner or tenant resided in the property at the time HAFA assistance was requested and was required to vacate as a condition of the short sale or l Treasury announced that some servicers could implement HAFA before April 5, 2010. Deficiency Judgment: Court order authorizing a lender to collect all or part of an unpaid and outstanding debt resulting from the borrower’s default on the mortgage note securing a debt. A deficiency judgment is rendered after the foreclosed or repossessed property is sold when the proceeds are insufficient to repay the full mortgage debt. 177 178 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.10 HAFA TRANSACTIONS BY TYPE, AS OF SEPTEMBER 30, 2015 3% 2% 19% 75% Deed-in-lieu with Relocation Compensation Deed-in-lieu without Relocation Compensation Short Sale with Relocation Compensation deed-in-lieu.li If the homeowner qualifies for HAFA relocation assistance, they are paid when the short sale or deed-in-lieu is closed. If the property was only occupied by a tenant and not the homeowner, then the servicer must provide the relocation assistance directly to the tenant, with no proceeds going to the homeowner.169 Through September 30, 2015, HAFA had facilitated 205,562 transactions, approximately 94% of which were short sales and 6% of which were deed-inlieu transactions.170 According to Treasury’s data, in the twelve months through September 30, 2015, just 22,641 HAFA transactions have been completed, down from 29,048 in the twelve months ended September 30, 2014. HAFA transactions have decreased quarter over quarter in 8 of the last 10 quarters.171 According to Treasury’s data, 78% of HAFA transactions through September 30, 2015, involved relocation assistance, while 22% did not.172 As of that date, Treasury had paid $1.0 billion in incentives to borrowers, servicers and investors, or just 25% of the $4.2 billion in TARP funds allocated to the program.173 Short Sale without Relocation Compensation Source: Treasury, “HAFA Program Inventory – Program Type – September 2015,” accessed 10/21/2015. FIGURE 4.11 HAFA TRANSACTION ACTIVITY, AS OF SEPTEMBER 30, 2015 250,000 189,813 200,000 205,562 163,417 150,000 117,654 100,000 52,246 50,000 0 7,373 2010 44,873 2011 Annual Transactions 65,408 45,763 26,396 2012 2013 2014 15,749 2015 Cumulative Transactions Source: Treasury, “HAFA Program Inventory – Loan Agreement Issue Month – September 2015,” accessed 10/21/2015. HAFA may be used to help prevent foreclosures on primary residences, investment properties, or second/vacation homes. The program provides relocation assistance for displaced tenants when an investment property is sold. As shown in Figure 4.12, HAFA transactions to date have largely involved principal residences, as about 93% of all HAFA transactions involved principal residences, 3% involved investment properties, and 3% involved second or vacation homes. As of August 31, 2015 (the latest such data is available), 94% of HAFA transactions involve homeowners who could not get into HAMP or were unsuccessful once in, as shown in Figure 4.13. Table 4.27 provides more detail on the remaining MHA programs. li For deed-in-lieu transactions, the servicer can allow the borrower to remain in the home as a renter (referred to as a “deed-for-lease”) or to repurchase the property later, but such transactions are not eligible for relocation assistance. Treasury, “Making Home Affordable Program Handbook for Servicers of Non-GSE Mortgages, version 4.5,” 6/1/2015, www.hmpadmin.com/portal/programs/docs/ hamp_servicer/mhahandbook_45.pdf, accessed 6/1/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.12 FIGURE 4.13 HAFA TRANSACTIONS BY PROPERTY TYPE, AS OF SEPTEMBER 30, 2015 HAMP STATUS OF HOMEOWNERS COMPLETING HAFA TRANSACTIONS, AS OF AUGUST 31, 2015 3% 3% 6% 6% 8% 93% 80% Principal Residence Does not qualify for a Trial Period Plan Second or Vacation Home Does not successfully complete a Trial Period Plan Investment Property Source: Treasury, “HAFA Program Inventory – Program Type – September 2015,” accessed 10/21/2015. Permanent HAMP Modification Delinquency Requested a Short Sale or Deed-in-Lieu Source: Treasury HAFA data, as of August 2015. 179 180 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.27 ADDITIONAL MAKING HOME AFFORDABLE (“MHA”) HOUSING SUPPORT PROGRAMS, AS OF 9/30/2015 Program Principal Reduction Alternative (“PRA”)b Home Price Decline Protection (“HPDP”)b Second Lien Modification Program (“2MP”) Treasury/ Federal Housing AdministrationHome Affordable Modification Program (“Treasury/FHAHAMP”) Date Announced 6/3/2010 Date Started Purpose To provide incentives to investors to modify homeowners’ mort10/1/2010 gages under HAMP by reducing the principal amount owed. Homeowners Assisted Estimated Number of Homeowners to be Permanents Permanents Assisted Started Active Estimated TARP Allocation (In Billions)a TARP Expenditures (In Billions) — 199,544c 151,042c $2.00 $1.7 7/31/2009 To provide additional TARP-funded incentives to investors to modify mortgages 9/1/2009 through HAMP by partially offsetting possible losses from home price declines. — 225,486c 139,058c 1.55 0.38 4/28/2009 To provide incentives to servicers, investors, and borrowers to modify second mortgages (second liens) -- with a partial or full extinguish8/13/2009 ment of the loan balance -- for homeowners with a corresponding first mortgage (first lien) that was modified under HAMP. “A Second Lien Program to Reach up to 1 to 1.5 Million Homeowners,” according to Treasury, “Making Home Affordable, Program Update, Fact Sheet,” 4/28/2009. 152,131 83,739 0.13 0.82 To provide TARP-funded, HAMP-like incentives to 8/15/2009 servicers and homeowners to modify mortgages insured by the FHA. “Tens of thousands of FHA borrowers will now be able to modify their mortgages in the same manner as so many others who are taking advantage of the Administration’s Making Home Affordable program,” according to HUD Secretary Shaun Donovan, HUD Press Release, “HUD Secretary Donovan Announces New FHA-Making Home Affordable Loan Modification Guidelines,” 7/30/2009. 100,494 75,797 0.23 0.21 7/30/2009d Continued on next page 181 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 ADDITIONAL MAKING HOME AFFORDABLE (“MHA”) HOUSING SUPPORT PROGRAMS, AS OF 9/30/2015 Program Department of Agriculture Rural DevelopmentHome Affordable Modification Program (“RDHAMP”) Treasury/ Federal Housing Administration Second Lien Program (“Treasury/FHA2LP”) g Department of Veterans Affairs-Home Affordable Modification Program (“VA HAMP”) Date Announced Date Started Purpose (CONTINUED) Homeowners Assisted Estimated Number of Homeowners to be Permanents Permanents Assisted Started Active Estimated TARP Allocation (In Billions)a TARP Expenditures (In Billions) 9/17/2010d To provide TARP-funded, HAMP-like incentives to servicers and borrow9/24/2010 ers for modifications of mortgages insured by RD. — 184 123 0.02 —e 3/26/2010d To provide TARP-funded incentives to servicers and investors to partially or fully extinguish sec8/6/2010 ond mortgages (second liens) for mortgages modified and insured by the FHA. — 0 0 2.69 0.00 1/8/2010d To provide non-TARPfunded, HAMP-like incentives to servicers 2/1/2010 and borrowers for modifications of mortgages insured by the VA. — 785 576 —f —f Notes: a Estimated TARP allocations are as of January 5, 2012. b Program is a subprogram of the Home Affordable Modification Program (“HAMP”). c Includes HAMP Tier 1 and Tier 2 modifications. d In its April 6, 2009 Supplemental Directive, Treasury announced that “Mortgage loans insured, guaranteed or held by a Federal Government agency (e.g., FHA, HUD, VA and Rural Development) may be eligible for the HAMP, subject to guidance issued by the relevant agency. Further details regarding inclusion of these loans in the HAMP will be provided in a subsequent Supplemental Directive.” e As of September 30, 2015, $471,597 has been expended for RD-HAMP. f Treasury does not provide incentive compensation related to VA-HAMP. g As of December 31, 2013, the FHA2LP program had expired. Sources: Treasury, responses to SIGTARP data calls, 1/5/2012, 1/8/2014, 1/24/2014, 4/9/2014, 4/25/2014, 7/8/2014, 7/24/2014, 10/6/2014, 10/10/2014, 1/5/2015, 1/23/2015, 4/23/2015, 7/6/2015 7/23/2015, and 10/6/2015; Treasury, Treasury, “2MP Program Inventory – Program Type by Payor – September 2015,“ accessed 10/21/2015; Treasury, “FHA & RD HAMP Trial Starts – Program Summary – September 2015,” accessed 10/21/2015; VA, responses to SIGTARP data calls, 1/8/2014, 4/3/2014, 7/7/2014, 10/23/2014, 1/2/2015, 4/1/2015, 7/1/2015 and 10/1/2015; Treasury, “Making Home Affordable Program Handbook for Servicers of Non-GSE Mortgages, Version 4.5; Treasury, Press Releases, 4/28/2013, 7/31/2009, 11/30/2009, and 3/26/2010; Treasury, “Supplemental Directive 09-01: Introduction of the Home Affordable Modification Program,” 4/6/2009; Treasury, “Supplemental Directive 09-04: Home Affordable Modification Program -- Home Price Decline Protection Incentives,” 7/31/2009; Treasury, “Supplemental Directive 09-09: Introduction of Home Affordable Foreclosure Alternatives -- Short Sale and Deed in Lieu of Foreclosure,” 11/30/2009; Treasury, “Supplemental Directive 09-09 Revised: Introduction of Home Affordable Foreclosure Alternatives -- Short Sale and Deed in Lieu of Foreclosure Update,” 3/26/2010; Treasury, “Supplemental Directive 09-05 Revised: Update to the Second Lien Modification Program (2MP),” 3/26/2010; Treasury, “Fact Sheet: FHA Program Adjustments to Support Refinancings for Underwater Homeowners,” 3/26/2010; Treasury, “HAMP Improvements Fact Sheet: Making Home Affordable Program Enhancements to Offer More Help for Homeowners,” 3/26/2010; Treasury, “Supplemental Directive 10-05: Home Affordable Modification Program - Modification of Loans with Principal Reduction Alternative,” 6/3/2010; Treasury, Supplemental Directive 10-10: Home Affordable Modification Program – Modifications of Loans Guaranteed by the Rural Housing Service,” 9/17/2010; HUD, press release, 7/30/2009; VA, Circular 26-10-2, 1/8/2010; and VA, Circular 26-10-6, 5/24/2010. 308,147 195,705 126,657 72,909 40,916 2,210,782 2011 2012 2013 2014 2015 Total 1,083,841 Total 563,828 8,128 2015 902,620 22,114 2014 2010 35,719 2009 81,478 2013 1,126,941 Total 2012 32,788 2015 138,072 50,795 2014 287,839 90,938 2013 2011 114,227 2012 2010 170,075 2011 510,491 275,989 2009 392,129 2009 2010 2,210,782 2,169,866 2,096,957 1,970,300 1,774,595 1,466,448 902,620 1,083,841 1,075,713 1,053,599 1,017,880 936,402 798,330 510,491 1,126,941 1,094,153 1,043,358 952,420 838,193 668,118 392,129 Cumulative 785,511 2,395 3,624 6,655 10,876 27,452 686,058 48,451 431,588 1,753 1,742 4,446 4,814 10,654 383,448 24,731 353,923 642 1,882 2,209 6,062 16,798 302,610 23,720 Annual 785,511 783,116 779,492 772,837 761,961 734,509 48,451 431,588 429,835 428,093 423,647 418,833 408,179 24,731 353,923 353,281 351,399 349,190 343,128 326,330 23,720 Cumulative Trials Cancelled 15,299 23,282 40,193 62,111 79,307 152,289 787,231 3,778 7,694 13,551 25,775 36,391 77,396 442,455 11,521 15,588 26,642 36,336 42,916 74,893 344,776 Annual Trials Active 1,409,972 46,504 86,196 141,920 202,025 353,677 512,712 66,938 648,475 10,291 26,229 43,497 87,280 168,423 269,450 43,305 761,497 36,213 59,967 98,423 114,745 185,254 243,262 23,633 Annual 1,409,972 1,363,468 1,277,272 1,135,352 933,327 579,650 66,938 648,475 638,184 611,955 568,458 481,178 312,755 43,305 761,497 725,284 665,317 566,894 452,149 266,895 23,633 Cumulative Trials Converted to Permanent 129 467,134 39,634 68,428 83,403 108,089 110,367 56,745 468 205,418 15,721 27,122 33,990 49,229 51,287 27,730 339 261,716 23,913 41,306 49,413 58,860 59,080 29,015 63,995 23,666 16,539 14,113 6,769 2,101 802 5 44,188 15,406 10,905 10,592 5,271 1,442 569 3 19,807 8,260 5,634 3,521 1,498 659 233 2 Annual 63,995 40,329 23,790 9,677 2,908 807 5 44,188 28,782 17,877 7,285 2,014 572 3 19,807 11,547 5,913 2,392 894 235 2 Cumulative Permanents Paid Off 876,583 (19,052) 1,225 44,403 87,168 241,209 455,165 66,465 397,962 (21,742) (11,799) (1,085) 32,780 115,694 241,151 42,963 478,621 2,690 13,024 45,488 54,388 125,515 214,014 23,502 Annual 876,583 895,635 894,410 850,007 762,839 521,630 66,465 397,962 419,704 431,503 432,588 399,808 284,114 42,963 478,621 475,931 462,907 417,419 363,031 237,516 23,502 Cumulative Permanents Active Sources: Treasury, responses to SIGTARP data calls, 7/24/2014, 4/25/2014, 1/23/2014, 10/23/2013, 10/21/2013, 7/19/2013, 2/28/2013, 1/22/2013, 1/20/2012, and 1/21/2011; Treasury, “HAMP 1MP: Program Volumes - Program Type & Payor by Tier - September 2015,” accessed 10/21/2015; Fannie Mae, responses to SIGTARP data calls, 7/24/2014, 4/24/2014, 1/23/2014, 10/21/2013; SIGTARP Quarterly Report to Congress, 1/29/2014; SIGTARP Quarterly Report to Congress, 1/30/2013; SIGTARP Quarterly Report to Congress, 1/26/2012; SIGTARP Quarterly Report to Congress, 1/26/2011; SIGTARP Quarterly Report to Congress, 1/30/2010. 467,134 427,500 359,072 275,669 167,580 57,213 468 205,418 189,697 162,575 128,585 79,356 28,069 339 261,716 237,803 196,497 147,084 88,224 29,144 129 Cumulative Permanents Redefaulted Annual Notes: Data is as of December 31, 2009; December 31, 2010; December 31, 2012; December 31, 2013; December 31, 2014; and September 30, 2015. Total GSE TARP Annual Trials Started ANNUAL AND CUMULATIVE HAMP TIER 1 MODIFICATION ACTIVITY, AS OF 9/30/2015 TABLE 4.28 182 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Housing Finance Agency Hardest Hit Fund (“HHF”) In February 2010, the Administration launched the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (“Hardest Hit Fund” or “HHF”) to use $7.6 billion in TARP funds for “innovative measures to help families in the states that have been hit the hardest by the aftermath of the housing bubble.”174 This TARP-funded housing support program was to be developed and administered by state housing finance agencies (“HFAs”) in 18 states and the District of Columbia with Treasury’s approval and oversight.175,xxxii Treasury picked states that it deemed to have significant home price declines and high unemployment rates.176 States’ TARP Allocations and Spending for HHF Of the $7.6 billion in TARP funds available for HHF, state HFAs collectively had drawn down $5.7 billion (75%) as of September 30, 2015, up from $5.2 billion (68%) in the prior quarter.177 However, as of June 30, 2015, the latest date for which detailed spending data is available from the state HFA Quarterly Financial Reports, which are one quarter behind,xxxiii only $4.2 billion had been spent on direct assistance to 234,497 individual homeowners; three states had spent another $76.8 million on blight elimination (which does not directly assist individual homeowners). As of June 30, 2015, states had also spent $553.2 million in HHF funds on administrative expenses, held $446.3 million as unspent cash-on-hand, and had an aggregate of $2.4 billion remaining in undrawn funds available for HHF.178 Treasury approves state HFAs’ allocation of their available HHF funds to specific HHF programs in each state, documented in HHF participation agreements entered into between the state HFA and Treasury, and the state HFAs then commit and disburse those funds. According to Treasury, committed program funds are funds that the state HFAs have committed and intend to disburse to homeowners who have been approved to participate in HHF programs. State HFAs vary as to when and how they capture and report funds as committed and, in the financial reports submitted to Treasury, state HFAs record funds committed for homeowner assistance variously as homeowner assistance, cash-on-hand, or undrawn funds. As of June 30, 2015, 77.1% of the HHF funds spent by state HFAs went to unemployment assistance, including past-due payment assistance.179 As SIGTARP found in its April 2012 audit, these were the only types of assistance for which the Government sponsored enterprises (“GSE”s) previously directed servicers to participate. The remaining assistance can be broken down to 20.6% for mortgage xxxii Participating HFAs in HHF are from: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, and Washington, DC. According to Treasury, as of September 30, 2015, there were 77 active HHF programs run by the 19 state HFAs. According to Treasury, seven state HFAs had previously reported that they had stopped accepting applications for assistance from homeowners after determining that their allocated HHF funds would likely be spent on homeowners already approved for HHF assistance (Illinois, New Jersey, Rhode Island, Ohio, Oregon, Tennessee and Washington, DC), although, as of September 30, 2015, four of them indicated they were again accepting applications for HHF assistance under select programs (Illinois, New Jersey, Oregon, and Washington, DC). xxxiii The HFA Quarterly Financial Reports reconcile each type of cash disbursement to funds drawn from Treasury, reporting all expenses based on actual cash disbursements. Cash-on-hand may also include lien recoveries and borrower remittances. 183 184 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM For more information on the Blight Elimination Program, please see “The Update on the Hardest Hit Funds Blight Elimination Program” on pages 191–210. FIGURE 4.14 AGGREGATE EXPENDITURES, BY PROGRAM CATEGORY PROGRAM THROUGH JUNE 30, 2015 0.4% 1.8% 20.6% 0.1% 16.2% 60.9% Unemployment ($2,592,035,293) Past-Due Payment ($689,510,512) Transition ($6,104,618) Modification ($877,627,767) Second-Lien Reduction ($15,835,505) Blight ($76,780,431) Down Payment Assistance ($0) Source: State HFA Quarterly Performance Reports as of June 30, 2015, available via hyperlink from Treasury, “Hardest Hit Fund: State-By State Information”; www.treasury.gov/initiatives/financial-stability/TARP-Programs/housing/Pages/ProgramDocuments.aspx, accessed 10/1/2015; Treasury, response to SIGTARP data call, 10/5/2015. modification assistance, including principal reduction assistance, 0.4% for secondlien reduction assistance, and 0.1% for transition assistance. As of June 30, 2015, three state HFAs (Michigan, Ohio, and Indiana) had spent $76.8 million (up from $50.5 million as of the prior quarter) to demolish 5,660 properties under the Blight Elimination Program, representing 1.8% of all HHF expenditures.180 According to information reported to Treasury by those three state HFAs as of June 30, 2015 (the only ones to report HHF demolition activity to Treasury), HHF Michigan had spent $65.4 million in removing and greening 4,677 properties, HHF Ohio spent $10.7 million to remove 924 properties, and HHF Indiana spent $602,117 to remove 59 properties.181 Generally, state HFAs can only reallocate HHF funds between programs by amending their participation agreements with Treasury. However, for state HFAs that have committed approximately 80% or more of their allocated HHF funds, Treasury has established a “streamlined reallocation process,” which allows those HFAs that Treasury has authorized to use it to reallocate funds among its HHF programs, subject only to getting Treasury’s written approval rather than formally amending their HHF participation agreements. As of September 30, 2015, four state HFAs—Rhode Island, Illinois, Oregon, and Ohio—have been approved to use this streamlined process.182 In the quarter ended September 30, 2015, two state HFAs reallocated HHF funds under this process: HHF Ohio shifted a total of $7.8 million from five different programs primarily into its blight elimination program ($6.5 million) and permitted expenses ($1.2 million); and HHF Illinois reallocated $30 million to fund its new HHF down payment assistance program, reducing the HHF funds available for its unemployment program ($26 million) and one of its modifcation programs ($4 million).183 Figure 4.15 shows state uses of TARP funds obligated for HHF by percent, as of June 30, 2015, the most recent figures available. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.15 STATE HFA USES OF $7.6 BILLION OF TARP FUNDS AVAILABLE FOR HHF, BY PERCENT, AS OF 6/30/2015 Alabama $162.5 million allocated Arizona $267.8 million allocated California $1,975.3 million allocated Florida $1,057.8 million allocated Georgia $339.3 million allocated Illinois $445.6 million allocated Indiana $221.7 million allocated Kentucky $148.9 million allocated Michigan $498.6 million allocated Mississippi $101.9 million allocated Nevada $194.0 million allocated New Jersey $300.5 million allocated North Carolina $482.8 million allocated Ohio $570.4 million allocated Oregon* $220.0 million allocated Rhode Island $79.4 million allocated South Carolina $295.4 million allocated Tennessee $217.3 million allocated Washington, DC $20.7 million allocated TOTAL $7.6 billion 0 20 40 Homeowner Assistance Cash-on-Hand Administrative Expenses Undrawn Funds 60 80 100 Blight Assistance Note: State spending figures from each state’s Quarterly Financial Report are as of June 30, 2015, the most recent available, and include actual cash expense disbursements and cash-on-hand (which may include lien recoveries and borrower remittances). * Oregon data reported as percentages of total program and administration expenses, plus cash on hand, reported as of June 30, 2015. The unique structure of certain of Oregon’s HHF programs (which extended new mortgage loans, and then recycled principal and interest received from those loans back into the program) enabled HHF Oregon to report total HHF funds used of $241.6 million as of that date: $191.7 million in homeowner assistance, $34.3 million in administrative expenses, and $15.6 million held as cash-on-hand. Sources: Treasury, Transactions Report-Housing Programs, 9/28/2015; Treasury, responses to SIGTARP data calls. 185 186 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM For more information on HHF, see: SIGTARP’s April 12, 2012, audit report, “Factors Affecting Implementation of the Hardest Hit Fund Program,” and SIGTARP’s July 2014 Quarterly Report, “Treasury Should Use HAMP and HHF Together to Help as Many Homeowners as Possible Avoid Foreclosure,” pages 277-290. State HFA Estimates of Homeowner Participation in HHF According to Treasury, as of June 30, 2015, state HFAs had spent $4.2 billion to help 234,497 individual homeowners. For the quarter ended June 30, 2015 alone, states spent $222.9 million to help 7,994 homeowners.184 In the beginning of 2011, state HFAs collectively estimated that they would help 546,562 homeowners with HHF.185 Since then, with Treasury’s approval, state HFAs have reduced that to 309,102 homeowners (237,460 fewer homeowners than they estimated helping with HHF in 2011, a reduction of 43%). Six state HFAs have reduced their estimates by more than 50%: Alabama (51% reduction), Florida (60% reduction), Illinois (53% reduction), Michigan (81% reduction), Nevada (66% reduction), and Rhode Island (74% reduction). Homeowners may be counted more than once if they receive assistance from multiple HHF programs. Table 4.29 provides each state HFA’s estimate of the number of homeowners it projects it will help and the actual number of homeowners helped as of June 30, 2015.xxxiv xxxiv Program participation and homeowners assisted data does not take into account the status of the mortgage (i.e., active, delinquent, in foreclosure, foreclosed, or sold) of homeowners who received TARP-funded HHF assistance. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TABLE 4.29 HHF ESTIMATED AND ACTUAL NUMBER OF BORROWERS ASSISTED AND ASSISTANCE PROVIDED BY STATE HFAs AS OF 6/30/2015 Estimated Number of Participating Households to be Assisted by 12/31/2017a Actual Borrowers Receiving Assistance as of 6/30/2015 Assistance Provided as of 6/30/2015b Alabama 6,600 4,093 $32,931,465 Arizona 7,606 3,891 126,853,326 California 71,970 51,612 1,044,324,576 Florida 42,333 23,234 520,682,162 Georgia 13,500 6,686 119,683,343 Illinois 13,500 13,868 333,687,310 Indiana 10,184 5,718 74,223,654 Kentucky 7,700 6,992 89,179,713 Michigan 9,444 26,865 209,235,676 Mississippi 3,500 3,344 53,695,424 Nevada 8,026 5,306 86,953,753 New Jersey 6,845 6,004 222,297,918 North Carolina 20,780 19,860 321,476,289 Ohio 41,201 24,521 416,592,262 Oregon 15,150 11,759 191,668,680 3,413 3,075 64,267,690 18,350 9,611 144,051,558 Tennessee 7,700 7,355 157,268,818 Washington, DC 1,300 703 13,662,060 309,102 234,497 $4,222,735,677 Recipient Rhode Island South Carolina Total Notes: a Total of the individual program estimates each state HFA provides for all HHF programs (includes highest estimate of a range), which according to Treasury, may not necessarily match the number of actual borrowers (unique households) that the states expect to assist because some households may participate in more than one HHF program. b Actual cash disbursements for program expenses reported on each state’s Quarterly Financial Report. Sources: Latest HFA Participation Agreements as of 6/30/2015 (subsequent amendments are not included); Second Quarter 2015 HFA Performance Data quarterly reports, Quarterly Performance Reports, and HFA Aggregate Quarterly Report; Treasury, response to SIGTARP data call, 10/5/2015. Assistance provided excludes money spent on Blight Elimination. 187 188 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM For more information on the challenges facing homeowners seeking HHF assistance, see SIGTARP’s special report, “Homeowners Have Struggled with Low Admission Rates and Lengthy Delays in Getting Help from TARP’s Second-Largest Housing Program—the Hardest Hit Fund,” in this Quarterly Report. State by State HHF Updates and Performance According to Treasury, seven state HFAs had reported that they had previously stopped accepting applications for assistance from homeowners after determining that their allocated HHF funds would be spent on homeowners who already have been approved for HHF assistance: Illinois, New Jersey, Rhode Island, Ohio, Oregon, Tennessee and Washington, DC.186 According to Treasury, however, as of September 30, 2015, four of them indicated they were again accepting applications for HHF assistance under select programs (Illinois, New Jersey, Oregon, and Washington, DC).187 Fewer than half of all homeowners who sought HHF assistance from their state HFA have gotten it, based on a national average as of June 30, 2015 (the latest data available): only 42.5% of homeowners who requested HHF assistance were admitted.188 Table 4.30 shows the number of homeowners who applied for HHF assistance, the number of homeowners who received assistance, and the homeowner admission rate for each participating state HFA, as of June 30, 2015. TABLE 4.30 HHF HOMEOWNER ADMISSION RATE BY HHF STATE, PROGRAM TO DATE, AS OF 6/30/2015 State Florida Homeowners That Applied Homeowners That Received Assistance Homeowner Admission Rate 113,086 23,234 20.5% Arizona 16,156 3,891 24.1% Alabama 15,650 4,093 26.2% Georgia 23,785 6,686 28.1% Nevada 13,749 5,306 38.6% 125,765 51,612 41.0% Oregon 28,301 11,759 41.5% South Carolina 22,837 9,611 42.1% California New Jersey 13,093 6,004 45.9% Michigan 56,252 26,865 47.8% Mississippi 5,279 3,344 63.3% Rhode Island 4,833 3,075 63.6% Kentucky 10,286 6,992 68.0% North Carolina 29,698 19,860 66.9% Illinois 20,375 13,868 68.1% Ohio 34,779 24,521 70.5% Indiana 7,423 5,718 77.0% Tennessee 9,352 7,355 78.6% 864 703 81.4% District of Columbia Source: Treasury’s Q2 2015 Quarterly Performance Reports, accessed from Treasury’s Hardest Hit Fund – State by State Information website, www.treasury.gov/initiatives/financial-stability/TARP-Programs/housing/Pages/Program-Documents.aspx, accessed 10/1/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Of the homeowners who applied for HHF assistance from their state HFA, more than half (53%) had had their applications denied as of June 30, 2015.189 Table 4.31 shows the number of homeowners who applied for HHF assistance, the number of homeowners whose applications were denied, and the homeowner denial rate for each participating state HFA, as of June 30, 2015.190 TABLE 4.31 HHF HOMEOWNER DENIAL RATE BY HHF STATE, PROGRAM TO DATE, AS OF 6/30/2015 Homeowners That Applied Homeowners Denied Assistance Arizona 16,156 11,007 68.1% New Jersey 13,093 6,953 53.1% State Homeowner Denial Rate Georgia 23,785 9,228 38.8% South Carolina 22,837 8,090 35.4% 4,833 1,425 29.5% 56,252 16,181 28.8% Rhode Island Michigan California 125,765 33,626 26.7% Florida 113,086 30,201 26.7% 5,279 1,324 25.1% Mississippi Nevada 13,749 2,753 20.0% Illinois 20,375 4,059 19.9% North Carolina 29,698 5,476 18.4% Kentucky 10,286 1,873 18.2% District of Columbia Ohio Tennessee 864 125 14.5% 34,779 4,882 14.0% 9,352 1,300 13.9% Alabama 15,650 1,538 9.8% Oregon 28,301 2,141 7.6% Indiana 7,423 469 6.3% Source: Treasury’s Q2 2015 Quarterly Performance Reports, accessed from Treasury’s Hardest Hit Fund – State by State Information website, www.treasury.gov/initiatives/financial-stability/TARP-Programs/housing/Pages/Program-Documents.aspx, accessed 10/1/2015. As of June 30, 2015, more than one-quarter (27%) of homeowners who applied for HHF assistance from their state HFA had withdrawn from the application process or had their applications withdrawn by their HFA.191 Table 4.32 shows the number of homeowners who applied for HHF assistance, the number of homeowners whose applications were withdrawn, and the homeowner withdrawal rate for each participating state HFA, as of June 30, 2015.192 189 190 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.32 HHF WITHDRAWN HOMEOWNER APPLICATIONS BY HHF STATE, PROGRAM TO DATE, AS OF 6/30/2015 Homeowners That Applied Homeowner Applications Withdrawn Homeowner Withdrawal Rate Alabama 15,650 9,860 63.0% Oregon 28,301 14,330 50.6% Nevada 13,749 5,687 41.4% Florida 113,086 45,753 40.5% State 23,785 6,844 28.8% California Georgia 125,765 35,273 28.0% Michigan 56,252 11,739 20.9% South Carolina 22,837 4,598 20.1% Ohio 34,779 5,119 14.7% North Carolina 29,698 3,885 13.1% Indiana 7,423 871 11.7% Kentucky 10,286 1,157 11.2% Illinois 20,375 2,204 10.8% Mississippi 5,279 474 9.0% Tennessee 9,352 697 7.5% Rhode Island Arizona District of Columbia New Jersey 4,833 333 6.9% 16,156 1,068 6.6% 864 28 3.2% 13,093 136 1.0% Source: Treasury’s Q2 2015 Quarterly Performance Reports, accessed from Treasury’s Hardest Hit Fund – State by State Information website, www.treasury.gov/initiatives/financial-stability/TARP-Programs/housing/Pages/Program-Documents.aspx, accessed 10/1/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 UPDATE ON THE HARDEST HIT FUND’S BLIGHT ELIMINATION PROGRAM TO DEMOLISH VACANT AND ABANDONED HOMES TARP’s Hardest Hit Fund (“HHF”) Blight Elimination Program, launched in the summer of 2013, continues to expand in TARP dollars spent and as Treasury approves new state housing finance agencies (“HFAs”) to participate. Existing state HFAs continue to ramp up activity. Treasury describes HHF’s Blight Elimination Program as the demolition and greening of certain vacant and abandoned single-family and multi-family structures.xxxii With Treasury’s approval of HHF Tennessee on September 29, 2015, HHF blight elimination is now with seven state HFAs.xxxiii As of June 30, 2015 (the latest data reported to Treasury), participating state HFAs report that HHF blight elimination had funded the demolition and greening of a total of 5,660 properties (up 76% from the 3,220 reported as of the prior quarter), with one state HFA, Michigan, accounting for almost 83% of the total (4,677 properties). Background Treasury initially approved HHF to provide assistance to homeowners in five categories: (i) principal reduction; (ii) second-lien reduction or payoff; (iii) reinstatement through payment of past due amounts; (iv) unemployment or underemployment assistance; and (v) transition assistance such as a short sale, deed-in-lieu of foreclosure, or relocation assistance. As SIGTARP reported in its April 2012 in-depth audit report, HHF was slow in getting assistance to homeowners.xxxiv Beginning in mid-2013, Treasury approved blight elimination as a sixth HHF category.xxxv The seven states Treasury has approved for the HHF Blight Elimination Program as of September 30, 2015, are: Michigan, Ohio, Indiana, Illinois, South Carolina, Alabama and, commencing November 1, 2015, Tennessee. Treasury did not authorize new TARP funds for these states, but instead reallocated funds from the states’ other HHF programs. As highlighted in the following pages, the HHF Blight Elimination Program differs across states in terms of program eligibility (including definition of “blighted property”), activities covered (e.g., acquisition, demolition, greening, and maintenance), and per-property assistance amounts. xxxii Treasury, Action Memorandum for Assistant Secretary Massad, Approval for HFA Hardest-Hit Fund Program Change Requests, 6/5/2013. xxxiii Tennessee Ninth Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/29/2015, www.treasury.gov/initiatives/financial-stability/TARP-Programs/housing/Documents/Redacted%209th%20Amendment%20to%20 HPA-%20Tennessee.pdf, accessed 10/6/2015. xxxiv SIGTARP, “Factors Affecting Implementation of the Hardest Hit Fund Program,” 4/12/2012, www.sigtarp.gov/Audit%20Reports/ SIGTARP_HHF_Audit.pdf. xxxv On April 21, 2015, Treasury approved a seventh category of HHF assistance for Florida’s HHF, the Down Payment Assistance Program, which provides up to $15,000 for first time homebuyers in the state. Florida Eleventh Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement, 4/21/2015, www.treasury.gov/initiatives/financial-stability/TARPPrograms/housing/Documents/Redacted%2011th%20Amendment%20to%20HPA%20-%20FL.PDF, accessed 10/1/2015. Treasury subsequently approved HHF to offer down payment assistance in two additional states, Illinois and North Carolina. For more information on the Hardest Hit Fund’s Blight Elimination Program, see SIGTARP’s April 21, 2015, Audit, “Treasury Should Do More to Increase the Effectiveness of the TARP Hardest Hit Fund Blight Elimination Program.” 191 192 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM A Shift in Approach Entailing New Risks As SIGTARP found in its April 2015 Audit,xxxvi Treasury’s Blight Elimination Program represents a significant shift in Treasury’s approach to the use of HHF and HHF funds. Previously, Treasury used HHF to make payments to homeowners or to mortgage servicers to help keep homeowners in their homes. Treasury’s Blight Elimination Program now allows for substantial payments of TARP funds to cities, counties, land banks, non-profit and for-profit partners, and other parties, including demolition contractors, in cash and mortgages that can be forgiven over time. For example, the HHF Blight Elimination Program provides up to $25,000 per property in Michigan, Ohio, Indiana, Tennessee and Alabama, and up to $35,000 in Illinois and South Carolina. SIGTARP’s 2015 Blight Elimination Program audit also noted that much of the decision-making and actual blight elimination activities are in the hands of city or county land banks, non-profits or for-profit partners, whose identities are unknown to Treasury. SIGTARP recommended, among other things, that Treasury keep itself informed of the critical activities taking place in this new program (including knowing the identities of the program partners), and develop and implement appropriate oversight tools as well as target outcomes for the program. Effective oversight by Treasury is critical to protecting taxpayers, while continuing to allow states ample flexibility to tailor and operate their HHF programs to suit local needs. Treasury should not wait until the end of the program to measure progress and success toward the goals set by Congress for TARP. SIGTARP also recommended that Treasury increase transparency, including publicizing blight elimination activity on its website and requiring detailed quarterly accounting by state HFAs on how TARP funds are spent reimbursing local partners for blightrelated activities. Tracking the program on a periodic basis, according to the audit report, would allow Treasury and the HFAs to give guidance to the city, county, and other partners that could allow for a greater impact for homeowners. State HFAs’ Reported Blight Elimination Program Activity Treasury requires state HFAs to report limited information on demolitions under the HHF Blight Elimination Program on a quarterly basis. These reports, which are one quarter behind, do not appear on Treasury’s website, but are instead hyperlinked to the state HFA websites. The following pages report on HHF Blight Elimination Program activities (including demolitions) reported by individual state HFAs, which in some cases continue to show zero or limited activity. As of June 30, 2015, the latest available, three state HFAs—Michigan, Ohio and Indiana— are the only ones to report funded demolitions to Treasury. HHF Illinois reported zero demolitions, while HHF South Carolina reported receiving applications (45 properties submitted for eligibility review) though no funded demolition activity, xxxvi SIGTARP Audit Report, “Treasury Should Do More to Increase the Effectiveness of the TARP Hardest Hit Fund Blight Elimination Program,” April 21, 2015, www.sigtarp.gov/Audit%20Reports/SIGTARP_Blight_Elimination_Report.pdf. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 as of June 30, 2015. HHF Alabama has not yet filed a Blight Elimination Program report with Treasury in the year since it was approved for the program. BLIGHT ELIMINATION PROGRAM AND ACTIVITY, AS OF 6/30/2015 Allocation Expenditures Properties Removed Blight (Millions) % of Total HHF Q2 2015 (Millions) Cumulative (Millions) State HFA Estimate Actual Q2 2015 Cumulative % of Estimate* Michigan $175.0 35% $22.5 $65.4 7,000 1,457 4,677 67% Ohio*** 73.0 13% 3.1 10.7 5,000 259 924 18% Indiana 75.0 34% 0.6 0.6 5,000 59 59 1% Illinois 1.9 0.4% 0 0 50 0 0 0% Alabama 25.0 15% ** ** 1,000 ** ** ** South Carolina 35.0 12% 0 0 1,300 0 0 0% 5.5 3% ** ** 220 ** ** ** $26.3 $76.8 19,570 1,775 5,660 State HFA Tennessee Total $390.4 Notes: Numbers may not total due to rounding. Estimated includes highest estimate of a range. * Cumulative properties reported removed as a percent of the state’s program estimate. ** No report filed with Treasury as of 10/13/2015. *** Ohio’s allocation amount is as of 9/8/2015 to reflect most current data reported by Treasury. Sources: For each state: the state’s Commitment to Purchase Financial Instrument and HFA Participation Agreement and subsequent amendments, various dates, accessed 10/13/15; the state’s Hardest Hit Fund Quarterly Performance Reports, Q2 2015, no date. accessed 10/13/2015; Treasury response to SIGTARP data call, 10/5/2015. As of June 30, 2015, the HHF Blight Elimination Program already represented approximately 35% of the total HHF allocation in Michigan, 34% in Indiana, 15% in Alabama, 12% in South Carolina, 13% in Ohio, 3% in Tennessee and 0.4% in Illinois. Treasury needs to identify, understand, and mitigate the new and different risks posed by using TARP taxpayer funds for the Blight Elimination Program, especially as the program continues to represent a growing portion of HHF expenditures. Taxpayers are entitled to transparency regarding how states are using these TARP funds. The information currently available to the public through Treasury on the use of these funds is scarce. SIGTARP is publishing on the following pages the limited, basic information made available on HHF state websites that the state HFAs reported to Treasury. Because these reports are one quarter behind (as of June 30, 2015), and given how quickly the state HFAs are spending HHF Blight Elimination Program funds, the reported information is supplemented with more recent data and reports gleaned from other public sources. SIGTARP is also publishing a list for each state of entities approved as “partners” for the HHF Blight Elimination Program, based on information SIGTARP has been able to obtain from the respective state HFAs. Treasury has told SIGTARP that it does not obtain or have information about the partners approved in each state. 193 194 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM MICHIGAN Approved by Treasury: Q2 2013 Program Description:* “decreasing foreclosures and stabilizing neighborhoods through the demolition and greening of vacant and abandoned single-family and multi-family structures in designated areas across Michigan.” Initial Allocation: $100 Million (20% of total HHF allocation) (6/6/2013) Current Allocation: $175 Million (35% of total HHF allocation) Eligibility: Single-family (1-4 units) and multi-family (4+ units) Structure of Assistance: 0% 5-year loan secured by the property, forgiven at 20% per year Per Property Cap: $25,000; includes payoff of existing lien (if applicable), demolition costs, a $500 one-time project management fee, and a $750 maintenance fee Initial MI Estimate: 4,000 properties (6/6/2013) Current MI Estimate: 7,000 properties Cumulative Program Activity Reported by HHF Michigan (as of 6/30/2015):** Applications Received: 9,346 Denied: 0 (0%); Approved: 4,677 (50%); In Process: 3,603 (39%); Withdrawn: 1,066 (11%) Total Assistance Provided: $65,435,042 Median Assistance Spent on Acquisition: $0 Median Assistance Spent on Demolition: $10,664 Median Assistance Spent on Greening:xxxvii $2,700 Through June 30, 2015, the latest data available, HHF Michigan reported to Treasury that it had spent $65.4 million (37% of the $175 million allocated for blight elimination as of June 30, 2015) to remove and green 4,677 properties—a 45% increase over the 3,220 reported removed as of the first quarter of 2015— yielding an average cost of $13,991 per property (up from the $13,333 average cost through March 31, 2015). As shown in the following chart, for the second consecutive quarter, HHF Michigan reported for the quarter ended June 30, 2015, more demolitions funded under the Blight Elimination Program (1,457) than unique homeowners assisted under all its other HHF programs combined (1,292). Obtaining more current data is difficult, as there is no other statewide source of comprehensive data, and most participating cities and counties do not publish separate data. However, based on information available directly from the Detroit and Genesee County (Flint) land banks, which are designated partners for the HHF Blight Elimination Program in Michigan, actual demolitions to date have accelerated since the data available through the Treasury reports: those two cities, alone, report that at least 6,124 properties had been removed as of August 12, 2015xxxviii—31% more than the number shown on the Treasury report for the entire state as of June 30, 2015. According to a third-party website, another city, Pontiac, reports having demolished 50 properties as of March 10, 2015, the latest data updated on that site.xxxix Treasury approved HHF Michigan’s request to increase its Blight Elimination Program allocation from $100 million to $175 million on October 10, 2014, at which time Michigan also added 11 xxxvii Prior to March 31, 2015, Michigan reported “site restoration expenses” as part of demolition costs, and reported “Median Assistance Spent on Greening” as $0. Beginning with the second quarter of 2015, Michigan began reporting the “Greening expense” separately. xxxviii The Detroit Land Bank reports 4,373 properties removed as of 8/12/2015 (www.buildingdetroit.org/our-programs/hardesthit-funddemolition/, accessed 10/1/2015); the Genesee County Land Bank (Flint, MI) reports 1,751 properties removed as of 7/10/2015 (www.thelandbank.org/blightfree.asp, accessed 10/14/2015). xxxix ADR Consultants, LLC, “Hardest Hit Funds,” www.mlbdemo.us/Hardest_Hit_Funds.php, accessed 10/13/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 additional cities to the program (which have not yet been added to the state’s quarterly report to Treasury): Ecorse, Highland Park, River Rouge, Ironwood, Muskegon Heights, Inkster, Jackson, Hamtramck, Port Huron, Adrian and Lansing. Separately, Treasury has approved Michigan’s engagement of Michigan State University’s Land Policy Institute to evaluate the impacts of HHF Michigan’s Blight Elimination Program in the 16 participating cities and develop performance indicators for the program.xl xl Treasury response to SIGTARP data call, 10/6/2015. MICHIGAN HHF BLIGHT ELIMINATION PROGRAM PARTNERS AND DEMOLITION ACTIVITY AS OF 6/30/2015** Most Recent Quarter Cumulative Applications Submitted 5,198 9,346 Properties Demolished/Removed 1,457 4,677 Demolished in Most Recent Quarter Demolished, Cumulative City/County Partnera Detroit Detroit Land Bank Authority 991 2,518 Flint Genesee County Land Bank Authority 297 1,510 Grand Rapids Kent County Land Bank Authority Habitat for Humanity of Kent County 9 78 Pontiac Michigan Land Bank Authority 34 34 Saginaw Saginaw Land Bank Authority City of Saginaw 126 537 Adrian Lenawee County Land Bank b b Hamtramck Michigan Land Bank b b Highland Park Michigan Land Bank b b Inkster Michigan Land Bank b b Ironwood Gogebic County Land Bank City of Ironwood b b Lansing Ingham County Land Bank b b Muskegon Hgts City of Muskegon Heights b b Port Huron Port Huron Neighborhood Housing Corporation b b Wayne Metro Wayne Metro Community Action Agency b b River Rouge City of River Rouge b b a b Michigan Homeowner Assistance Nonprofit Housing Corporation (MHA). Michigan State Housing Finance Development Authority has announced these cities/counties are participating in the program, but has not yet reported activity to Treasury for them, as of June 30, 2015. *Michigan Homeowner Assistance Nonprofit Housing Corporation, Seventh and Tenth Amendments to Agreements, 6/6/2013 and 3/6/2015. ** Michigan Homeowner Assistance Nonprofit Housing Corporation, Hardest Hit U.S. Treasury Reports, Quarterly Performance Report Q2 2015, no date. 195 196 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM MICHIGAN HARDEST HIT FUND: HOMEOWNERS HELPED AND BLIGHTED PROPERTIES REMOVED AS REPORTED BY QUARTER 12,000 10,000 8,000 6,000 4,000 2,000 2,154 1,879 1,655 1,721 1,333 1,019 Q1'14 Q2'14 Blight Elimination Program, Properties Removed Other HHF Programs, Unique Homeowners Assisted 1,292 1,457 501 190 124 0 1,006 Q3'14 Q4'14 Q1'15 Q2'15 State Estimated Homeowner Program Participation Note: Estimated program participation shows the estimated number of program participants over the life of the program. However, unique homeowners assisted are displayed on a quarter to date basis. States report estimated participation individually for each HHF program they operate. Estimated program participation shows the aggregate estimate for each state. Therefore, these totals do not necessarily translate into the number of unique households that the states expect to assist because some households may participate in more than one HHF program. Sources: Michigan Homeowner Assistance Nonprofit Housing Corporation, Hardest Hit U.S. Treasury Reports, Quarterly Performance Reports, Q1 2014 through Q2 2015, no date; Michigan Homeowner Assistance Nonprofit Housing Corporation, Eighth through Tenth Amendments to Agreements, 12/12/2013, 10/10/2014, and 3/6/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 OHIO Approved by Treasury: Q3 2013 Program Description:* “stabilize property values by removing and greening vacant and abandoned properties in targeted areas to prevent future foreclosures for existing homeowners.” Initial Allocation: $60 Million (11% of total HHF allocation) (8/28/2013) Current Allocation: $73 Million (13% of total HHF allocation)xli Eligibility: 1-4 unit residential properties, as well as “mixed use” propertiesxlii Structure of Assistance: 0% 3-year loan secured by the property, forgiven at end of term OH Estimate: 5,000 properties Per Property Cap: $25,000; includes acquisition (if applicable), payoff of existing loan, approved demolition, remediation and greening of the site, maintenance and administration for up to 3 years Cumulative Program Activity Reported by HHF Ohio (as of 6/30/2015):** Applications Received: 1,002 Denied: 0 (0%); Approved: 924 (92%); In Process: 68 (7%); Withdrawn: 10 (1%) Total Assistance Provided: $10,743,272 Median Assistance Spent on Acquisition: $225 Median Assistance Spent on Demolition: $8,165 Median Assistance Spent on Greening: $475xliii As of the second quarter of 2015, Ohio is one of three states (with Michigan and Indiana) to have reported completed demolitions to Treasury on its HHF Blight Elimination Program report. As of June 30, 2015, HHF Ohio reported that it had spent $10.7 million, 15% of the $73 million allocated for blight elimination as of that date, to remove and green 924 properties, a 39% increase over the 665 properties reported as of the first quarter of 2015, for an average cost of $11,627 per property (compared to a $11,425 average cost through March 31, 2015). In the quarter ended June 30, 2015, HHF Ohio reported that it funded the demolition of 259 properties (up from 237 in the prior quarter), the first time HHF Ohio reported demolishing more homes under the Blight Elimination Program than the number of unique homeowners it assisted under all its other HHF programs combined (36). As in Michigan, there is no other statewide source of comprehensive data on properties removed, and limited or no public reporting at the local level. In a departure from other states, HHF Ohio allows “mixed use” properties to be demolished in their program, in addition to 1-4 unit residential properties. After having awarded $49.5 million to 11 HHF Blight Elimination Program partners across the state in February 2014, HHF Ohio awarded its remaining blight allocation to 15 partners, including nine counties that had not previously received funding.xliv xli Treasury, response to SIGTARP data call, 10/5/2015. xlii Neighborhood Initiative Guidelines, 2/6/2015, ohiohome.org/savethedream/NeighborhoodInitiative-Guidelines.pdf, accessed 10/1/2015. xliii According to Ohio, prior to 12/1/2014, “site restoration expenses” were reported as demolition costs, but were reclassified as “Greening” effective as of that date. xliv Ohio Housing Finance Agency, “OFHA Continues Efforts to Tackle Blighted Communities, Awards $10.4 Million to 15 Counties,” 8/21/2014, ohi‑ohome.org/newsreleases/rlsNIPannouncement2.aspx, accessed 9/10/2015. 197 198 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM OHIO HHF BLIGHT ELIMINATION PROGRAM PARTNERS AND DEMOLITION ACTIVITY AS OF 6/30/2015** Most Recent Quarter Cumulative Applications Submitted 328 1,002 Properties Demolished/Removed 259 924 Demolished in Most Recent Quarter Demolished, Cumulative City/County Partnera Ashtabula Ashtabula County Land Reauthorization Corporation 0 0 Belmont Belmont County Land Reutilization Corporation 0 0 Butler Butler County Land Reutilization Corporation 0 0 Clark Clark County Land Reutilization Corporation O 0 Columbiana Columbiana County Land Reutilization Corporation 0 0 Cuyahoga Cuyahoga County Land Reutilization Corp. 143 724 Erie Erie County Land Reutilization Corporation 0 0 Fairfield Fairfield County Land Reutilization Corporation 0 0 Franklin Central Ohio Community Improvement Corp. 0 0 Hamilton Port of Greater Cincinnati Development Authority Hamilton County Land Reutilization Corporation 0 0 Jefferson Jefferson County Regional Planning Commission 0 0 Lake Lake County Land Reutilization Corp. 0 0 Lorain Lorain County Port Authority Lucas Lucas County Land Reutilization Corp. Mahoning Montgomery 0 0 116 176 Mahoning County Land Reutilization Corp. 0 0 Montgomery County Land Reutilization Corp. 0 0 Portage Portage County Land Reutilization Corporation 0 0 Richland Richland County Land Reutilization Corp. 0 0 Stark City of Canton Stark County Land Reutilization Corporation 0 0 Summit Summit County Land Reutilization Corp. 0 0 Trumbull Trumbull County Land Reutilization Corp. 0 24 a hio Housing Finance Agency, “OFHA Awards 11 Counties a Portion of $49.5 Million to Tackle Blighted Communities,” 2/28/2014; ohiohome.org/newsreleases/ O rlsNIPannouncement.aspx, accessed 10/1/2015; Ohio Housing Finance Agency, “OFHA Continues Efforts to Tackle Blighted Communities, Awards $10.4 Million to 15 Counties,” 8/21/2014, ohiohome.org/newsreleases/rlsNIPannouncement2.aspx, accessed 9/11/2015. * Ohio Homeowner Assistance LLC, Eleventh Amendment to Agreement, 12/18/2014. ** Ohio Homeowner Assistance LLC, Save the Dream Ohio: Quarterly Reports, Quarterly Performance Report, Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 OHIO HARDEST HIT FUND: HOMEOWNERS HELPED AND BLIGHTED PROPERTIES REMOVED AS REPORTED BY QUARTER 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 2,315 2,604 2,354 0 0 Q1'14 14 Q2'14 Blight Elimination Program, Properties Removed Other HHF Programs, Unique Homeowners Assisted 130 Q3'14 1,294 284 Q4'14 271 237 Q1'15 36 259 Q2'15 State Estimated Homeowner Program Participation Note: Estimated program participation shows the estimated number of program participants over the life of the program. However, unique homeowners assisted are displayed on a quarter to date basis. States report estimated participation individually for each HHF program they operate. Estimated program participation shows the aggregate estimate for each state. Therefore, these totals do not necessarily translate into the number of unique households that the states expect to assist because some households may participate in more than one HHF program. Sources: Ohio Homeowner Assistance LLC, Save the Dream Ohio: Quarterly Reports, Quarterly Performance Reports, Q1 2014 through Q2 2015, no date; Ohio Homeowner Assistance LLC, ninth through eleventh Amendment to Agreement, 12/12/2013, 2/27/2014, and 12/18/2014. 199 200 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM INDIANA Approved by Treasury: Q4 2013 Program Description:* “decrease foreclosures, stabilize homeowner property values and increase neighborhood safety in communities across the state of Indiana through the demolition and greening of vacant, abandoned and blighted residential properties.” Allocation: $75 Million (34% of total HHF allocation) Eligibility: Single-family (1-4 units) and multi-family (4+ units) Structure of Assistance: 0% 3-year loan secured by the property, forgiven 33.3% per year Per Property Cap: $25,000; includes the costs of acquisition (if necessary), demolition and up to $1,000/year for property stabilization for a period of 3 years IN Estimate: 3,000-5,000 properties Cumulative Program Activity Reported by HHF Indiana (as of 6/30/2015):** Applications Received: 3,078 Denied: 0 (0%); Approved: 59 (2%); In Process:xlv 3,019 (98%); Withdrawn: 0 (0%) Total Assistance Provided: $602,117 Median Assistance Spent on Acquisition: $0 Median Assistance Spent on Demolition: $9,027 Median Assistance Spent on Greening: $1,500 As of June 30, 2015, HHF Indiana for the first time has reported demolition activity and expenditures to Treasury. As of that date, HHF Indiana reported spending $602,117 of its $75 million blight elimination allocation approved by Treasury to remove 59 properties. Separately, HHF Indiana told SIGTARP that, as of September 30, 2015, it had removed a total of 287 properties and spent nearly $1.7 million under the HHF Blight Elimination Program, although the state has not yet filed its report to Treasury for that quarter.xlvi xlv The cumulative number of applications still in process as of the reporting date is the cumulative “Total Number of Structures Submitted for Eligibility Review” less the sum of the cumulative number approved, denied and withdrawn. xlvi Indiana Housing and Community Development Authority. 201 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 INDIANA HHF BLIGHT ELIMINATION PROGRAM PARTNERS AND DEMOLITION ACTIVITY AS OF 6/30/2015** Applications Submitted Properties Demolished/Removed City/County City of Alexandria City of Anderson City of Arcadia City of Auburn City of Austin Partnera Alexandria Redevelopment Commission Madison County Council of Governments Anderson Redevelopment Commission South Meridian Church of God Bethesda Missionary Baptist Church Habitat for Humanity of Madison County Curtis and Mary Parr Habitat for Humanity of Northeast Indiana City of Auburn Redevelopment Corp. Austin Redevelopment Commission (ARC) Southern Indiana Housing & Community Development Corp. Most Recent Quarter Cumulative 0 3,078 59 59 Demolished in Most Recent Quarter Demolished, Cumulative 0 0 0 0 0 0 0 0 0 0 City of Bicknell City of Auburn Redevelopment Commission 0 0 City of Brazil Clay County Economic Redevelopment Commission 0 0 City of Coatesville South Meridian Church of God National Road Heritage Trail 0 0 City of Columbus ARA (Administrative Resources Association) 0 0 City of Connersville House of Ruth Connersville Urban Enterprise Association U.E.A. 0 0 City of Delphi Not Available 0 0 City of Dunkirk Not Available 0 0 City of East Chicago East Chicago Department of Redevelopment 0 0 City of Elwood Elwood Redevelopment Commission 0 0 City of Evansville Comfort Homes Community One, Inc. Evansville Brownfields Corp. Evansville Housing Authority ECHO Housing Corporation Full Gospel Mission Gethsemane Church Habitat for Humanity of Evansville, Inc. Hope of Evansville JBELL Properties, LLC Memorial Community Development Corporation New Odyssey Investments, LLC Ozanam Family Shelter Corp. 24 24 City of Fort Wayne Housing and Neighborhood Devt. Svcs, Inc. 0 0 City of Garrett Garrett State Bank 0 0 City of Gary Broadway Area Community Development Corp. Fuller Center for Housing of Gary The Gary Redevelopment Commission The Sojourner Truth House 35 35 City of Hammond United Neighborhoods, Inc. 0 0 Continued on next page 202 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM INDIANA HHF BLIGHT ELIMINATION PROGRAM PARTNERS AND DEMOLITION ACTIVITY AS OF 6/30/2015 City/County City of Hartford City City of Indianapolis Partnera Rosalie Adkins Jay Dawson Blackford Development Corp. Community & Family Services Community Alliance of Far Eastside Near East Area Renewal Near North Development Corporation Riley Area Development Corporation Renew Indianapolis (CONTINUED) Demolished in Most Recent Quarter Demolished, Cumulative 0 0 0 0 City of Knox Starke County Economic Devt. Foundation, Inc. 0 0 City of Kokomo Kokomo Community Development Corp. 0 0 City of Lawrence Lawrence/Fort Harrison Development Corporation dba Lawrence Community Development Corporation 0 0 City of Lebanon Not Available 0 0 City of Logansport Logansport Municipal Building Corporation 0 0 City of Marion Marion Redevelopment Commission 0 0 City of Montpelier Blackford Development Corp Community & Family Services 0 0 City of Muncie Muncie Redevelopment Commission 0 0 City of New Castle Healthy Communities of Henry County Interlocal Community Action Program, Inc. New Castle Housing Authority Westminster Community Center 0 0 City of Peru Not Available 0 0 City of Portland Community & Family Services 0 0 0 0 0 0 City of Richmond City of Rising Sun Habitat for Humanity of Greater Richmond, Neighborhood Services Clearinghouse Redevelopment Commission of City of Rising Sun RSOC Senior Citizen Housing Inc. City of Rushville Southern Indiana Housing & Community Development Corp 0 0 City of Seymour Southern Indiana Housing & Community Development Corp 0 0 0 0 0 0 0 0 City of South Bend City of Terre Haute City of Vincennes Near Northwest Neighborhood Inc. South Bend Heritage Foundation, Inc. Urban Enterprise Assoc. of South Bend, Inc. Terre Haute Department of Redevelopment West Terre Haute Redevelopment Commission Dan Vories Jack Stilwell Leonard Stevenson Larry Stuckman Priscilla Wissell Rick Szudy Thursday Church William Ridge Mark Loveman Carol Anderson Chris Case Karen Evans Randall E. Madison Matt McCoy Continued on next page 203 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 INDIANA HHF BLIGHT ELIMINATION PROGRAM PARTNERS AND DEMOLITION ACTIVITY AS OF 6/30/2015 City/County City of Washington County of Dearborn Partnera Davies County Economic Development Foundation, Inc. Habitat for Humanity of Daviess County, Inc. Washington Housing Authority City of Aurora Redevelopment Commission Casey Kaiser John & Darlene Albright Laura Williams Town of Moores Hill Redevelopment Commission (CONTINUED) Demolished in Most Recent Quarter Demolished, Cumulative 0 0 0 0 County of Elkhart LaCasa Inc. 0 0 County of Gibson Princeton Redevelopment Commission Kenneth L. Wolf Leslie T. Marshall Mark A. Tooley Nicholas Burns Ralph B DeBord Richard Ellis Sheryl Walker-Isakson/Allen Isakson Steve & Brian Dyson Sheiln J. Besing Timothy A. Beadles Thomas R. Johnstone, Sr. Tim Thompson Anna Marie Kiel Brenda Boyer Billy Ray Walden Brandon Taylor David O. Hill Daniel R. Engler John D. Young Joseph H. Gardner Jason Spindler Brian Dawson 0 0 County of Greene Greene Redevelopment Commission 0 0 County of Howard Not Available 0 0 County of Posey Mt. Vernon Redevelopment Dale Reuter Beverly Stone/Katrina Wagner James C. Welch, Jr 0 0 County of Pulaski White’s General Contracting 0 0 County of Sullivan Sullivan City Redevelopment Commission Sullivan County Redevelopment Commission 0 0 County of Vigo West Terre Haute Redevelopment Commission 0 0 Continued on next page 204 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM INDIANA HHF BLIGHT ELIMINATION PROGRAM PARTNERS AND DEMOLITION ACTIVITY AS OF 6/30/2015 City/County County of Warrick Partnera Habitat for Humanity of Warrick County Charles L. Allen Larry & Karen Willis Andy R & Donna VanWinkle Brian Hendrickson Boonville Now, Inc. Christopher Lunn Josh Barnett James B. Decker, II Lori Lamar Ronald Evans Scott Speicher Tim A. McKinney Zachary Lee Bailey (CONTINUED) Demolished in Most Recent Quarter Demolished, Cumulative 0 0 Monroe City Not Available 0 0 Noble County /Kendallville Not Available 0 0 Richland City The Friends of Richland 0 0 Shelby County/City of Shelbyville Habitat for Humanity For Shelby Co. 0 0 Town of Brookville Not Available 0 0 Town of Cambridge City Not Available 0 0 Town of Daleville Daleville Parks, Inc. 0 0 Town of Decker Community Center Cathy Griffith David & Bonnie Wehmeirer Delora Koenig Darrell & Robin Lindsay 0 0 Town of Edwardsport Not Available 0 0 Town of Greens Fork Not Available 0 0 Town of Hagerstown Not Available 0 0 Town of Lagro Not Available 0 0 Town of Oaktown Knox County Housing Authority 0 0 Town of Silver Lake Not Available 0 0 Town of St. Joe Habitat for Humanity of Northeast Indiana Michael Mills 0 0 Town of Sweetser Sweetser Redevelopment Corp. 0 0 City of Walton Cass County Redevelopment Commission 0 0 Town of Waterloo Habitat for Humanity of Northeast Indiana RP Wakefield Co. Waterloo Redevelopment Commission 0 0 a Indiana Housing and Community Development Authority, accessed as of 9/30/2015 (partners). Data is as of 6/30/2015. * Indiana Housing and Community Development Authority, Ninth Amendment to Agreement, 7/31/2014. **Indiana Housing and Community Development Authority, Indiana’s Hardest Hit Fund, Quarterly Reports to the U.S. Treasury, Quarterly Performance Report, Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 ILLINOIS Approved by Treasury: Q2 2014 Program Description:* “to decrease preventable foreclosures through neighborhood stabilization achieved through the demolition and greening of vacant, abandoned and blighted residential properties throughout Illinois. Such vacant, abandoned and blighted residential properties will be returned to use through a process overseen by approved units of government and their not-for-profit partner(s).” Allocation: $1.9 Million (0.4% of total HHF allocation) Eligibility: 1-4 unit residential structures Structure of Assistance: 0% 3-year loan secured by the property, forgiven one-third per year Per Property Cap: $35,000, which may include the following on a per unit basis (if applicable): acquisition, closing costs, demolition, lot treatment/greening, $3,000 flat fee for maintenance, and up to $1,750 for administrative expenses. IL Estimate: 50 properties Cumulative Program Activity Reported by HHF Illinois (as of 6/30/2015):** Applications Received: 0 Denied: 0 (0%); Approved: 0 (0%); In Process: 0 (0%); Withdrawn: 0 (0%) Total Assistance Provided: $0 Median Assistance Spent on Acquisition: $0 Median Assistance Spent on Demolition: $0 Median Assistance Spent on Greening: $0 As of June 30, 2015, HHF Illinois reported that, more than one year after it was approved by Treasury, it had still not expended any of its $1.9 million Blight Elimination Program allocation, and had not removed any properties as of that date. While HHF Illinois’ Blight Elimination report to Treasury reveals no actual demolitions as of June 30, 2015, state HHF reports to Treasury are one quarter behind. 205 206 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM ILLINOIS HHF BLIGHT ELIMINATION PROGRAM PARTNERS AND DEMOLITION ACTIVITY AS OF 6/30/2015** Most Recent Quarter Cumulative Applications Submitted 0 0 Properties Demolished/Removed 0 0 Demolished in Most Recent Quarter Demolished, Cumulative City/County Partnera Aurora Fox Valley Habitat for Humanity 0 0 Chicago Heights Cook County Land Bank Authority 0 0 Chicago (Cook County Land Bank Authority) Greater Englewood CDC Sunshine Gospel Ministries 0 0 Freeport NW Homestart, Inc. 0 0 Joliet South Suburban Land Bank and Devt. Authority 0 0 Moline Moline Community Development Corporation 0 0 Ottawa Starved Rock Homes Development Corp 0 0 Park Forest South Suburban Land Bank and Devt. Authority 0 0 Riverdale Cook County Land Bank Authority 0 0 Rock Island Rock Island Economic Growth Corp. 0 0 Springfield The Springfield Project Enos Park Neighborhood Improvement Association 0 0 Sterling Rock Island Economic Growth Corp. 0 0 Urbana Habitat for Humanity of Champaign County 0 0 Rockford (Winnebago County) Comprehensive Community Solutions, Inc. 0 0 a Illinois Housing Development Authority, 6/30/2015 and 9/30/2015. * Treasury, response to SIGTARP data call, 10/5/2015; Illinois Housing Development Authority, Tenth and Eleventh Amendments to Agreement, 4/11/2014, and 7/30/2015. **Illinois Housing Development Authority, Illinois Hardest Hit Program, Reporting, Quarterly Performance Report, Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 SOUTH CAROLINA Approved by Treasury: Q3 2014 Program Description:* “decrease foreclosures and stabilize homeowner property values in communities across South Carolina through the demolition of vacant, abandoned, and blighted residential structures, and subsequent greening/improvement.” Allocation: $35 Million (12% of total HHF allocation) Eligibility: Single-family (1-4 units) and multi-family (4+ units) Structure of Assistance: 0% 3-year loan secured by the property, forgiven at one-third per year Per Property Cap: $35,000; includes acquisition costs (if applicable); demolition and greening/ improvement costs; and a $2,000 one-time project management fee to cover management and maintenance expenses for a period of three years. SC Estimate: 1,000-1,300 properties Cumulative Program Activity Reported by HHF South Carolina (as of 6/30/2015):** Applications Received: 45 Denied: 0 (0%); Approved: 0 (0%); In Process: 45 (100%); Withdrawn: 0 (0%) Total Assistance Provided: $0 Median Assistance Spent on Acquisition: $0 Median Assistance Spent on Demolition: $0 Median Assistance Spent on Greening: $0 As of June 30, 2015, HHF South Carolina reports it had not expended any of the $35 million Blight Elimination Program allocation approved by Treasury, and had not funded the removal of any properties as of that date. While HHF South Carolina’s Blight Elimination report to Treasury reports no actual demolitions as of June 30, 2015, it reports that 45 structures have been submitted for eligibility review. As in other states, HHF South Carolina’s reports to Treasury are one quarter behind. 207 208 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SOUTH CAROLINA HHF BLIGHT ELIMINATION PROGRAM PARTNERS AND DEMOLITION ACTIVITY AS OF 6/30/2015** Applications Submitted Most Recent Quarter Cumulative 45 45 0 0 Demolished in Most Recent Quarter Demolished, Cumulative Properties Demolished/Removed City/County Partnera Aiken County Second Baptist CDC Nehemiah Community Revitalization Corp. 0 0 Allendale County Southeastern Housing Foundation Allendale County Alive 0 0 Anderson County Pelzer Heritage Commission Nehemiah Community Revitalization Corp. Anderson Community Development Corp. 0 0 Bamberg County Southeastern Housing Foundation 0 0 Barnwell County Southeastern Housing Foundation Blackville, CDC 0 0 Charleston County Sea Island Habitat for Humanity PASTORS, Inc. 0 0 Chester County Not Available 0 0 Chesterfield County Town of Cheraw Community Development Corp. 0 0 Florence County Downtown Development Corporation 0 0 Greenville County Allen Temple Community Economic Devt. Corp. Habitat for Humanity of Greenville County Homes of Hope, Inc. Nehemiah Community Revitalization Corp. Neighborhood Housing Corp. of Greenville, Inc. United Housing Connections Genesis Homes 0 0 Hampton County Southeastern Housing Foundation 0 0 Horry County Myrtle Beach Community Land Trust 0 0 Kershaw County Santee-Lynches Regional Development Corp. 0 0 Lancaster County Not Available 0 0 Richland County Columbia Housing Development Corporation Eau Claire Development Corporation Columbia Development Corporation 0 0 Spartanburg County Homes of Hope Habitat for Humanity Nehemiah Community Revitalization Corp. Northside Development Group Upstate Housing Partnership 0 0 Sumter County Santee-Lynches Regional Development Corp 0 0 Union County Not Available 0 0 York County Housing Development Corporation of Rock Hill Catawba Regional Development Corp. 0 0 a SC Housing Corp., “Neighborhood Initiative Program,” www.schousing.com/Housing%20Partners/Neighborhood%20Initiative%20Program, accessed 9/11/2015. *SC Housing Corp., Seventh and Eight Amendments to Agreement, 7/31/2014 and 9/29/2015. **SC Housing Corp., SC HELP, Reports, Quarterly Performance Reports, Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 ALABAMA Approved by Treasury: Q3 2014 Program Description:* “reduce foreclosures, promote neighborhood stabilization and maintain property values through the removal of unsafe condemned single family structures and subsequent greening in areas across the State of Alabama.” Allocation: $25 Million (15% of total HHF allocation) Eligibility: 1-4 unit residential properties, owned by an Affiliate of Alabama Assoc. of Habitat for Humanity Affiliates Structure of Assistance: 0% loan secured by the property, forgiven at 33.3% per year Per Property Cap: $25,000; including demolition, greening and maintenance (not to exceed $3,000) for 3-years AL Estimate: 1,000 properties Partners: The Alabama Association of Habitat for Humanity Affiliates will administer the program, working in partnership with its members (Affiliates) Cumulative Program Activity Reported by HHF Alabama (as of 6/30/2015):** HHF Alabama has not filed a Blight Elimination Program activity report with Treasury. * Alabama Housing Finance Authority, Ninth Amendment to Agreement, 1/31/2015. ** Alabama Housing Finance Authority, Treasury Reports, Quarterly Performance Report, Q2 2015, no date. 209 210 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TENNESSEE Approved by Treasury: Q3 2015 Program Description:* “reduce foreclosures, promote neighborhood stabilization, and maintain or improve property values through the demolition of vacant, abandoned, blighted residential structures, and subsequent greening/improvement of the remaining parcels.” Allocation: $5.5 Million Eligibility: Single- family (1-4 unit) properties located in targeted area. Structure of Assistance: 0% loan secured by the property, forgivable over 3 years. Per Property Cap: $25,000 TN Estimate: 220 properties Cumulative Program Activity Reported by HHF Tennessee (as of 6/30/2015):** HHF Tennessee was approved for the Blight Elimination Program in Q3 2015, to commence November 1, 2015. * Tennessee Housing Development Agency, Ninth Amendment to Agreement, 9/29/2015. ** Tennessee Housing Development Agency, Treasury Reports, Quarterly Performance Report, Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Alabama’s HHF Programs FIGURE 4.16 Treasury obligated $162,521,345 in HHF funds to Alabama.193 At the end of 2010, HHF Alabama estimated that it would help as many as 13,500 homeowners with HHF but had reduced that by 51%, to 6,600 homeowners, as of June 30, 2015. As of that date, HHF Alabama had four active programs: one to provide unemployment assistance to homeowners, a second to modify homeowners’ mortgages, a third to provide HHF transition assistance to homeowners, and a fourth for blight elimination. As of June 30, 2015, HHF Alabama had helped 4,093 individual homeowners with HHF, almost all of them with the Unemployed Homeowners Program.194 HHF Alabama’s Short Sale program, launched in March 2013, had not helped a single homeowner during its nearly two-year history. Its Loan Modification Program had helped just 22 homeowners since it began in March 2013. In addition to decreasing the number of homeowners it estimated helping, HHF Alabama has shifted $25 million of its HHF funds (15%) away from existing HHF programs to blight elimination. This represents a shift from making payments directly to homeowners or their mortgage servicers to help keep homeowners in their homes. Treasury’s Blight Elimination Program allows for substantial payment of TARP funds to land banks, non-profits and other parties, including demolition contractors, in cash and mortgages that can be forgiven over time. For more information about HHF blight elimination in Alabama, please see the “Update on the Hardest Hit Fund’s Blight Elimination Program” discussion on page 209 of this Quarterly Report. As of June 30, 2015, HHF Alabama had only spent 20% of its HHF funds to help homeowners, the lowest amount of any state in the HHF program.195 The state’s HFA had drawn down $47 million (29%) of its HHF funds as of June 30, 2015, the most recent data available, and spent $32.9 million (20% of its obligated funds) to help homeowners.196 The remaining $8.2 million (5%) was spent on administrative expenses, and $6.4 million (4%) was held as cash-on-hand.197 No HHF funds have yet been spent on the Blight Elimination Program. Figure 4.17 shows, in aggregate, the number of homeowners estimated to participate in HHF Alabama’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Because homeowners may participate in more than one program, the reported program participation numbers can be higher than the total number of individual homeowners assisted. Figure 4.18 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Alabama’s programs, as of June 30, 2015. AL HHF EXPENDITURES, BY PROGRAM CATEGORY PROGRAM THROUGH JUNE 30, 2015 1% 99% Unemployment ($32,492,305) Transition ($0) Modification ($486,819) Blight ($0) Source: Alabama Housing Finance Authority, Treasury Reports, Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). 211 212 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.17 HHF ALABAMA PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 20,000 As of 6/30/2015: Estimate: 6,600 (Peak: 13,500) Homeowner Applications: 15,650 Program Participation: 4,095 Homeowners Assisted: 4,093 Homeowner Admission Rate: 26.2% 15,000 10,000 5,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 2014 Q3 Q4 Q1 Q2 2015 Notes: Estimated includes highest estimate of a range, but excludes Alabama’s estimate of the number of blighted properties to be eliminated. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Alabama Housing Finance Authority, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through nine, as of 6/30/2015; Alabama Housing Finance Authority, Quarterly Performance Reports Q1 2011–Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 213 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.18 HHF ALABAMA ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 HARDEST HIT FOR ALABAMA'S UNEMPLOYED HOMEOWNERS (UNEMPLOYMENT)–SEPTEMBER 2010 15,000 1,600 As of 6/30/2015: Estimate: 5,000 (Peak: 13,500) Program Participation: 4,073 Homeowner Admission Rate: 28.8% 12,000 9,000 SHORT SALE ASSISTANCE PROGRAM (TRANSITION)– MARCH 2013 As of 6/30/2015: Estimate: 400 (Peak: 1,500) Program Participation: 0 Homeowner Admission Rate: 0% 1,200 800 6,000 400 3,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 800 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation BLIGHT ELIMINATION PROGRAM (BLIGHT)– SEPTEMBER 2014 1,000 As of 6/30/2015: Estimate: 1,200 (Peak: 1,200) Program Participation: 22 Homeowner Admission Rate: 1.2% 1,200 Q2 2010 Program Participation LOAN MODIFICATION ASSISTANCE PROGRAM (MODIFICATION)–MARCH 2013 1,600 Q1 2015 800 As of 6/30/2015: Blighted homes proposed to be eliminated: 1,000 Actual blighted homes eliminated: 0 600 400 400 200 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Program Participation Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range, but excludes Alabama’s estimate of the number of blighted properties to be eliminated. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and Alabama Housing Finance Authority, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through nine, as of 6/30/2015; Alabama Housing Finance Authority, Quarterly Performance Reports Q1 2011–Q2 2015, no date. 214 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.19 Arizona’s HHF Programs AZ HHF EXPENDITURES, BY PROGRAM CATEGORY Treasury obligated $267,766,006 in HHF funds to Arizona.198 At the end of 2010, HHF Arizona estimated that it would help as many as 11,959 homeowners with HHF but had reduced that by 36%, to 7,606, as of June 30, 2015. As of that date, HHF Arizona had four active HHF programs: one to modify homeowners’ mortgages with principal reduction assistance, a second to provide HHF secondlien reduction assistance, a third to provide unemployment assistance, and a fourth to provide transition assistance to homeowners. As of June 30, 2015, HHF Arizona had helped 3,891 individual homeowners with its HHF programs, with the largest numbers in the unemployment/underemployment and the principal reduction assistance programs.199 As of June 30, 2015, the state’s HFA had drawn down $155.8 million (58%) of its HHF funds.200 As of June 30, 2015, the most recent data available, HHF Arizona had spent $126.9 million (47% of its obligated funds) to help homeowners.201 The remaining $18.1 million (7%) was spent on administrative expenses, and $11.6 million (4%) was held as cash-on-hand.202 Figure 4.20 shows, in aggregate, the number of homeowners estimated to participate in HHF Arizona’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Because homeowners may participate in more than one program, the reported program participation numbers are higher than the total number of individual homeowners assisted. Figure 4.21 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Arizona’s programs, as of June 30, 2015. PROGRAM THROUGH JUNE 30, 2015 1% 53% 39% 7% Modification ($53,560,085) Second-Lien Reduction ($7,347,061) Unemployment ($38,933,559) Transition ($686,617) Source: Arizona (Home) Foreclosure Prevention Funding Corporation, Hardest Hit Fund Reporting (quarterly performance reports), Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.20 HHF ARIZONA PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 20,000 As of 6/30/2015: Estimate: 7,606 (Peak: 11,959) Homeowner Applications: 16,156 Program Participation: 4,205 Homeowners Assisted: 3,891 Homeowner Admission Rate: 24.1% 15,000 10,000 5,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Notes: Estimated includes highest estimate of a range. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Arizona (Home) Foreclosure Prevention Funding Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 6/23/2010; and Amendments to Agreement one through fifteen, as of 6/30/2015; Arizona (Home) Foreclosure Prevention Funding Corporation, Quarterly Performance Reports Q3 2010 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 215 216 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.21 HHF ARIZONA ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 PRINCIPAL REDUCTION ASSISTANCE (MODIFICATION)–JUNE 2010 SECOND MORTGAGE ASSISTANCE COMPONENT (SECOND-LIEN REDUCTION)–JUNE 2010 As of 6/30/2015: Estimate: 1,849 (Peak: 7,227) Program Participation: 1,031 Homeowner Admission Rate: N/A* 8,000 6,000 1,500 4,000 1,000 2,000 500 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 2014 Q1 Q2 4,000 3,000 Q1 Q2 2015 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Program Participation UNEMPLOYMENT/UNDEREMPLOYMENT/ REINSTATEMENT MORTGAGE ASSISTANCE COMPONENT (UNEMPLOYMENT)–JUNE 2010 5,000 As of 6/30/2015: Estimate: 1,279 (Peak: 1,875) Program Participation: 251 Homeowner Admission Rate: N/A* 2,000 Q2 Q3 Q4 2014 Q1 Q2 2015 Program Participation SHORT SALE ASSISTANCE COMPONENT (TRANSITION)–MAY 2011 1,200 As of 6/30/2015: Estimate: 4,140 (Peak: 4,140) Program Participation: 2,803 Homeowner Admission Rate: N/A* As of 6/30/2015: Estimate: 338 (Peak: 1,200) Program Participation: 120 Homeowner Admission Rate: N/A* 900 600 2,000 300 1,000 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 Q1 2012 State Estimated Program Participation Q2 Q3 2013 Q4 Q1 Q2 Q3 2014 Q4 Q1 Q2 2015 Program Participation Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 Q1 2012 State Estimated Program Participation Q2 Q3 2013 Q4 Q1 Q2 Q3 2014 Q4 Q1 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. *Arizona does not report program by program application numbers. Sources: Treasury and Arizona (Home) Foreclosure Prevention Funding Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 6/23/2010; and Amendments to Agreement one through fifteen, as of 6/30/2015; Arizona (Home) Foreclosure Prevention Funding Corporation, Quarterly Performance Reports Q3 2010 - Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 California’s HHF Programs FIGURE 4.22 Treasury obligated $1,975,334,096 in HHF funds to California.203 At the end of 2010, HHF California estimated that it would help as many as 101,337 homeowners with HHF but had reduced that by 29%, to 71,970, as of June 30, 2015. As of that date, HHF California had six active HHF programs: one to provide unemployment assistance to homeowners, a second to modify homeowners’ mortgages with principal reduction assistance, a third to provide HHF transition assistance to homeowners, a fourth and a fifth to provide past-due payment assistance to homeowners, and a sixth to provide HHF second-lien assistance to homeowners. As of June 30, 2015, HHF California has defunded two programs: the NeighborWorks Sacramento Short Sale Gateway Program (September 2013) and the Los Angeles Housing Department Principal Reduction Program (February 2014).204 Both programs ended without helping a single homeowner. As of June 30, 2015, HHF California had helped 51,612 individual homeowners, with the largest number in unemployment and past due payment assistance.205 As of June 30, 2015, California’s HFA had drawn down $1,217.5 million (62%) of its HHF funds.206 As of June 30, 2015, HHF California had spent $1,044.3 million (53% of its obligated funds) to help homeowners.207 The remaining $112.6 million (6%) was spent on administrative expenses, and $88.8 million (4%) was held as cash-on-hand.208 Figure 4.23 shows, in aggregate, the number of homeowners estimated to participate in HHF California’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Because homeowners may participate in more than one program, the reported program participation numbers are higher than the total number of individual homeowners assisted. Figure 4.24 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF California’s programs, as of June 30, 2015. CA HHF EXPENDITURES, BY PROGRAM CATEGORY PROGRAM THROUGH JUNE 30, 2015 0.1% 0.3% 12.5% 52.5% 34.7% Unemployment ($547,783,649) Modification ($362,384,867) Past-Due Payment ($130,428,001) Transition ($3,167,125) Second-Lien Reduction ($589,210) Source: CalHFA Mortgage Assistance Corporation, “Keep Your Home California, Reports & Statistics, Quarterly Reports,” Quarterly Performance Reports Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). 217 218 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.23 HHF CALIFORNIA PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 150,000 As of 6/30/2015: Estimate: 71,970 (Peak: 101,337) Homeowner Applications: 125,765 Program Participation: 57,983 Homeowners Assisted: 51,612 Homeowner Admission Rate: 41.0% 120,000 90,000 60,000 30,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Notes: Estimated includes highest estimate of a range. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and CalHFA Mortgage Assistance Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 6/23/2010; and Amendments to Agreement one through sixteen, as of 6/30/2015; CalHFA Mortgage Assistance Corporation, Quarterly Performance Reports Q4 2010 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. Q2 2015 219 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.24 HHF CALIFORNIA ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 UNEMPLOYMENT MORTGAGE ASSISTANCE PROGRAM (UNEMPLOYMENT)–JUNE 2010 As of 6/30/2015: Estimate: 44,700 (Peak: 60,531) Program Participation: 41,537 Homeowner Admission Rate: 57.7% 75,000 60,000 15,000 10,000 30,000 5,000 15,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 25,000 20,000 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation TRANSITION ASSISTANCE PROGRAM (TRANSITION)–JUNE 2010 As of 6/30/2015: Estimate: 13,400 (Peak: 25,135) Program Participation: 6,108 Homeowner Admission Rate: 13.7% 30,000 Q1 Q2 2015 PRINCIPAL REDUCTION PROGRAM (MODIFICATION)– JUNE 2010 As of 6/30/2015: Estimate: 1,700 (Peak: 6,471) Program Participation: 891 Homeowner Admission Rate: 43.0% 10,000 8,000 6,000 15,000 4,000 10,000 2,000 5,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 Q1 Q2 2015 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Program Participation COMMUNITY SECOND MORTGAGE PRINCIPAL REDUCTION PROGRAM (SECOND-LIEN REDUCTION)– AUGUST 2011 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation REVERSE MORTGAGE ASSISTANCE PILOT PROGRAM (PAST-DUE PAYMENT)–SEPTEMBER 2014 500 2,000 375 125 As of 6/30/2015: Estimate: 10,400 (Peak: 17,293) Program Participation: 9,330 Homeowner Admission Rate: 16.2% 20,000 45,000 250 MORTGAGE REINSTATEMENT ASSISTANCE PROGRAM (PAST-DUE PAYMENT)–JUNE 2010 As of 6/30/2015: Estimate: 1,400 (Peak: 1,400) Program Participation: 83 Homeowner Admission Rate: 11.3% 1,500 As of 6/30/2015: Estimate: 370 (Peak: 370) Program Participation: 34 Homeowner Admission Rate: 81.0% 1,000 500 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 100 25 Q4 Q1 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation LOS ANGELES HOUSING DEPARTMENT PRINCIPAL REDUCTION PROGRAM (MODIFICATION)– AUGUST 2011 200 Program Ended September 2013 As of 6/30/2015: Estimate: 0 (Peak: 91) Program Participation: 0 Homeowner Admission Rate: 0% 50 Q3 2010 Program Participation NEIGHBORWORKS SACRAMENTO SHORT SALE GATEWAY PROGRAM (TRANSITION)–AUGUST 2011 75 Q1 Q2 2015 150 100 50 As of 6/30/2015: Estimate: 0 (Peak: 166) Program Participation: 0 Homeowner Admission Rate: 0% Program Ended February 2014 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Program Participation Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and CalHFA Mortgage Assistance Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 6/23/2010; and Amendments to Agreement one through sixteen, as of 6/30/2015; CalHFA Mortgage Assistance Corporation, Quarterly Performance Reports Q4 2010 - Q2 2015, no date. 220 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.25 Florida’s HHF Programs FL HHF EXPENDITURES, BY PROGRAM CATEGORY Treasury obligated $1,057,839,136 of HHF funds to Florida.209 At the start of 2011, HHF Florida estimated that it would help as many as 106,000 homeowners with HHF but had reduced that by 60%, to 42,333, as of June 30, 2015, although that represented an increase over the 39,000 homeowners estimated as of the prior quarter. As of June 30, 2015, HHF Florida had six active HHF programs: one to provide unemployment assistance to homeowners, a second and third to provide past-due payment assistance to homeowners, a fourth and fifth to modify homeowners’ mortgages and a sixth to provide down payment assistance. As of June 30, 2015, HHF Florida had helped 23,234 individual homeowners with its HHF programs, with the largest numbers in the unemployment and reinstatement programs.210 Approved in April 2013, HHF Florida’s Modification Enabling Program had only assisted 105 homeowners in more than two years, as of June 30, 2015. As of June 30, 2015, the state’s HFA had drawn down $626.3 million (59%) of its HHF funds.211 As of June 30, 2015, the most recent data available, HHF Florida had spent $520.7 million (49% of its obligated funds) to help homeowners.212 The remaining $54.6 million (5%) was spent on administrative expenses, and $54.1 million (5%) was held as cash-on-hand.213 Figure 4.26 shows, in aggregate, the number of homeowners estimated to participate in HHF Florida’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Because homeowners may participate in more than one program, the reported program participation numbers are higher than the total number of individual homeowners assisted. Figure 4.27 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Florida’s programs, as of June 30, 2015. PROGRAM THROUGH JUNE 30, 2015 26% 43% 31% Past-Due Payment ($137,454,516) Unemployment ($160,263,256) Modification ($222,962,311) Down Payment Assistance ($0) Source: Housing Finance Corporation, Florida Hardest Hit Fund (HHF) Information, Quarterly Reports, Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.26 HHF FLORIDA PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 120,000 100,000 80,000 As of 6/30/2015: Estimate: 42,333 (Peak: 106,000) Homeowner Applications: 113,086 Program Participation: 36,002 Homeowners Assisted: 23,234 Homeowner Admission Rate: 20.5% 60,000 40,000 20,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Notes: Estimated includes highest estimate of a range. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Florida Housing Finance Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 6/23/2010; and Amendments to Agreement one through eleven, as of 6/30/2015; Florida Housing Finance Corporation, Quarterly Performance Reports Q3 2010 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 221 222 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.27 HHF FLORIDA ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 UNEMPLOYMENT MORTGAGE ASSISTANCE PROGRAM (UNEMPLOYMENT)–JUNE 2010 As of 6/30/2015: Estimate: 25,000* (Peak: 53,000) Program Participation: 15,309 Homeowner Admission Rate: 20.4% 60,000 50,000 MORTGAGE LOAN REINSTATEMENT PROGRAM (PAST-DUE PAYMENT)–DECEMBER 2010 60,000 50,000 40,000 40,000 30,000 30,000 20,000 20,000 10,000 10,000 0 As of 6/30/2015: Estimate: 25,000* (Peak: 53,000) Program Participation: 14,660 Homeowner Admission Rate: 19.6% 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 Q1 Q2 2015 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 Q2 2012 Q3 State Estimated Program Participation Program Participation MODIFICATION ENABLING PILOT PROGRAM (MODIFICATION)–APRIL 2013 Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation PRINCIPAL REDUCTION PROGRAM (MODIFICATION)– SEPTEMBER 2013 2,000 10,000 8,000 As of 6/30/2015: Estimate: 1,500 (Peak: 1,500) Program Participation: 105 Homeowner Admission Rate: 52.0% 1,500 1,000 As of 6/30/2015: Estimate: 10,000 (Peak: 10,000) Program Participation: 5,313 Homeowner Admission Rate: 14.6% 6,000 4,000 500 2,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 Q1 Q2 2015 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 Q2 2012 Q3 State Estimated Program Participation Program Participation ELDERLY MORTGAGE ASSISTANCE PROGRAM (PAST-DUE PAYMENT)–SEPTEMBER 2013 Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation DOWN PAYMENT ASSISTANCE PROGRAM (DOWN PAYMENT ASSISTANCE)–APRIL 2015 2,500 4,000 2,000 3,200 As of 6/30/2015: Estimate: 2,500 (Peak: 2,500) Program Participation: 615 Homeowner Admission Rate: 17.0% 1,500 1,000 As of 6/30/2015: Estimate: 3,333 (Peak: 3,333) Program Participation: 0 Homeowner Admission Rate: 0% 2,400 1,600 500 800 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Program Participation Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. *Florida estimates that it will serve approximately 25,000 homeowners in the aggregate between its Unemployment Mortgage Assistance Program and its Mortgage Loan Reinstatement Program. Sources: Treasury and Florida Housing Finance Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 6/23/2010; and Amendments to Agreement one through eleven, as of 6/30/2015; Florida Housing Finance Corporation, Quarterly Performance Reports Q3 2010 - Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Georgia’s HHF Programs FIGURE 4.28 Treasury obligated $339,255,819 in HHF funds to Georgia.214 At the end of 2010, HHF Georgia estimated that it would help as many as 18,300 homeowners with HHF but had reduced that by 26%, to 13,500, as of June 30, 2015. As of that date, HHF Georgia had three active HHF programs: one to provide unemployment assistance to homeowners, a second to provide past-due payment assistance to homeowners, and a third to modify homeowners’ mortgages. As of June 30, 2015, HHF Georgia had helped 6,686 individual homeowners with HHF, the vast majority with the unemployment program.215 As of June 30, 2015, HHF Georgia’s Recast/Modification program had helped only 18 homeowners (compared to an estimate of 1,000), and its Mortgage Reinstatement program had assisted only 126 homeowners (compared to a current estimate of 3,500), since those programs were approved in December 2013. As of June 30, 2015, the state’s HFA had drawn down $194 million (57%) of its HHF funds.216 As of June 30, 2015, the most recent data available, HHF Georgia had spent $119.7 million (35% of its obligated funds) to help homeowners.217 The remaining $22.7 million (7%) was spent on administrative expenses, and $52.5 million (15%) was held as cash-on-hand.218 Figure 4.29 shows the number of homeowners estimated to participate in HHF Georgia’s program and the number of homeowners who have been assisted, as of June 30, 2015. Figure 4.30 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Georgia’s programs, as of June 30, 2015. GA HHF EXPENDITURES, BY PROGRAM CATEGORY PROGRAM THROUGH JUNE 30, 2015 0.4% 1.0% 98.6% Unemployment ($117,961,056) Past-Due Payment ($1,196,896) Modification ($525,391) Source: GHFA Affordable Housing Inc., HomeSafe Georgia, US Treasury Reports, Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). 223 224 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.29 HHF GEORGIA PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 25,000 20,000 15,000 As of 6/30/2015: Estimate: 13,500 (Peak: 18,300) Homeowner Applications: 23,785 Program Participation: 6,689 Homeowners Assisted: 6,686 Homeowner Admission Rate: 28.1% 10,000 5,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Notes: Estimated includes highest estimate of a range. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and GHFA Affordable Housing Inc., Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through seven as of 6/30/2015; GHFA Affordable Housing Inc., Quarterly Performance Reports Q4 2010 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 225 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.30 HHF GEORGIA ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 MORTGAGE PAYMENT ASSISTANCE (UNEMPLOYMENT)–SEPTEMBER 2010 MORTGAGE REINSTATEMENT PROGRAM (PAST-DUE PAYMENT)–DECEMBER 2013 5,000 20,000 15,000 4,000 As of 6/30/2015: Estimate: 9,000 (Peak: 18,300) Program Participation: 6,545 Homeowner Admission Rate: 27.8% 10,000 As of 6/30/2015: Estimate: 3,500 (Peak: 5,000) Program Participation: 126 Homeowner Admission Rate: 70.0% 3,000 2,000 5,000 1,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation RECAST/MODIFICATION (MODIFICATION)– DECEMBER 2013 1,000 As of 6/30/2015: Estimate: 1,000 (Peak: 1,000) Program Participation: 18 Homeowner Admission Rate: 51.4% 750 500 250 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and GHFA Affordable Housing Inc., Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through seven as of 6/30/2015; GHFA Affordable Housing Inc., Quarterly Performance Reports Q4 2010 - Q2 2015, no date. 226 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.31 Illinois’s HHF Programs IL HHF EXPENDITURES, BY PROGRAM CATEGORY Treasury obligated $445,603,557 in HHF funds to Illinois.219 In mid-2011, HHF Illinois estimated that it would help as many as 29,000 homeowners with HHF but had reduced that by 53%, to 13,500, as of June 30, 2015. As of that date, HHF Illinois had four active HHF programs: one to provide unemployment assistance to homeowners, a second and third to modify homeowners’ mortgages, and a fourth for blight elimination. As of June 30, 2015, HHF Illinois had helped 13,868 individual homeowners with HHF programs, with the largest numbers in the unemployment and home preservation modification programs.220 According to Treasury, Illinois stopped accepting new applications from struggling homeowners seeking help from the state’s HHF programs after September 30, 2013, but, as of September 30, 2015, is again accepting applications for select programs.221 In the most recent quarter ended September 30, 2015, Treasury approved HHF Illinois to add a fifth HHF program, for down payment assistance for first-time homebuyers.222 In addition to decreasing the number of homeowners it estimated helping, HHF Illinois has shifted $1.9 million (0.4%) of its HHF funds away from existing HHF programs to blight elimination. This represents a shift from making payments directly to homeowners or their mortgage servicers to help keep homeowners in their homes. Treasury’s Blight Elimination Program allows for substantial payments of TARP funds to land banks, non-profits and other parties, including demolition contractors, in cash and mortgages that can be forgiven over time. For more information about blight elimination in Illinois, please see the “Update on the Hardest Hit Fund’s Blight Elimination Program” discussion on pages 205-206 of this Quarterly Report. As of June 30, 2015, the state’s HFA had drawn down $395 million (89%) of its HHF funds.223 As of June 30, 2015, the most recent data available, HHF Illinois had spent $333.7 million (75% of its obligated funds) to help homeowners.224 The remaining $33.1 million (7%) was spent on administrative expenses, and $35.5 million (8%) was held as cash-on-hand.225 No funds had yet been spent on blight elimination.226 Figure 4.32 shows, in aggregate, the number of homeowners estimated to participate in HHF Illinois’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Because homeowners may participate in more than one program, the reported program participation numbers are higher than the total number of individual homeowners assisted. Figure 4.33 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Illinois’s programs, as of June 30, 2015. PROGRAM THROUGH JUNE 30, 2015 15% 85% Unemployment ($277,510,395) Modification ($48,967,466) Blight ($0) Source: Illinois Housing Development Authority, Illinois Hardest Hit Program, Reporting, Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.32 HHF ILLINOIS PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 30,000 25,000 20,000 15,000 As of 6/30/2015: Estimate: 13,500 (Peak: 29,000) Homeowner Applications: 20,375 Program Participation: 13,922 Homeowners Assisted: 13,868 Homeowner Admission Rate: 68.1% 10,000 5,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 2014 Q3 Q4 Q1 Q2 2015 Notes: Estimated includes highest estimate of a range, but excludes Illinois estimate of the number of blighted properties to be eliminated. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Illinois Housing Development Authority, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through ten, as of 6/30/2015; Illinois Housing Development Authority, Quarterly Performance Reports Q1 2011 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 227 228 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.33 HHF ILLINOIS ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 HARDEST HIT FUND HOMEOWNER EMERGENCY LOAN PROGRAM (UNEMPLOYMENT)– SEPTEMBER 2010 30,000 MORTGAGE RESOLUTION FUND PROGRAM (MODIFICATION)–AUGUST 2011 2,000 As of 6/30/2015: Estimate: 12,000 (Peak: 27,000) Program Participation: 13,324 Homeowner Admission Rate: 68.5% 25,000 20,000 1,500 15,000 As of 6/30/2015: Estimate: 1,000 (Peak: 2,000) Program Participation: 174 Homeowner Admission Rate: 39.5% 1,000 10,000 500 5,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 2014 Q1 Q2 Q1 Q2 2015 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 Q2 2012 Q3 State Estimated Program Participation Program Participation HARDEST HIT FUND HOME PRESERVATION PROGRAM (MODIFICATION)–SEPTEMBER 2012 500 Q4 Q1 2013 Q2 Q3 Q4 2014 Q1 Q2 2015 Program Participation HARDEST HIT FUND BLIGHT REDUCTION PROGRAM (BLIGHT)–APRIL 2014 100 375 75 As of 6/30/2015: Estimate: 500 (Peak: 500) Program Participation: 424 Homeowner Admission Rate: 80.5% 250 As of 6/30/2015: Blighted homes proposed to be eliminated: 50 Actual blighted homes eliminated: 0 50 125 25 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 Q1 2012 State Estimated Program Participation Q2 Q3 2013 Q4 Q1 Q2 Q3 2014 Q4 Q1 Q2 2015 Program Participation Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 Q1 2012 State Estimated Program Participation Q2 Q3 2013 Q4 Q1 Q2 Q3 2014 Q4 Q1 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range, but excludes Illinois estimate of the number of blighted properties to be eliminated. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and Illinois Housing Development Authority, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through ten, as of 6/30/2015; Illinois Housing Development Authority , Quarterly Performance Reports Q1 2011 - Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Indiana’s HHF Programs FIGURE 4.34 Treasury obligated $221,694,139 in HHF funds to Indiana.227 At the start of 2011, HHF Indiana estimated helping as many as 16,257 homeowners with HHF but had reduced that by 37%, to 10,184, as of June 30, 2015. As of that date, HHF Indiana had four active HHF programs: one to provide unemployment assistance to homeowners, a second to modify homeowners’ mortgages, a third to provide transition assistance to homeowners, and a fourth for blight elimination. As of June 30, 2015, HHF Indiana had helped 5,718 individual homeowners with HHF programs, with the largest number in its unemployment program; HHF Indiana’s Recast Program, which began in March 2013, had only 93 participants, while the Transition Assistance Program, also started on the same date, had just 7 participants.228 In addition to decreasing the number of homeowners it estimated helping, HHF Indiana has shifted $75 million (34%) of its HHF funds away from existing HHF programs to blight elimination. This represents a shift from making payments directly to homeowners or their mortgage servicers to help keep homeowners in their homes. Treasury’s Blight Elimination Program allows for substantial payments of TARP funds to land banks, non-profits and other parties, including demolition contractors, in cash and mortgages that can be forgiven over time. For more information about blight elimination in Indiana, please see the “Update on the Hardest Hit Fund’s Blight Elimination Program” discussion on pages 200-204 of this Quarterly Report. As of June 30, 2015, the state’s HFA had drawn down $110.7 million (50%) of its HHF funds.229 As of June 30, 2015, the most recent data available, HHF Indiana had spent $74.2 million (33% of its obligated funds) to help homeowners.230 HHF Indiana had also spent $602,117 to demolish 59 properties as of June 30, 2015.231 The remaining $20.9 million (9%) was spent on administrative expenses, and $15.5 million (7%) was held as cash-on-hand.232 Figure 4.35 shows, in aggregate, the number of homeowners estimated to participate in HHF Indiana’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Figure 4.36 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Indiana’s programs, as of June 30, 2015. IN HHF EXPENDITURES, BY PROGRAM CATEGORY PROGRAM THROUGH JUNE 30, 2015 0.03% 0.8% 3.44% 95.72% Unemployment ($71,622,631) Modification ($2,576,024) Transition ($25,000) Blight ($602,117) Source: Indiana Housing and Community Development Authority, Indiana’s Hardest Hit Fund, Quarterly Reports to the U.S. Treasury, Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). 229 230 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.35 HHF INDIANA PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 20,000 15,000 10,000 As of 6/30/2015: Estimate: 10,184 (Peak: 16,257) Homeowner Applications: 7,423 Program Participation: 5,718 Homeowners Assisted: 5,718 Homeowner Admission Rate: 77.0% 5,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 2014 Q1 Q2 2015 Notes: Estimated includes highest estimate of a range, but excludes Indiana's estimate of the number of blighted properties to be eliminated. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Indiana Housing and Community Development Authority, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010 and Amendments to Agreement one through nine, as of 6/30/2015; Indiana Housing and Community Development Authority, Quarterly Performance Reports Q2 2011 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 231 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.36 HHF INDIANA ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 HARDEST HIT FUND UNEMPLOYMENT BRIDGE PROGRAM (UNEMPLOYMENT)–SEPTEMBER 2010 20,000 HARDEST HIT FUND RECAST/MODIFICATION PROGRAM (MODIFICATION)–MARCH 2013 2,000 As of 6/30/2015: Estimate: 8,000 (Peak: 16,257) Program Participation: 5,618 Homeowner Admission Rate: 79.0% 15,000 1,500 10,000 1,000 5,000 500 0 As of 6/30/2015: Estimate: 2,000 (Peak: 2,000) Program Participation: 93 Homeowner Admission Rate: 33.3% 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 Q1 Q2 2015 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 State Estimated Program Participation Program Participation HARDEST HIT FUND TRANSITION ASSISTANCE PROGRAM (TRANSITION)–MARCH 2013 Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation HARDEST HIT FUND BLIGHT ELIMINATION PROGRAM (BLIGHT)–DECEMBER 2013 5,000 200 150 4,000 As of 6/30/2015: Estimate: 184 (Peak: 184) Program Participation: 7 Homeowner Admission Rate: 17.9% 100 3,000 2,000 50 As of 6/30/2015: Blighted homes proposed to be eliminated: 5,000 Actual blighted homes eliminated: 59 1,000 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Program Participation Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range, but excludes Indiana’s estimate of the number of blighted properties to be eliminated. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and Indiana Housing and Community Development Authority, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010 and Amendments to Agreement one through nine, as of 6/30/2015; Indiana Housing and Community Development Authority, Quarterly Performance Reports Q2 2011 - Q2 2015, no date. 232 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Kentucky’s HHF Program Treasury obligated $148,901,875 in HHF funds to Kentucky.233 At the end of 2010, HHF Kentucky estimated that it would help as many as 15,000 homeowners but had reduced that by 49%, to 7,700, as of June 30, 2015. As of that date, HHF Kentucky had helped 6,992 individual homeowners with its single unemployment program.234 As of June 30, 2015, the state’s HFA had drawn down $104 million (70%) of its HHF funds and spent $89.2 million (60% of its obligated funds) to help homeowners.235 The remaining $12.9 million (9%) was spent on administrative expenses, and $3.1 million (2%) was held as cash-on-hand.236 Figure 4.37 shows the number of homeowners estimated to participate in HHF Kentucky’s program and the number of homeowners who have been assisted, as of June 30, 2015. FIGURE 4.37 HHF KENTUCKY PROGRAM PERFORMANCE, AS OF 6/30/2015 15,000 12,000 9,000 As of 6/30/2015: Estimate: 7,700 (Peak: 15,000) Homeowner Applications: 10,286 Program Participation: 6,992 Homeowners Assisted: 6,992 Homeowner Admission Rate: 68.0% 6,000 3,000 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 2011 State Estimated Program Participation Q4 Q1 Q2 Q3 2012 Q4 Q1 Q2 Q3 2013 Q4 Q1 Q2 2014 Q3 Q4 Q1 Q2 2015 Homeowners Assisted Homeowner Applications Notes: Estimated includes highest estimate of a range. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Kentucky Housing Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through seven, as of 6/30/2015; Kentucky Housing Corporation, Quarterly Performance Reports Q4 2010 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Michigan’s HHF Programs FIGURE 4.38 Treasury obligated $498,605,738 in HHF funds to Michigan.237 At the end of 2010, HHF Michigan estimated that it would help as many as 49,422 homeowners with HHF but had reduced that by 81%, to 9,444, as of June 30, 2015. As of that date, HHF Michigan had five active HHF programs: one to provide unemployment assistance to homeowners, a second to provide past-due payment assistance, two to modify homeowners’ mortgages, and a fifth for blight elimination. As of June 30, 2015, HHF Michigan had helped 26,865 individual homeowners, with the largest numbers in the past-due payment assistance and unemployment programs.238 In addition to decreasing the number of homeowners it estimated helping, HHF Michigan has shifted $175 million (35%) of its HHF funds away from existing HHF programs to blight elimination. This represents a shift from making payments directly to homeowners or their mortgage servicers to help keep homeowners in their homes. Treasury’s Blight Elimination Program allows for substantial payments of TARP funds to land banks, non-profits and other parties, including demolition contractors, in cash and mortgages that can be forgiven over time. For more information about blight elimination in Michigan, please see the “Update on the Hardest Hit Fund’s Blight Elimination Program” discussion on pages 194-196 of this Quarterly Report. As of June 30, 2015, the state’s HFA had drawn down $341.1 million (68%) of its HHF funds.239 As of June 30, 2015, the most recent data available, HHF Michigan had spent $209.2 million (42% of its obligated funds) to help homeowners; it had also spent $65.4 million (13%) to demolish 4,677 vacant properties.240 The remaining $29 million (6%) was spent on administrative expenses, and $40.1 million (8%) was held as cash-on-hand.241 Figure 4.39 shows, in aggregate, the number of homeowners estimated to participate in HHF Michigan’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Figure 4.40 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Michigan’s programs, as of June 30, 2015. MI HHF EXPENDITURES, BY PROGRAM CATEGORY PROGRAM THROUGH JUNE 30, 2015 24% 52% 21% 3% Past-Due Payment ($143,158,139) Modification ($7,829,686) Unemployment ($58,247,851) Blight ($65,435,042) Source: Michigan Homeowner Assistance Nonprofit Housing Corporation, Hardest Hit U.S. Treasury Reports, Quarterly Performance Reports Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). 233 234 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.39 HHF MICHIGAN PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 60,000 As of 6/30/2015: Estimate: 9,444 (Peak: 49,422) Homeowner Applications: 56,252 Program Participation: 26,865 Homeowners Assisted: 26,865 Homeowner Admission Rate: 47.8% 50,000 40,000 30,000 20,000 10,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 2014 Q3 Q4 Q1 Q2 2015 Notes: Estimated includes highest estimate of a range, but excludes Michigan's estimate of the number of blighted properties to be eliminated. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Michigan Homeowner Assistance Nonprofit Housing Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 6/23/2010, and Amendments to Agreement one through ten, as of 6/30/2015; Michigan Homeowner Assistance Nonprofit Housing Corporation, Quarterly Performance Reports Q3 2010 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 235 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.40 HHF MICHIGAN ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 PRINCIPAL CURTAILMENT PROGRAM (MODIFICATION)– JUNE 2010 As of 6/30/2015: Estimate: 300 (Peak: 3,044) Program Participation: 305 Homeowner Admission Rate: 20.2% 4,000 3,000 LOAN RESCUE PROGRAM (PAST-DUE PAYMENT)– JUNE 2010 As of 6/30/2015: Estimate: 4,567 (Peak: 21,760) Program Participation: 18,568 Homeowner Admission Rate: 43.1% 25,000 20,000 15,000 2,000 10,000 1,000 5,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 15,000 Q4 Q1 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation MODIFICATION PLAN PROGRAM (MODIFICATION)– JUNE 2013 1,000 As of 6/30/2015: Estimate: 4,282 (Peak: 24,618) Program Participation: 7,773 Homeowner Admission Rate: 72.6% 20,000 Q3 2010 Program Participation UNEMPLOYMENT MORTGAGE SUBSIDY PROGRAM (UNEMPLOYMENT)–JUNE 2010 25,000 Q1 Q2 2015 750 As of 6/30/2015: Estimate: 295 (Peak: 825) Program Participation: 219 Homeowner Admission Rate: 22.0% 500 10,000 250 5,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation BLIGHT ELIMINATION PROGRAM (BLIGHT)–JUNE 2013 7,000 6,000 As of 6/30/2015: Blighted homes proposed to be eliminated: 7,000 Actual blighted homes eliminated: 4,677 5,000 4,000 3,000 2,000 1,000 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range, but excludes Michigan’s estimate of the number of blighted properties to be eliminated. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and Michigan Homeowner Assistance Nonprofit Housing Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 6/23/2010, and Amendments to Agreement one through ten, as of 6/30/2015; Michigan Homeowner Assistance Nonprofit Housing Corporation, Quarterly Performance Reports Q3 2010 - Q2 2015, no date. 236 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Mississippi’s HHF Program Treasury obligated $101,888,323 in HHF funds to Mississippi.242 At the end of 2010, HHF Mississippi estimated that it would provide HHF unemployment assistance to as many as 3,800 homeowners, but had reduced that by 8%, to 3,500, as of June 30, 2015. As of that date, HHF Mississippi had helped 3,344 individual homeowners with its single HHF program.243 As of June 30, 2015, the state’s HFA had drawn down $65.8 million (65%) of its HHF funds and spent $53.7 million (53% of its obligated funds) to help homeowners.244 The remaining $9.5 million (9%) was spent on administrative expenses, and $2.8 million (3%) was held as cash-on-hand.245 Figure 4.41 shows the number of homeowners estimated to participate in HHF Mississippi’s program and the number of homeowners who have been assisted, as of June 30, 2015. FIGURE 4.41 HHF MISSISSIPPI PROGRAM PERFORMANCE, AS OF 6/30/2015 6,000 5,000 4,000 3,000 As of 6/30/2015: Estimate: 3,500 (Peak: 3,800) Homeowner Applications: 5,279 Program Participation: 3,344 Homeowners Assisted: 3,344 Homeowner Admission Rate: 63.3% 2,000 1,000 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 2011 State Estimated Program Participation Q4 Q1 Q2 Q3 2012 Q4 Q1 Q2 Q3 2013 Q4 Q1 Q2 2014 Q3 Q4 Q1 Q2 2015 Homeowners Assisted Homeowner Applications Notes: Estimated includes highest estimate of a range. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Mississippi Home Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through eight, as of 6/30/2015; Mississippi Home Corporation, Quarterly Performance Reports Q4 2010 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Nevada’s HHF Programs FIGURE 4.42 Treasury obligated $194,026,240 in HHF funds to Nevada.246 In mid-2011, HHF Nevada estimated that it would help as many as 23,556 homeowners with HHF, but had reduced that peak estimate by 66%, to 8,026, as of June 30, 2015, although that represented an increase over the 7,565 homeowners estimated as of the prior quarter. As of June 30, 2015, HHF Nevada had five active HHF programs: two to provide unemployment assistance to homeowners, one to modify homeowners’ mortgages with principal reduction assistance, one to provide secondlien reduction assistance to homeowners, and one to provide transition assistance to homeowners. As of June 30, 2015, HHF Nevada had helped 5,306 individual homeowners with HHF programs, with the largest numbers in the unemployment and the principal reduction programs.247 Neither HHF Nevada’s Home Retention Program, launched in September 2013, nor its Recast Refinance program, launched in June 2014, had helped a single homeowner during their program lives and both were defunded as of June 30, 2015.248 As of June 30, 2015, the state’s HFA had drawn down $112 million (58%) of its HHF funds.249 As of June 30, 2015, the most recent data available, HHF Nevada had spent $87 million (45% of its obligated funds) to help homeowners.250 The remaining $15.1 million (8%) was spent on administrative expenses, and $11 million (6%) was held as cash-on-hand.251 Figure 4.43 shows, in aggregate, the number of homeowners estimated to participate in HHF Nevada’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Figure 4.44 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Nevada’s programs, as of June 30, 2015. NV HHF EXPENDITURES, BY PROGRAM CATEGORY PROGRAM THROUGH JUNE 30, 2015 57.6% 36.7% 0.3% 5.4% Modification ($50,100,394) Second-Lien Reduction ($4,680,948) Transition ($289,179) Unemployment ($31,883,231) Source: Nevada Affordable Housing Assistance Corporation, Nevada Hardest Hit Fund, US Treasury Reports, Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). 237 238 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.43 HHF NEVADA PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 25,000 As of 6/30/2015: Estimate: 8,026 (Peak: 23,556) Homeowner Applications: 13,749 Program Participation: 5,632 Homeowners Assisted: 5,306 Homeowner Admission Rate: 38.6% 20,000 15,000 10,000 5,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 2014 Q3 Q4 Q1 Q2 2015 Notes: Estimated includes highest estimate of a range. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. As of June 30, 2015, Nevada reported 5,306 individual homeowners helped with HHF programs, revised down from 5,539 reported as of December 31, 2014. Sources: Treasury and Nevada Affordable Housing Assistance Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 6/23/2010, and Amendments to Agreement one through fourteen, as of 6/30/2015; Nevada Affordable Housing Assistance Corporation, Quarterly Performance Reports Q1 2011 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 239 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.44 HHF NEVADA ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 PRINCIPAL REDUCTION PROGRAM (MODIFICATION)– JUNE 2010 SECOND MORTGAGE REDUCTION PLAN (SECOND-LIEN REDUCTION)–JUNE 2010 As of 6/30/2015: Estimate: 2,550 (Peak: 3,016) Program Participation: 1,208 Homeowner Admission Rate: 44.0% 4000 3000 3,000 2,000 1,500 2000 1,000 1000 500 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 Q2 2012 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2,000 Q4 Q1 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation MORTGAGE ASSISTANCE PROGRAM (UNEMPLOYMENT)–SEPTEMBER 2010 20,000 As of 6/30/2015: Estimate: 3,900 (Peak: 16,969) Program Participation: 3,682 Homeowner Admission Rate: 38.0% 15,000 1,000 10,000 500 5,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 Q1 Q2 2015 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Program Participation MORTGAGE ASSISTANCE PROGRAM ALTERNATIVE (UNEMPLOYMENT)–FEBRUARY 2012 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation HOME RETENTION PROGRAM (MODIFICATION)– AUGUST 2013 1,200 500 1,000 375 125 Q3 2010 Program Participation As of 6/30/2015: Estimate: 100 (Peak: 1,713) Program Participation: 104 Homeowner Admission Rate: 26.4% 1,500 Q1 Q2 2015 SHORT-SALE ACCELERATION PROGRAM (TRANSITION)–JUNE 2010 250 As of 6/30/2015: Estimate: 1,300 (Peak: 2,200) Program Participation: 412 Homeowner Admission Rate: 25.7% 2,500 800 As of 6/30/2015: Estimate: 176 (Peak: 416) Program Participation: 226 Homeowner Admission Rate: 95.8% 600 400 As of 6/30/2015: Estimate: 0 (Peak: 1,150) Program Participation: 0 Homeowner Admission Rate: 0% Program Ended June 2015 200 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation NEVADA RECAST REFINANCE AND MODIFICATION PROGRAM (MODIFICATION)–JUNE 2014 1,000 750 As of 6/30/2015: Estimate: 0 (Peak: 1,000) Program Participation: 0 Homeowner Admission Rate: 0% 500 Program Ended June 2015 250 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and Nevada Affordable Housing Assistance Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 6/23/2010, and Amendments to Agreement one through fourteen, as of 6/30/2015; Nevada Affordable Housing Assistance Corporation, Quarterly Performance Reports Q1 2011 - Q2 2015, no date. 240 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.45 New Jersey’s HHF Program NJ HHF EXPENDITURES, BY PROGRAM CATEGORY Treasury obligated $300,548,144 in HHF funds to New Jersey.252 From the end of 2010 to the end of 2013, HHF New Jersey estimated helping 6,900 homeowners with HHF but had reduced that by 1%, to 6,845, as of June 30, 2015. As of that date, HHF New Jersey had two HHF programs: one to provide unemployment assistance and a second, recently added in May 2015, to modify homeowners’ mortgages. As of June 30, 2015, HHF New Jersey had helped 6,004 individual homeowners with HHF, all of them through its unemployment program.253 According to Treasury, HHF New Jersey had previously stopped accepting new applications from homeowners after November 30, 2013, but, as of September 30, 2015, has reported that it is again accepting applications under select programs.254 As of June 30, 2015, HHF New Jersey had drawn down $270.5 million (90%) of its HHF funds and spent $222.3 million (74%) of its obligated funds on program expenses to help homeowners.255 The remaining $23.7 million (8%) was spent on administrative expenses, and $26.7 million (9%) was held as cash-on-hand.256 Figure 4.46 shows, in aggregate, the number of homeowners estimated to participate in HHF New Jersey’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Figure 4.47 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF New Jersey’s programs, as of June 30, 2015. PROGRAM THROUGH JUNE 30, 2015 100% 100% Unemployment ($222,297,918) Modification ($0) Source: New Jersey Housing and Mortgage Finance Agency, The New Jersey HomeKeeper Program, About the Program, Performance Reports, Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). 241 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.46 HHF NEW JERSEY PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 15,000 As of 6/30/2015: Estimate: 6,845 (Peak: 6,900) Homeowner Applications: 13,093 Program Participation: 6,004 Homeowners Assisted: 6,004 Homeowner Admission Rate: 45.9% 12,000 9,000 6,000 3,000 0 Q1 Q2 Q3 Q4 Q1 Q2 2010 Q3 Q4 Q1 Q2 2011 Q3 Q4 Q1 Q2 2012 Q3 Q4 Q1 Q2 2013 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q3 Q4 Q1 2014 Q2 2015 Notes: Estimated includes highest estimate of a range. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and New Jersey Housing and Mortgage Finance Agency, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, Amendments to Agreement one through eight, as of 6/30/2015; New Jersey Housing and Mortgage Finance Agency, Quarterly Performance Reports Q3 2011 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. FIGURE 4.47 HHF NEW JERSEY ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 NEW JERSEY HOMEKEEPER PROGRAM (UNEMPLOYMENT ASSISTANCE)–SEPTMEBER 2010 NEW JERSEY HOME SAVER PROGRAM (MODIFICATION)–MAY 2015 8,000 500 6,000 400 As of 6/30/2015: Estimate: 6,500 (Peak: 6,900) Program Participation: 6,004 Homeowner Admission Rate: 45.9% 4,000 As of 6/30/2015: Estimate: 345 (Peak: 345) Program Participation: 0 Homeowner Admission Rate: 0% 300 200 2,000 100 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Program Participation Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and New Jersey Housing and Mortgage Finance Agency, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, Amendments to Agreement one through eight, as of 6/30/2015; New Jersey Housing and Mortgage Finance Agency, Quarterly Performance Reports Q3 2011 - Q2 2015, no date. 242 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.48 North Carolina’s HHF Programs NC HHF EXPENDITURES, BY PROGRAM CATEGORY Treasury obligated $482,781,786 in HHF funds to North Carolina.257 From mid2011 to mid-2013, HHF North Carolina estimated that it would help as many as 22,290 homeowners with HHF but had reduced that by 7%, to 20,780, as of June 30, 2015. As of that date, HHF North Carolina had five active HHF programs: two to provide unemployment assistance to homeowners, a third to provide secondlien reduction assistance to homeowners, and a fourth, and, as June 2015, a fifth to modify homeowners’ mortgages with principal reduction. As of June 30, 2015, HHF North Carolina had helped 19,860 individual homeowners with its HHF programs, with the largest number in the two unemployment programs.258 HHF North Carolina has ended two programs that had not assisted any homeowners: the Permanent Loan Modification Program (August 2013) and the Principal Reduction Recast Program (December 2013). HHF North Carolina’s Modification Enabling Pilot Project, approved in December 2013, had just 13 participants as of June 30, 2015. In the most recent quarter ended September 30, 2015, Treasury approved HHF North Carolina to add a sixth HHF program, for down payment assistance for firsttime homebuyers.259 As of June 30, 2015, the state’s HFA had drawn down $395.2 million (82%) of its HHF funds and spent $321.5 million (67%) of their obligated funds on program expenses to help homeowners.260 The remaining $53.9 million (11%) was spent on administrative expenses, and $25.6 million (5%) was held as cash-on-hand.261 Figure 4.49 shows, in aggregate, the number of homeowners estimated to participate in HHF North Carolina’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Because homeowners may participate in more than one program, the reported program participation numbers are higher than the total number of individual homeowners assisted. Figure 4.50 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF North Carolina’s programs, as of June 30, 2015. PROGRAM THROUGH JUNE 30, 2015 1% 0.1% 98.9% Modification ($264,162) Second-Lien Reduction ($3,218,286) Unemployment ($317,993,841) Source: North Carolina Housing Finance Agency, Hardest Hit Fund & Performance Reporting, Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.49 HHF NORTH CAROLINA PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 30,000 25,000 20,000 As of 6/30/2015: Estimate: 20,780 (Peak: 22,290) Homeowner Applications: 29,698 Program Participation: 19,996 Homeowners Assisted: 19,860 Homeowner Admission Rate: 66.9% 15,000 10,000 5,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Notes: Estimated includes highest estimate of a range. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and North Carolina Housing Finance Agency, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 8/23/2010, and Amendments to Agreement one through eight, as of 6/30/2015; North Carolina Housing Finance Agency, Quarterly Performance Reports Q3 2010 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 243 244 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.50 HHF NORTH CAROLINA ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 MORTGAGE PAYMENT PROGRAM-2 (UNEMPLOYMENT)–SEPTEMBER 2010 MORTGAGE PAYMENT PROGRAM-1 (UNEMPLOYMENT)–SEPTEMBER 2010 6,000 15,000 5,000 12,000 4,000 9,000 3,000 As of 6/30/2015: Estimate: 5,410 (Peak: 5,750) Program Participation: 4,939 Homeowner Admission Rate: 48.3% 2,000 1,000 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 As of 6/30/2015: Estimate: 14,100 (Peak: 14,100) Program Participation: 14,885 Homeowner Admission Rate: 65.7% 6,000 3,000 0 Q4 Q1 2014 Q1 Q2 Q2 Q3 Q4 Q1 2010 2015 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 State Estimated Program Participation Program Participation SECOND MORTGAGE REFINANCE PROGRAM (SECOND-LIEN REDUCTION)–SEPTEMBER 2010 Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation MODIFICATION ENABLING PILOT PROJECT (MODIFICATION)–DECEMBER 2013 2,000 1,000 1,500 750 As of 6/30/2015: Estimate: 2,000 (Peak: 400) Program Participation: 159 Homeowner Admission Rate: 47.2% 1,000 500 As of 6/30/2015: Estimate: 270 (Peak: 800) Program Participation: 13 Homeowner Admission Rate: 86.7% 500 250 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 Q4 Q1 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation 1,000 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation PERMANENT LOAN MODIFICATION PROGRAM (MODIFICATION)–SEPTEMBER 2010 Program Ended August 2013 500 375 As of 6/30/2015: Estimate: 600 (Peak: 600) Program Participation: 0 Homeowner Admission Rate: 0% 500 Q3 2010 Program Participation PRINCIPAL REDUCTION RECAST/LIEN EXTINGUISHMENT FOR UNAFFORDABLE MORTGAGES (MODIFICATION)–JUNE 2015 750 Q1 Q2 2015 As of 6/30/2015: Estimate: 0 (Peak: 440) Program Participation: 0 Homeowner Admission Rate: 0% 250 125 250 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation PRINCIPAL REDUCTION RECAST PROGRAM (MODIFICATION)–AUGUST 2013 Program Ended December 2013 2,000 1,500 As of 6/30/2015: Estimate: 0 (Peak: 680) Program Participation: 0 Homeowner Admission Rate: 0% 1,000 500 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and North Carolina Housing Finance Agency, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 8/23/2010, and Amendments to Agreement one through eighth, as of 6/30/2015; North Carolina Housing Finance Agency, Quarterly Performance Reports Q3 2010 - Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Ohio’s HHF Programs FIGURE 4.51 Treasury obligated $570,395,099 in HHF funds to Ohio.262 At the end of 2010, HHF Ohio estimated that it would help as many as 63,485 homeowners with HHF but had reduced that by 35%, to 41,201, as of June 30, 2015. As of that date, HHF Ohio had eight active HHF programs: three to modify homeowners’ mortgages, a fourth and fifth to provide past-due payment assistance to homeowners, a sixth to provide unemployment assistance to homeowners, a seventh to provide transition assistance to homeowners, and an eighth for blight elimination. As of June 30, 2015, HHF Ohio had helped 24,521 individual homeowners, with the largest numbers in the past due payment and unemployment assistance programs.263 HHF Ohio ended a ninth program, the Short Refinance Program in December 2012, which had not helped a single homeowner over the program’s life. HHF Ohio’s Transition Assistance Program, launched in September 2010, had only helped 75 homeowners during nearly five years of operation through June 30, 2015. According to Treasury, HHF Ohio had previously stopped accepting new applications from homeowners after April 30, 2014, but, as of September 30, 2015, has reported that is again accepting applications under select programs.264 In addition to decreasing the number of homeowners it estimated helping, HHF Ohio has shifted $73 million (13%) of its HHF funds away from existing HHF programs to blight elimination (as of September 30, 2015).265 This represents a shift from making payments directly to homeowners or their mortgage servicers to help keep homeowners in their homes. Treasury’s Blight Elimination Program allows for substantial payments of TARP funds to land banks, non-profits and other parties, including demolition contractors, in cash and mortgages that can be forgiven over time. For more information about blight elimination in Ohio, please see the “Update on the Hardest Hit Fund’s Blight Elimination Program” discussion on pages 197-199 of this Quarterly Report. As of June 30, 2015, the state’s HFA had drawn down $499.2 million (88%) of its HHF funds.266 As of June 30, 2015, the most recent data available, HHF Ohio had spent $416.6 million (73% of its obligated funds) to help homeowners; it had also spent $10.7 million to demolish and remove 924 properties under its blight elimination program.267 The remaining $47.8 million (8%) was spent on administrative expenses, and $26.7 million (5%) was held as cash-on-hand.268 Figure 4.52 shows, in aggregate, the number of homeowners estimated to participate in HHF Ohio’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Because homeowners may participate in more than one program, the reported program participation numbers are higher than the total number of individual homeowners assisted. Figure 4.53 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Ohio’s programs, as of June 30, 2015. OH HHF EXPENDITURES, BY PROGRAM CATEGORY PROGRAM THROUGH JUNE 30, 2015 0.1% 2.6% 37.7% 42.5% 17.2% Past-Due Payment ($178,120,508) Modification ($71,891,838) Unemployment ($158,057,950) Transition ($360,966) Blight ($10,743,272) Source: Ohio Homeowner Assistance LLC, Save the Dream Ohio: Quarterly Reports, Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). 245 246 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.52 HHF OHIO PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 80,000 70,000 60,000 50,000 As of 6/30/2015: Estimate: 41,201 (Peak: 63,485) Homeowner Applications: 34,779 Program Participation: 40,053 Homeowners Assisted: 24,521 Homeowner Admission Rate: 70.5% 40,000 30,000 20,000 10,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 2014 Q3 Q4 Q1 Q2 2015 Notes: Estimated includes highest estimate of a range, but excludes Ohio's estimate of the number of blighted properties to be eliminated. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Ohio Homeowner Assistance LLC, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through eleven as of 6/30/2015; Ohio Homeowner Assistance LLC, Quarterly Performance Reports Q4 2010 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 247 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.53 HHF OHIO ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 RESCUE PAYMENT ASSISTANCE PROGRAM (PAST-DUE PAYMENT)–SEPTEMBER 2010 MORTGAGE PAYMENT ASSISTANCE PROGRAM (UNEMPLOYMENT)–SEPTEMBER 2010 40,000 25,000 20,000 15,000 As of 6/30/2015: Estimate: 21,000 (Peak: 21,000) Program Participation: 20,249 Homeowner Admission Rate: 72.4% 10,000 5,000 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 20,000 10,000 0 Q2 Q1 Q2 2015 Q1 Q2 Q3 Q4 Q1 Q2 2011 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation LIEN ELIMINATION ASSISTANCE (MODIFICATION)– SEPTEMBER 2010 3,000 6,000 2,500 1,500 Q4 State Estimated Program Participation 7,500 3,000 Q3 2010 Program Participation MODIFICATION WITH CONTRIBUTION ASSISTANCE PROGRAM (MODIFICATION)–DECEMBER 2011 4,500 As of 6/30/2015: Estimate: 15,500 (Peak: 31,900) Program Participation: 14,874 Homeowner Admission Rate: 78.6% 30,000 As of 6/30/2015: Estimate: 1,150 (Peak: 2,350) Program Participation: 1,208 Homeowner Admission Rate: 66.4% 2,000 1,500 As of 6/30/2015: Estimate: 1,300 (Peak: 6,400) Program Participation: 1,567 Homeowner Admission Rate: 59.0% 1,000 500 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 Q1 Q2 2015 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 Q2 2011 Q3 Q4 Q1 2012 Q2 Q3 State Estimated Program Participation Program Participation TRANSITION ASSISTANCE PROGRAM (TRANSITION)–SEPTEMBER 2010 Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation HOMEOWNERSHIP RETENTION ASSISTANCE (PAST-DUE PAYMENT)–DECEMBER 2012 6,000 4,000 5,000 As of 6/30/2015: Estimate: 63 (Peak: 4,900) Program Participation: 75 Homeowner Admission Rate: 41.7% 4,000 3,000 2,000 3,000 2,000 As of 6/30/2015: Estimate: 1,738 (Peak: 3,100) Program Participation: 1,928 Homeowner Admission Rate: 76.4% 1,000 1,000 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Program Participation Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Program Participation Q2 2015 248 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM HHF OHIO ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 (CONTINUED) HOMEOWNER STABILIZATION ASSISTANCE PROGRAM (MODIFICATION)–MARCH 2013 NEIGHBORHOOD INITIATIVE PROGRAM (BLIGHT)– AUGUST 2013 6,000 1,000 750 5,000 As of 6/30/2015: Estimate: 450 (Peak: 900) Program Participation: 152 Homeowner Admission Rate: 24.3% 500 4,000 3,000 2,000 250 As of 6/30/2015: Blighted homes proposed to be eliminated: 5,000 Actual blighted homes eliminated: 924 1,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation SHORT REFINANCE PROGRAM (TRANSITION)– DECEMBER 2010 8,000 As of 6/30/2015: Estimate: 0 (Peak: 6,500) Program Participation: 0 Homeowner Admission Rate: 0% 6,000 4,000 Program Ended December 2012 2,000 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range, but excludes Ohio’s estimate of the number of blighted properties to be eliminated. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and Ohio Homeowner Assistance LLC, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through eleven as of 6/30/2015; Ohio Homeowner Assistance LLC, Quarterly Performance Reports Q4 2010 - Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Oregon’s HHF Programs FIGURE 4.54 Treasury obligated $220,042,786 in HHF funds to Oregon.269 As of June 30, 2014, HHF Oregon estimated that it would help as many as 15,280 homeowners with HHF, but had reduced that estimate by 1%, to 15,150, as of June 30, 2015. As of that date, the HHF Oregon had four active HHF programs: an unemployment assistance program, two separate mortgage modification assistance programs, and a past-due payment assistance program. As of June 30, 2015, HHF Oregon had helped 11,759 individual homeowners with its HHF programs, with the largest numbers in the unemployment and past due payment assistance programs.270 HHF Oregon has ended two additional programs for which the HFA had reported helping no homeowners: the Loan Modification Assistance Program (June 2013) and the Transition Assistance Program (December 2011). According to Treasury, HHF Oregon had previously stopped accepting new applications from homeowners after June 30, 2014, but, as of September 30, 2015, has reported that is again accepting applications for select programs.271 As of June 30, 2015, the state’s HFA had drawn down 100% of its HHF funds.272 As of June 30, 2015, the most recent data available, HHF Oregon had spent $191.7 million (79%) to help homeowners, $34.3 million (14%) on administrative expenses, and held $15.6 million (6%) as cash-on-hand.273 The unique structures of two of HHF Oregon’s programs, the Loan Refinance Assistance Program and the Rebuilding American Homeownership Assistance Pilot Project—under which Oregon extends new mortgage loans to homeowners, receives principal and interest payments while it holds the new loans and recovers principal when it sells the loans to third parties—allow the state to recycle large amounts back into HHF, which can then either be used to provide additional homeowner assistance or held as cash-on-hand. As of June 30, 2015, Oregon’s HFA reported having recovered $19 million in funds from homeowners who left the program before their HHF award was fully forgiven (lien release), including under those programs.274 Figure 4.55 shows, in aggregate, the number of homeowners estimated to participate in HHF Oregon’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Because homeowners may participate in more than one program, the reported program participation numbers are higher than the total number of individual homeowners assisted. Figure 4.56 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Oregon’s programs, as of June 30, 2015. OR HHF EXPENDITURES, BY PROGRAM CATEGORY PROGRAM THROUGH JUNE 30, 2015 8% 21% 71% Past-Due Payment ($14,387,198) Unemployment ($136,372,479) Modification ($40,908,476) Source: Oregon Affordable Housing Assistance Corporation, Oregon Homeownership Stabilization Initiative, Reporting, Quarterly Performance Reports Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). 249 250 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.55 HHF OREGON PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 30,000 As of 6/30/2015: Estimate: 15,150 (Peak: 15,280) Homeowner Applications: 28,301 Program Participation: 15,851 Homeowners Assisted: 11,759 Homeowner Admission Rate: 41.5% 25,000 20,000 15,000 10,000 5,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Notes: Estimated includes highest estimate of a range. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Oregon Affordable Housing Assistance Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 8/3/2010, and Amendments to Agreement one through fifteen, as of 6/30/2015; Oregon Affordable Housing Assistance Corporation, Quarterly Performance Reports Q2 2011 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 251 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.56 HHF OREGON ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 MORTGAGE PAYMENT ASSISTANCE PROGRAM (UNEMPLOYMENT)–SEPTEMBER 2010 LOAN PRESERVATION ASSISTANCE PROGRAM (PAST-DUE PAYMENT)–SEPTEMBER 2010 As of 6/30/2015: Estimate: 11,000 (Peak: 11,000) Program Participation: 11,262 Homeowner Admission Rate: 42.5% 15,000 12,000 9,000 5,000 4,000 3,000 6,000 2,000 3,000 1,000 0 As of 6/30/2015: Estimate: 3,900 (Peak: 4,000) Program Participation: 4,340 Homeowner Admission Rate: 31.5% 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 Q1 Q2 2015 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 State Estimated Program Participation Program Participation LOAN REFINANCE ASSISTANCE PROGRAM (MODIFICATION)–MARCH 2011 Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation REBUILDING AMERICAN HOMEOWNERSHIP ASSISTANCE PILOT PROJECT (MODIFICATION)– FEBRUARY 2013 400 100 300 75 As of 6/30/2015: Estimate: 200 (Peak: 330) Program Participation: 179 Homeowner Admission Rate: 23.4% 200 100 50 25 0 As of 6/30/2015: Estimate: 50 (Peak: 50) Program Participation: 70 Homeowner Admission Rate: 25.5% 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2,000 1,500 500 Q1 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation TRANSITION ASSISTANCE PROGRAM (TRANSITION)– SEPTEMBER 2010 3,000 As of 6/30/2015: Estimate: 0 (Peak: 2,515) Program Participation: 0 Homeowner Admission Rate: 0% 2,500 2,000 1,500 Program Ended June 2013 1,000 Q4 State Estimated Program Participation As of 6/30/2015: Estimate: 0 (Peak: 2,600) Program Participation: 0 Homeowner Admission Rate: 0% 2,500 Q3 2010 Program Participation LOAN MODIFICATION ASSISTANCE PROGRAM (MODIFICATION)–SEPTEMBER 2010 3,000 Q1 Q2 2015 Program Ended December 2011 1,000 500 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Program Participation Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and Oregon Affordable Housing Assistance Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 8/3/2010, and Amendments to Agreement one through fifteen, as of 6/30/2015; Oregon Affordable Housing Assistance Corporation, Quarterly Performance Reports Q2 2011 - Q2 2015, no date. 252 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.57 Rhode Island’s HHF Program RI HHF EXPENDITURES, BY PROGRAM CATEGORY Treasury obligated $79,351,573 in HHF funds to Rhode Island.275 At the end of 2010, HHF Rhode Island estimated that it would help as many as 13,125 homeowners with HHF but had reduced that by 74%, to 3,413, as of June 30, 2015. As of that date, HHF Rhode Island had five active HHF programs: one to provide assistance to unemployed homeowners, a second to provide past-due payment assistance, a third and fourth to modify homeowners’ mortgages, and a fifth to provide transition assistance to homeowners giving up their homes. As of June 30, 2015, HHF Rhode Island had helped 3,075 individual homeowners with HHF programs, with the largest numbers in the unemployment and past due payment programs.276 According to Treasury, HHF Rhode Island stopped accepting new applications from struggling homeowners seeking help from HHF after January 31, 2013.277 As of June 30, 2015, the state’s HFA had drawn down 100% of its HHF funds.278 As of June 30, 2015, the most recent data available, HHF Rhode Island had spent $64.3 million (81% of its obligated funds) to help homeowners.279 The remaining $8.3 million (10%) was spent on administrative expenses, and $7.7 million (10%) was held as cash-on-hand.280 Figure 4.58 shows, in aggregate, the number of homeowners estimated to participate in HHF Rhode Island’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Because homeowners may participate in more than one program, the reported program participation numbers are higher than the total number of individual homeowners assisted. Figure 4.59 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF Rhode Island’s programs, as of June 30, 2015. PROGRAM THROUGH JUNE 30, 2015 20.5% 0.5% 18.2% 60.8% Modification ($13,183,426) Transition ($340,227) Past-Due Payment ($11,681,694) Unemployment ($39,062,344) Source: Rhode Island Housing and Mortgage Finance Corporation, Hardest Hit Fund – Rhode Island, About HHFRI, Reports, Quarterly Performance Report Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.58 HHF RHODE ISLAND PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 15,000 As of 6/30/2015: Estimate: 3,413 (Peak: 13,125) Homeowner Applications: 4,833 Program Participation: 3,368 Homeowners Assisted: 3,075 Homeowner Admission Rate: 63.6% 12,000 9,000 6,000 3,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Notes: Estimated includes highest estimate of a range. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Rhode Island Housing and Mortgage Finance Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 8/3/2010, and Amendments to Agreement one through nine, as of 6/30/2015; Rhode Island Housing and Mortgage Finance Corporation, Quarterly Performance Reports Q4 2010 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. Q2 2015 253 254 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.59 HHF RHODE ISLAND ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 LOAN MODIFICATION ASSISTANCE PROGRAM (MODIFICATION)–SEPTEMBER 2010 3,500 TEMPORARY AND IMMEDIATE HOMEOWNER ASSISTANCE (PAST-DUE PAYMENT)– SEPTEMBER 2010 3,000 As of 6/30/2015: Estimate: 477 (Peak: 3,500) Program Participation: 496 Homeowner Admission Rate: 56.2% 3,000 2,500 2,000 As of 6/30/2015: Estimate: 681 (Peak: 2,750) Program Participation: 667 Homeowner Admission Rate: 57.0% 2,500 2,000 1,500 1,500 1,000 1,000 500 500 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 Q1 State Estimated Program Participation Q2 Q3 2013 Q4 Q1 Q2 Q3 2014 Q4 Q1 Q2 2015 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 2014 Q4 Q1 Q2 2015 Program Participation MORTGAGE PAYMENT ASSISTANCE – UNEMPLOYMENT (UNEMPLOYMENT)– SEPTEMBER 2010 As of 6/30/2015: Estimate: 70 (Peak: 875) Program Participation: 65 Homeowner Admission Rate: 55.6% 750 Q4 State Estimated Program Participation Program Participation MOVING FORWARD ASSISTANCE (TRANSITION)– SEPTEMBER 2010 1,000 Q1 Q2 Q3 2010 6,000 As of 6/30/2015: Estimate: 2,153 (Peak: 6,000) Program Participation: 2,112 Homeowner Admission Rate: 67.2% 5,000 4,000 500 3,000 2,000 250 1,000 0 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 Q1 State Estimated Program Participation Q2 Q3 2013 Q4 Q1 Q2 Q3 2014 Q4 Q1 Q2 2015 Program Participation Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 Q1 State Estimated Program Participation Q2 Q3 2013 Q4 Q1 Q2 Q3 2014 Q4 Q1 Q2 2015 Program Participation PRINCIPAL REDUCTION PROGRAM (MODIFICATION)– MAY 2011 100 75 50 As of 6/30/2015: Estimate: 32 (Peak: 100) Program Participation: 28 Homeowner Admission Rate: 66.7% 25 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 Q1 State Estimated Program Participation Q2 Q3 2013 Q4 Q1 Q2 Q3 2014 Q4 Q1 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and Rhode Island Housing and Mortgage Finance Corporation, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 8/3/2010, and Amendments to Agreement one through nine, as of 6/30/2015; Rhode Island Housing and Mortgage Finance Corporation, Quarterly Performance Reports Q4 2010 - Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 South Carolina’s HHF Programs FIGURE 4.60 Treasury obligated $295,431,547 in HHF funds to South Carolina.281 At the end of 2010, HHF South Carolina estimated that it would help as many as 34,100 homeowners with HHF but had reduced that by 46%, to 18,350, as of June 30, 2015. As of that date, HHF South Carolina had five active HHF programs: one to provide unemployment assistance to homeowners, a second to provide past-due payment assistance to homeowners, a third to modify homeowners’ mortgages, a fourth to provide transition assistance to homeowners giving up their homes, and a fifth for blight elimination. As of June 30, 2015, HHF South Carolina had helped 9,611 individual homeowners with HHF programs, with the largest numbers in the past-due assistance and unemployment programs.282 HHF South Carolina ended its program to provide second-lien reduction assistance to homeowners in August 2011 and its HAMP modification assistance program in October 2013. Neither of those programs had assisted a single homeowner. HHF South Carolina’s remaining modification assistance program, approved in October 2013, had only 90 participants as of June 30, 2015. In addition to decreasing the number of homeowners it estimated helping, HHF South Carolina has shifted $35 million (12%) of its HHF funds away from existing HHF programs to blight elimination. This represents a shift from making payments directly to homeowners or their mortgage servicers to help keep homeowners in their homes. Treasury’s Blight Elimination Program allows for substantial payments of TARP funds to land banks, non-profits and other parties, including demolition contractors, in cash and mortgages that can be forgiven over time. For more information about blight elimination in South Carolina, please see the “Update on the Hardest Hit Fund’s Blight Elimination Program” discussion on page 207 of this Quarterly Report. As of June 30, 2015, the state’s HFA had drawn down $175 million (59%) of its HHF funds, and had spent $144.1 million (49% of its obligated funds) to help homeowners; no HHF funds had been spent on blight elimination.283 The remaining $25.9 million (9%) was spent on administrative expenses, and $6.1 million (2%) was held as cash-on-hand.284 Figure 4.61 shows, in aggregate, the number of homeowners estimated to participate in HHF South Carolina’s programs (estimated program participation), the reported number of homeowners who participated in one or more programs (program participation), and the total number of individual homeowners assisted, as of June 30, 2015. Because homeowners may participate in more than one program, the reported program participation numbers are higher than the total number of individual homeowners assisted. Figure 4.62 shows the number of homeowners estimated to participate (estimated program participation) and the reported number of homeowners who participated (program participation) in each of HHF South Carolina’s programs, as of June 30, 2015. SC HHF EXPENDITURES, BY PROGRAM CATEGORY PROGRAM THROUGH JUNE 30, 2015 51% 47% 1% 1% Past-Due Payment ($73,083,560) Modification ($1,986,822) Transition ($1,235,504) Unemployment ($67,745,673) Blight ($0) Source: SC Housing Corp., SC HELP, Reports, Quarterly Performance Reports Q2 2015, no date (may differ from cash disbursements reported on the state’s Quarterly Financial Report). 255 256 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.61 HHF SOUTH CAROLINA PROGRAM PERFORMANCE, ALL HHF PROGRAMS, AS OF 6/30/2015 35,000 As of 6/30/2015: Estimate: 18,350 (Peak: 34,100) Homeowner Applications: 22,837 Program Participation: 14,873 Homeowners Assisted: 9,611 Homeowner Admission Rate: 42.1% 30,000 25,000 20,000 15,000 10,000 5,000 0 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Homeowners Assisted Program Participation Homeowner Applications Q1 Q2 Q3 2013 Q4 Q1 Q2 2014 Q3 Q4 Q1 Q2 2015 Notes: Estimated includes highest estimate of a range, but excludes South Carolina's estimate of the number of blighted properties to be eliminated. Program participation numbers may have double-counted individual homeowners who received assistance from more than one program. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and SC Housing Corp., Commitment to Purchase Financial Instrument and HFA Participation Agreement, 8/3/2010, Amendments to Agreement one through seven, as of 6/30/2015; SC Housing Corp., Quarterly Performance Reports Q1 2011 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 257 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FIGURE 4.62 HHF SOUTH CAROLINA ACTUAL VS. ESTIMATED PROGRAM PERFORMANCE, BY PROGRAM, AS OF 6/30/2015 MONTHLY PAYMENT ASSISTANCE PROGRAM (UNEMPLOYMENT)–SEPTEMBER 2010 15,000 DIRECT LOAN ASSISTANCE PROGRAM (PAST-DUE PAYMENT)–SEPTEMBER 2010 12,000 9,000 As of 6/30/2015: Estimate: 11,500 (Peak: 11,500) Program Participation: 9,205 Homeowner Admission Rate: 47.1% 15,000 As of 6/30/2015: Estimate: 6,000 (Peak: 14,000) Program Participation: 5,330 Homeowner Admission Rate: 32.5% 12,000 9,000 6,000 6,000 3,000 3,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 Q1 Q2 2015 6,000 5,000 5,000 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation As of 6/30/2015: Estimate: 300 (Peak: 6,000) Program Participation: 248 Homeowner Admission Rate: 82.9% 4,000 As of 6/30/2015: Estimate: 550 (Peak: 3,500) Program Participation: 90 Homeowner Admission Rate: 90.9% 2,000 Q1 PROPERTY DISPOSITION ASSISTANCE PROGRAM (TRANSITION)–SEPTEMBER 2010 6,000 3,000 Q4 State Estimated Program Participation Program Participation MODIFICATION ASSISTANCE PROGRAM (MODIFICATION)–OCTOBER 2013 4,000 Q3 2010 3,000 2,000 1,000 1,000 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 Q1 Q2 2015 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 State Estimated Program Participation Program Participation Q4 Q1 2013 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation SECOND MORTGAGE ASSISTANCE PROGRAM (SECOND-LIEN REDUCTION)–SEPTEMBER 2010 NEIGHBORHOOD INITIATIVE PROGRAM (BLIGHT)– JULY 2014 3,000 1,500 1,250 2,500 As of 6/30/2015: Blighted homes proposed to be eliminated: 1,300 Actual blighted homes eliminated: 0 1,000 750 2,000 500 1,000 250 500 As of 6/30/2015: Estimate: 0 (Peak: 2,600) Program Participation: 0 Homeowner Admission Rate: 0% Program Ended August 2011 1,500 0 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 State Estimated Program Participation Q2 Q3 Q4 Q1 2014 Q2 2015 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation HAMP ASSISTANCE PROGRAM (MODIFICATION)– SEPTEMBER 2010 6,000 5,000 4,000 As of 6/30/2015: Estimate: 6,000 (Peak: 6,000) Program Participation: 0 Homeowner Admission Rate: 0% Program Ended October 2013 3,000 2,000 1,000 0 Q1 Q2 Q3 2010 Q4 Q1 Q2 Q3 2011 Q4 Q1 Q2 Q3 Q4 2012 State Estimated Program Participation Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Program Participation Notes: Programs may have been started or ended at different times. Estimated includes highest estimate of a range, but excludes South Carolina’s estimate of the number of blighted properties to be eliminated. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of reported Homeowner Applications. Sources: Treasury and SC Housing Corp., Commitment to Purchase Financial Instrument and HFA Participation Agreement, 8/3/2010, Amendments to Agreement one through seven, as of 6/30/2015; SC Housing Corp., Quarterly Performance Reports Q1 2011 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 258 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Tennessee’s HHF Program Treasury obligated $217,315,593 in HHF funds to Tennessee.285 At the end of 2011, HHF Tennessee estimated that it would provide HHF assistance to as many as 13,500 homeowners through its single HHF unemployment program but had reduced that by 43%, to 7,700, as of June 30, 2015. As of that date, HHF Tennessee had helped 7,355 individual homeowners.286 According to Treasury, as of September 30, 2014, HHF Tennessee stopped accepting new applications from struggling homeowners.287 In the most recent quarter ended September 30, 2015, Treasury approved a second HHF program in Tennessee, for HHF blight elimination.288 As of June 30, 2015, the state’s HFA had drawn down $190.3 million (88%) of its HHF funds and spent $157.3 million (72%) to help homeowners.289 The remaining $19.3 million (9%) was spent on administrative expenses, and $14.7 million (7%) was held as cash-on-hand.290 Figure 4.63 shows the number of homeowners estimated to participate in HHF Tennessee’s program and the number of homeowners who have been assisted, as of June 30, 2015. FIGURE 4.63 HHF TENNESSEE PROGRAM PERFORMANCE, AS OF 6/30/2015 15,000 12,000 9,000 As of 6/30/2015: Estimate: 7,700 (Peak: 13,500) Homeowner Applications: 9,352 Program Participation: 7,355 Homeowners Assisted: 7,355 Homeowner Admission Rate: 78.6% 6,000 3,000 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 2011 State Estimated Program Participation Q4 Q1 Q2 Q3 2012 Q4 Q1 Q2 Q3 2013 Q4 Q1 Q2 2014 Q3 Q4 Q1 Q2 2015 Homeowners Assisted Homeowner Applications Notes: Estimated includes highest estimate of a range. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and Tennessee Housing Development Agency, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through eight, as of 6/30/2015; Tennessee Housing Development Agency, Quarterly Performance Reports Q1 2011 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Washington, DC’s HHF Program Treasury obligated $20,697,198 in HHF funds to Washington, DC.291 At the end of 2010, Washington, DC’s HFA estimated that it would provide HHF assistance to as many as 1,000 homeowners with its single HHF HomeSaver unemployment program but had increased that to 1,300 as of June 30, 2015. As of that date, HHF DC had helped 703 individual homeowners.292 According to Treasury, HHF DC had previously stopped accepting new homeowner applications after November 22, 2013, but, as of September 30, 2015, has reported that it is again accepting applications for select programs.293 As of June 30, 2015, HHF DC had drawn down $18.2 million (88%) of its HHF funds and spent $13.7 million (66% of its obligated funds) to help individual homeowners.294 The remaining $3.2 million (16%) was spent on administrative expenses and $2 million (10%) was held as cash-on-hand.295 Figure 4.64 shows the number of homeowners estimated to participate in HHF DC’s program and the number of homeowners who have been assisted, as of June 30, 2015. FIGURE 4.64 HHF WASHINGTON, DC PROGRAM PERFORMANCE, AS OF 6/30/2015 1,500 As of 6/30/2015: Estimate: 1,300 (Peak: 1,300) Homeowner Applications: 864 Program Participation: 703 Homeowners Assisted: 703 Homeowner Admission Rate: 81.4% 1,200 900 600 300 0 Q1 Q2 Q3 Q4 Q1 2010 Q2 Q3 2011 State Estimated Program Participation Q4 Q1 Q2 Q3 2012 Q4 Q1 Q2 Q3 2013 Q4 Q1 Q2 Q3 Q4 Q1 2014 Q2 2015 Homeowners Assisted Homeowner Applications Notes: Estimated includes highest estimate of a range. Applications are the total number of unique borrower applicants reported to Treasury, which Treasury began reporting as of Q3 2012. Homeowner Admission Rate is cumulative Homeowners Assisted as a percent of Homeowner Applications. Sources: Treasury and District of Columbia Housing Finance Agency, Commitment to Purchase Financial Instrument and HFA Participation Agreement, 9/23/2010, and Amendments to Agreement one through ten, as of 6/30/2015; District of Columbia’s Housing Finance Agency, Quarterly Performance Reports Q1 2011 - Q2 2015, no date; Treasury, HFA Aggregate Reports Q3 2012 – Q2 2015, no date. 259 260 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FHA Short Refinance Program For more information concerning FHA Short Refinance eligibility, see SIGTARP’s April 2011 Quarterly Report, pages 85-87. On March 26, 2010, Treasury and HUD announced the FHA Short Refinance program, which gives homeowners the option of refinancing an underwater, nonFHA-insured mortgage into an FHA-insured mortgage at 97.75% of the home’s value. In March 2013, Treasury reduced TARP funds allocated to provide loss protection to FHA through a letter of credit (initially $1 billion running though October 2020, later reduced to $100 million running through December 31, 2022), plus up to $25 million in fees.296 FHA Short Refinance is voluntary for servicers.297 As of September 30, 2015, according to Treasury, 6,639 loans had been refinanced under the program.298 As of September 30, 2015, Treasury has paid $145,330 on claims for six defaults under the program; however, it is possible that more loans have defaulted but FHA has not yet evaluated the claims.299 Treasury has $10 million in a reserve account for future claims, and has spent approximately $10 million on administrative expenses.300 If a homeowner defaults on a loan refinanced prior to June 1, 2013, TARP compensates the investor for the first 4.38% – 18.85% of losses, with FHA responsible for the remainder. For loans refinanced in after January 25, 2015, Treasury covers the first 7.56% or 14.85% of the loss, depending on the date of refinance.301 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 FINANCIAL INSTITUTION SUPPORT PROGRAMS Capital Purchase Program Treasury’s stated goal for CPP was to invest in “healthy, viable institutions” as a way to promote financial stability, maintain confidence in the financial system, and enable lenders to meet the nation’s credit needs.302 Under CPP, Treasury used $204.9 billion in TARP funds predominantly to purchase preferred equity interests in 707 financial institutions. The institutions issued Treasury senior preferred shares that paid a 5% annual dividend for the first five years and a 9% annual dividend thereafter. Subchapter S Corporations (“S corporations”) paid an initial rate of 7.7%, that increased to 13.8%. Rate increases began in the quarter ended December 31, 2013. As of September 30, 2015, 29 institutions remained in CPP, 19 with outstanding principal investments; in 10 of them, Treasury holds only warrants to purchase stock. Treasury does not consider these 10 institutions to be in TARP, although Treasury applies all proceeds from the sale of warrants in these banks to recovery amounts in TARP’s CPP program. Taxpayers were still owed $5.3 billion.303 According to Treasury, it had write-offs and realized losses of $5.1 billion in the program, leaving $267.9 million in TARP funds outstanding. While Treasury has not yet realized all of those losses, it expects that all of its investments in the banks will be lost.304 As of September 30, 2015, 16 of the 19 banks with remaining principal investments had missed dividends and interest payments.305 As of September 30, 2015, Treasury has recovered $197.4 billion of the CPP principal.306 However, only 261, or 37%, fully repaid CPP principal.307 Of the other banks that exited with less than full repayment, four CPP banks merged with other CPP banks; Treasury sold its investments in 36 banks for less than par and sold at auction its investments in 190 banks (Treasury sold 167 of these at a loss); and 32 institutions or their subsidiary banks failed, meaning Treasury has lost or expects to lose its entire investment in those banks.308 Figure 4.65 shows the status of the 707 CPP recipients as of September 30, 2015. Treasury converted $363.3 million in preferred stock for 28 CPP bank investments into CDCI, which therefore is still an outstanding obligation to TARP. Additionally, $2.2 billion in CPP investments in 137 banks was refinanced in 2011 into SBLF, a non-TARP Treasury program.309 As of September 30, 2015, Treasury had received approximately $12.1 billion in interest and dividends from CPP recipients and $8.1 billion through the sale of CPP warrants.310 For a complete list of CPP share repurchases, see Appendix C: “Transaction Detail.” Although the 10 largest investments accounted for $142.6 billion of the program, CPP made many smaller investments: 311 of the 707 recipients received less than $10 million.311 As of September 30, 2015, of the 19 banks with remaining principal investments in CPP, five were in the Southeast region, one was in the Southwest/ Senior Preferred Stock: Shares that give the stockholder priority dividend and liquidation claims over junior preferred and common stockholders. Subchapter S Corporations (“S corporations”): Corporate form that passes corporate income, losses, deductions, and credit through to shareholders for Federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are taxed at their individual income tax rates. For discussion of SIGTARP’s recommendations on TARP exit paths for community banks, see SIGTARP’s October 2011 Quarterly Report, pages 167-169. For discussion of SIGTARP’s recommendations issued on October 9, 2012, regarding CPP preferred stock auctions, see SIGTARP’s October 2012 Quarterly Report, pages 180-183. 261 262 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM FIGURE 4.65 STATUS OF CPP RECIPIENTS, AS OF 9/30/2015 3% 24% 37% 1% 5% 5% 4% 19% 3% Fully Repaid Principal (261) Remaining Principal Investment in CPP (19) Refinanced into SBLF (137) Refinanced into CDCI (28) Sold for less than par (36) Failed/subsidiary failed (32) Merged (4) Auction: Sold at loss (167) Auction: Sold at par or profit (23) Note: 10 banks repaid CPP principal but remain in TARP with Treasury holding only warrants. Source: Treasury, response to SIGTARP data call, 10/9/2015. South Central region, five were in the Midwest region, three were in the MidAtlantic/Northeast region, four were in the West region, and one was in the Mountain West/Plains region. The Southeast region and the Mid-Atlantic/ Northeast region had the largest total remaining CPP investments: $174.0 million and $30.4 million, respectively. These regions were followed in remaining CPP investments by the Midwest region ($19.1 million), the Southwest/South Central region ($17.3 million), the West region ($24.1 million), and the Mountain West/ Plains region ($3.1 million). Dividends and Interest As of September 30, 2015, Treasury had received $12.1 billion in dividends on its CPP investments.312 However, as of that date, missed dividend and interest payments by 172 institutions, including banks with missed payments that no longer have outstanding CPP principal investments, totaled approximately $521.6 million. At the five-year anniversary in CPP, dividend rates increased from 5% to 9% (some banks structured as S corporations have had their interest rate increase from 7.7% to 13.8%). For more information on dividend rate increases, including the date of rate increases, see Appendix D of this Quarterly Report, which is available on SIGTARP’s website. More than four-fifths, or 16 of the 19 banks that had remaining CPP principal investments as of September 30, 2015, were not current on their dividend (at 9%) and interest payments to Treasury, behind by as many as 27 payments totaling $41.6 million.313 When a participant misses six dividend (or interest) payments, Treasury has the right to appoint up to two additional members to the institution’s board of directors.314 As of September 30, 2015, 16 of the 19 institutions with remaining principal investments have missed at least six payments, but none have Treasuryappointed directors. For institutions that miss five or more dividend (or interest) payments, Treasury has stated that it would seek consent from such institutions to send observers to the institutions’ board meetings.315 According to Treasury, the observers would be selected from its Office of Financial Stability (“OFS”) and assigned to “gain a better understanding of the institution’s condition and challenges and to observe how the board is addressing the situation.”316 As of September 30, 2015, Treasury had assigned observers to 13 current CPP recipients, as noted in Table 4.34.317 Seven of the 707 banks that received CPP investments have never made a single dividend payment to Treasury. Two, Saigon National Bank and Grand Mountain Bankshares, have remaining CPP principal investments and three, Midwest Bank Holdings, Inc., One Georgia Bank, and Rising Sun Bancorp, have filed for bankruptcy. Table 4.34 lists CPP recipients that had unpaid dividend (or interest) payments as of September 30, 2015. For a complete list of CPP recipients and institutions making dividend or interest payments, see Appendix C: “Transaction Detail.” SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Twelve Banks Rejected Treasury Observers Twelve banks have rejected Treasury’s requests to send an observer to the institutions’ board meetings.318 The banks had initial CPP investments of as much as $7 million, have missed as many as 27 quarterly dividend payments to Treasury, and have been overdue in dividend payments by as much as $4.1 million.319 Six of these banks have since been sold at a loss to Treasury at auction.320 Table 4.33 lists the banks that rejected Treasury observers. TABLE 4.33 CPP BANKS THAT REJECTED TREASURY OBSERVERS Institution Intermountain Community Bancorp CPP Principal Investment Number of Missed Payments Value of Missed Payments Date of Treasury Request Date of Rejection $27,000,000 —a $— 3/11/2011 4/12/2011 b — 10/18/2011 11/23/2011 3,204,600 3/28/2012 4/27/2012 e Community Bankers Trust Corporation 17,680,000 — White River Bancshares Companyc 16,800,000 14d Timberland Bancorp, Inc. 16,641,000 — — 6/27/2011 8/18/2011 12,000,000 12f 3,020,400 3/10/2011 5/6/2011 h c Alliance Financial Services Inc.c 11,385,000 15 2,134,688 3/9/2011 5/18/2012 Commonwealth Business Bankc 7,701,000 10i 1,049,250 8/13/2010 9/20/2010 Pacific International Bancorpj 6,500,000 —k — 9/23/2010 11/17/2010 Rising Sun Bancorp 5,983,000 20 1,749,960 12/3/2010 2/28/2011 Omega Capital Corp.c 2,816,000 15l 575,588 12/3/2010 1/13/2011 Central Virginia Bankshares, Inc. g m Citizens Bank & Trust Company 2,400,000 5 163,500 9/23/2010 11/17/2010 Saigon National Bank 1,549,000 27 635,598 8/13/2010 9/20/2010 n Notes: Numbers may not total due to rounding. a Bank later became current in accrued and unpaid dividends after missing the initial scheduled payment date(s). Prior to repayment, Intermountain Community Bancorp had 12 missed payments totaling $4.1 million. b Bank later became current in accrued and unpaid dividends after missing the initial scheduled payment date(s). Prior to repayment, Community Bankers had seven missed payments totaling $1.5 million. c Bank was sold at a loss at auction. d White River Bancshares Company was sold at auction and its missed payments to Treasury were not repaid. e Bank later became current in accrued and unpaid dividends after missing the initial scheduled payment date(s). Prior to repayment, Timberland had eight missed payments totaling $1.7 million. f Alliance Financial Services Inc. was sold at a loss at auction and its missed payments to Treasury were not repaid. g Bank accepted and then declined Treasury’s request to have a Treasury observer attend board of directors meetings. h Central Virginia Bankshares, Inc. was sold to C&F Financial Corporation and its missed payments to Treasury were not repaid. i Commonwealth Business Bank was sold at a loss at auction and its missed payments to Treasury were not repaid. j Bank has exited the Capital Purchase Program. k Bank later became current in accrued and unpaid dividends after missing the initial scheduled payment date(s). Prior to repayment, Pacific International Bancorp had 10 missed payments totaling $0.8 million. l Omega Capital Corp. was sold at a loss at auction and its missed payments to Treasury were not repaid. m Rising Sun Bancorp entered bankruptcy and its missed payments to Treasury were not repaid. n Citizens Bank & Trust Company was sold at a loss at auction and its missed payments to Treasury were not repaid. Source: Treasury, Dividends and Interest Report, 10/9/2015. 263 264 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.34 CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 9/30/2015 Company Dividend or Payment Type Number of Missed Payments Saigon National Bank Non-Cumulative One United Bank Observers Assigned to Board of Directors2 Value of Missed Payments3 Value of Unpaid Amounts3,4,5 27 $653,598 $653,598 Interest 26 4,644,255 4,644,255 Grand Mountain Bancshares, Inc. Cumulative 25 1,164,395 1,164,395 Citizens Commerce Bancshares, Inc. Cumulative 24 2,438,100 2,438,100 Cecil Bancorp, Inc. Cumulative 23 4,017,100 4,017,100 Capital Commerce Bancorp, Inc. Cumulative 21 1,714,238 1,714,238 Harbor Bankshares Corporation Cumulative 21 2,227,000 2,057,000 Pinnacle Bank Holding Company Cumulative 21 1,475,040 1,475,040 CalWest Bancorp Cumulative 20 1,548,210 1,548,210 Liberty Shares, Inc. Cumulative 20 5,572,800 5,572,800 Tidelands Bancshares, Inc Cumulative 20 4,478,880 4,478,880 HCSB Financial Corporation Cumulative 19 3,707,313 3,707,313 Allied First Bancorp, Inc. Cumulative 17 1,028,648 1,028,648 ** US Metro Bank Non-Cumulative 15 756,360 756,360 OneFinancial Corporation*,** Non-Cumulative 14 6,174,490 6,174,490 Calvert Financial Corporation Cumulative 11 217,678 217,678 Non-Cumulative 23 $1,059,242 $1,059,242 City National Bancshares Corporation Cumulative 22 2,973,285 2,973,285 Goldwater Bank, N.A. Non-Cumulative 22 923,640 923,640 Prairie Star Bancshares, Inc.***** Cumulative 21 913,150 913,150 United American Bank Non-Cumulative 21 2,482,702 2,482,702 U.S. Century Bank 15,378,590 15,378,590 ** Exchanges, Sales, Recapitalizations, and Failed Banks Lone Star Bank***** ***** **,***** ***** Non-Cumulative 21 **** Rising Sun Bancorp Cumulative 20 1,749,960 1,749,960 Royal Bancshares of Pennsylvania, Inc.***** Cumulative 20 7,601,750 7,601,750 CSRA Bank Corp.***** Cumulative 19 717,300 717,300 Idaho Bancorp Cumulative 19 1,786,238 1,786,238 Blue Valley Ban Corp Cumulative 18 4,893,750 4,893,750 Pacific City Financial Corporation***** Cumulative 18 3,973,050 3,973,050 Centrue Financial Corporation***** Cumulative 18 6,959,475 6,959,475 Georgia Primary Bank Non-Cumulative 18 1,113,163 1,113,163 Northern States Financial Corp Cumulative 18 3,872,475 3,872,475 Western Community Bancshares, Inc. Cumulative 17 1,834,538 1,834,538 **** ***** ***** ***** Continued on next page 265 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 9/30/2015 Dividend or Payment Type Company Number of Missed Payments Observers Assigned to Board of Directors2 (CONTINUED) Value of Missed Payments3 Value of Unpaid Amounts3,4,5 Anchor BanCorp Wisconsin, Inc.**** Cumulative 17 $23,604,167 $23,604,167 First Banks, Inc. Cumulative 17 64,543,063 64,543,063 Syringa Bancorp Cumulative 17 1,853,000 1,853,000 Market Bancorporation, Inc. Cumulative 16 449,080 449,080 Provident Community Bancshares, Inc. Cumulative 15 1,737,375 1,737,375 Central Virginia Bankshares, Inc. Cumulative 15 2,134,688 2,134,688 Omega Capital Corp. Cumulative 15 575,588 575,588 Rogers Bancshares, Inc.**** Cumulative 15 5,109,375 5,109,375 Pathway Bancorp***** Cumulative 15 761,588 761,588 ***** **** ***** ***** Bridgeview Bancorp, Inc. Cumulative 15 7,766,250 7,766,250 Madison Financial Corporation***** Cumulative 15 688,913 688,913 Midtown Bank & Trust Company Non-Cumulative 15 1,067,213 1,067,213 TCB Holding Company**** Cumulative 15 2,397,488 2,397,488 Provident Community Bancshares, Inc. Cumulative 15 1,737,375 1,737,375 Marine Bank & Trust Company***** Non-Cumulative 15 613,125 613,125 Highlands Independent Bancshares, Inc. Cumulative 15 1,436,313 1,436,313 NCAL Bancorp Cumulative 14 2,207,500 2,207,500 Cumulative 14 2,864,575 2,864,575 Dickinson Financial Corporation II Cumulative 14 27,859,720 27,859,720 ***** **,***** ***** ***** ***** 1st FS Corporation ***** ***** FC Holdings, Inc. Cumulative 14 4,013,730 4,013,730 Ridgestone Financial Services, Inc.***** Cumulative 14 2,079,175 2,079,175 Intervest Bancshares Corporation Cumulative 14 4,375,000 4,375,000 Fidelity Federal Bancorp Cumulative 14 1,229,924 1,229,924 Cumulative 14 7,245,000 7,245,000 ***** ***** ***** Premierwest Bancorp ***** SouthFirst Bancshares, Inc. Cumulative 14 609,270 609,270 Great River Holding Company*,**,***** Cumulative 14 2,466,660 2,466,660 Porter Bancorp, Inc. Cumulative 13 6,737,500 6,737,500 First Southwest Bancorporation, Inc.***** Cumulative 13 974,188 974,188 Tennessee Valley Financial Holdings, Inc. Cumulative 13 531,375 531,375 First Sound Bank Non-Cumulative 13 1,202,500 1,202,500 Pacific Commerce Bank**,***** Non-Cumulative 13 751,089 695,771 ***** ***** ***** Patriot Bancshares, Inc.***** Cumulative 13 4,612,010 4,612,010 ***** Bank of the Carolinas Corporation Cumulative 14 2,306,325 2,306,325 ***** White River Bancshares Company Cumulative 14 $3,204,600 $3,204,600 Continued on next page 266 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 9/30/2015 Dividend or Payment Type Company Number of Missed Payments Stonebridge Financial Corp.***** Cumulative 12 Observers Assigned to Board of Directors2 (CONTINUED) Value of Missed Payments3 Value of Unpaid Amounts3,4,5 1,794,180 1,794,180 Premier Financial Corp Interest 12 1,597,857 1,597,857 Citizens Bancshares Co. (MO)**** Cumulative 12 4,086,000 4,086,000 Northwest Bancorporation, Inc.***** Cumulative 12 1,716,750 1,716,750 Plumas Bancorp Cumulative 12 1,792,350 1,792,350 Gold Canyon Bank Non-Cumulative 12 254,010 254,010 Santa Clara Valley Bank, N.A.***** Non-Cumulative 12 474,150 474,150 *,**,***** ***** **** Spirit BankCorp, Inc. Cumulative 12 4,905,000 4,905,000 Alliance Financial Services, Inc.*,***** Interest 12 3,020,400 3,020,400 First Trust Corporation*,***** Interest 12 4,522,611 4,522,611 Community First, Inc. ***** Cumulative 12 2,911,200 2,911,200 Eastern Virginia Bankshares, Inc.***** Cumulative 11 3,300,000 3,300,000 ***** The Queensborough Company Cumulative 11 1,798,500 1,798,500 Boscobel Bancorp, Inc.*,***** Interest 11 1,288,716 1,288,716 Investors Financial Corporation of Pettis County, Inc.* Interest 11 922,900 922,900 Florida Bank Group, Inc.***** Cumulative 11 3,068,203 3,068,203 Reliance Bancshares, Inc.***** Cumulative 11 5,995,000 5,995,000 Village Bank and Trust Financial Corp. Cumulative 11 2,026,475 2,026,475 AB&T Financial Corporation Cumulative 11 481,250 481,250 Atlantic Bancshares, Inc.***** Cumulative 11 299,255 299,255 Cumulative 10 2,500,000 2,500,000 Cumulative 10 9,125,000 9,125,000 Security State Bank Holding-Company Interest 10 2,931,481 2,931,481 Bank of George***** Non-Cumulative 10 364,150 364,150 Valley Community Bank Non-Cumulative 10 749,375 749,375 Commonwealth Business Bank***** Non-Cumulative 10 1,049,250 1,049,250 Gregg Bancshares, Inc.**** Cumulative 9 101,115 101,115 Metropolitan Bank Group, Inc./NC Bancorp, Inc.*** Cumulative 9 12,716,368 9,511,543 National Bancshares, Inc.***** Cumulative 9 3,024,383 3,024,383 Cumulative 9 1,581,863 1,581,863 Cumulative 9 1,275,300 1,275,300 Interest 9 $803,286 ***** ***** ***** First Financial Service Corporation ***** Old Second Bancorp, Inc. ***** *,**,***** ***** SouthCrest Financial Group, Inc. ***** Citizens Bancorp**** Community Pride Bank Corporation *,**,***** $803,286 Continued on next page 267 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 9/30/2015 Dividend or Payment Type Company Number of Missed Payments Observers Assigned to Board of Directors2 (CONTINUED) Value of Missed Payments3 Value of Unpaid Amounts3,4,5 Premier Bank Holding Company**** Cumulative 9 1,164,938 1,164,938 RCB Financial Corporation Cumulative 9 1,055,520 1,055,520 Central Federal Corporation***** Cumulative 8 722,500 722,500 CoastalSouth Bancshares, Inc. Cumulative 8 1,687,900 1,687,900 HMN Financial, Inc.***** Cumulative 8 2,600,000 2,600,000 Non-Cumulative 8 605,328 605,328 Independent Bank Corporation Cumulative 8 14,193,996 6,164,420 First Intercontinental Bank***** Non-Cumulative 8 697,400 697,400 Coloeast Bankshares, Inc. Cumulative 8 1,090,000 1,090,000 Cascade Financial Corporation***** Cumulative 7 3,409,875 3,409,875 Integra Bank Corporation**** Cumulative 7 7,313,775 7,313,775 Princeton National Bancorp, Inc.**** Cumulative 7 2,194,763 2,194,763 Brogan Bankshares, Inc. Interest 7 352,380 352,380 Maryland Financial Bank***** Non-Cumulative 7 162,138 162,138 Cumulative 6 1,754,475 1,754,475 ***** ***** One Georgia Bank **** *** ***** * Severn Bancorp, Inc. ***** Central Pacific Financial Corp. Cumulative 6 10,125,000 — Coastal Banking Company, Inc.***** Cumulative 6 995,000 995,000 First Reliance Bancshares, Inc.***** Cumulative 6 1,254,720 1,254,720 FNB United Corp.*** Cumulative 6 3,862,500 — ***,10 FPB Bancorp, Inc. (FL) Cumulative 6 435,000 435,000 Indiana Bank Corp.**** Cumulative 6 107,310 107,310 Naples Bancorp, Inc. Cumulative 6 327,000 327,000 First Place Financial Corp. Cumulative 6 5,469,525 5,469,525 Worthington Financial Holdings, Inc.***** Cumulative 6 222,360 222,360 Fort Lee Federal Savings Bank Non-Cumulative 6 106,275 106,275 Alarion Financial Services, Inc.***** Cumulative 6 532,560 532,560 Citizens Bank & Trust Company Non-Cumulative 5 163,500 163,500 Community Financial Shares, Inc.*** Cumulative 5 759,820 759,820 Delmar Bancorp Cumulative 5 613,125 613,125 First BanCorp (PR)*** Cumulative 5 42,681,526 — **** ***** **** ***** ***** First Federal Bancshares of Arkansas, Inc. Cumulative 5 1,031,250 1,031,250 Flagstar Bancorp, Inc.***** Cumulative 5 16,666,063 16,666,063 Midwest Banc Holdings, Inc.6 Cumulative 5 4,239,200 4,239,200 Pacific Capital Bancorp Cumulative 5 $13,547,550 ***** ***,10 — Continued on next page 268 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 9/30/2015 Dividend or Payment Type Number of Missed Payments Non-Cumulative Northwest Commercial Bank IA Bancorp, Inc.**,***** Observers Assigned to Board of Directors2 (CONTINUED) Value of Missed Payments3 Value of Unpaid Amounts3,4,5 5 494,063 $494,063 Non-Cumulative 5 135,750 135,750 Cumulative 5 472,365 393,638 CB Holding Corp. Cumulative 4 224,240 224,240 Colony Bankcorp, Inc.***** Cumulative 4 1,400,000 1,400,000 First Community Bank Corporation of America***** Cumulative 4 534,250 534,250 Green Bankshares, Inc.***** Cumulative 4 3,613,900 3,613,900 Hampton Roads Bankshares, Inc.***,10 Cumulative 4 4,017,350 4,017,350 Pierce County Bancorp Cumulative 4 370,600 370,600 Santa Lucia Bancorp Cumulative 4 200,000 200,000 Sterling Financial Corporation (WA)***,10 Cumulative 4 18,937,500 18,937,500 TIB Financial Corp*****,8 Cumulative 4 1,850,000 1,850,000 Community Bank of the Bay7 Non-Cumulative 4 72,549 72,549 The Bank of Currituck Non-Cumulative 4 219,140 219,140 The Connecticut Bank and Trust Company***** Non-Cumulative 4 246,673 246,673 Plato Holdings Inc.*,***** Interest 4 207,266 207,266 Virginia Company Bank Company GulfSouth Private Bank**** **** **** **** ***** ***** Non-Cumulative 3 185,903 185,903 Blue River Bancshares, Inc.**** Cumulative 3 204,375 204,375 Community West Bancshares Cumulative 3 585,000 585,000 Legacy Bancorp, Inc. Cumulative 3 206,175 206,175 Sonoma Valley Bancorp**** Cumulative 3 353,715 353,715 Superior Bancorp Inc. Cumulative 3 2,587,500 2,587,500 Tennessee Commerce Bancorp, Inc.**** Cumulative 3 1,125,000 1,125,000 ***** ***** **** **** The South Financial Group, Inc. Cumulative 3 13,012,500 13,012,500 Treaty Oak Bancorp, Inc.***** Cumulative 3 133,553 133,553 Bank of Commerce ***** Non-Cumulative 3 122,625 122,625 Carolina Trust Bank***** Non-Cumulative 3 150,000 150,000 Non-Cumulative 3 150,000 150,000 ***** ,8 Commerce National Bank Cadence Financial Corporation Cumulative 2 550,000 550,000 First Alliance Bancshares, Inc.***** Cumulative 2 93,245 93,245 ***** Pacific Coast National Bancorp Cumulative 2 112,270 112,270 The Baraboo Bancorporation, Inc.***** Cumulative 2 565,390 565,390 Colonial American Bank***** Non-Cumulative 2 $15,655 **** $15,655 Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 9/30/2015 Dividend or Payment Type Number of Missed Payments Non-Cumulative FBHC Holding Company Gateway Bancshares, Inc. Company Fresno First Bank*** *,***** Observers Assigned to Board of Directors2 (CONTINUED) Value of Missed Payments3 Value of Unpaid Amounts3,4,5 2 33,357 33,357 Interest 2 123,127 123,127 Cumulative 2 163,500 163,500 CIT Group Inc. Cumulative 2 29,125,000 29,125,000 UCBH Holdings, Inc.**** Cumulative 1 3,734,213 3,734,213 Non-Cumulative 1 585,875 585,875 Non-Cumulative 1 ****,9 Exchange Bank ***** Tifton Banking Company **** Total 51,775 51,775 $603,381,202 $521,626,180 Notes: Numbers may not total due to rounding. Approximately $39.2 million of the $521.6 million in unpaid CPP dividend/interest payments are non-cumulative and Treasury has no legal right to missed dividends that are non-cumulative. * Missed interest payments occur when a Subchapter S recipient fails to pay Treasury interest on a subordinated debenture in a timely manner. ** Partial payments made after the due date. *** C ompleted an exchange with Treasury. For an exchange of mandatorily convertible preferred stock or trust preferred securities, dividend payments normally continue to accrue. For an exchange of mandatorily preferred stock for common stock, no additional preferred dividend payments will accrue. **** F iled for bankruptcy or subsidiary bank failed. For completed bankruptcy proceedings, Treasury’s investment was extinguished and no additional dividend payments will accrue. For bank failures, Treasury may elect to file claims with bank receivers to collect current and/or future unpaid dividends. ***** Treasury sold or is selling its CPP investment to the institution or a third party. No additional preferred dividend payments will accrue after a sale, absent an agreement to the contrary. Treasury has appointed one or more directors to the Board of Directors. Treasury has assigned an observer to the Board of Directors. IGTARP and Treasury do not use the same methodology to report unpaid dividend and interest payments. For example, Treasury generally excludes institutions SIGTARP would include, such as those: (i) S that have completed a recapitalization, restructuring, or exchange with Treasury (though Treasury does report such institutions as non-current during the pendency of negotiations); (ii) for which Treasury sold the CPP investment to a third party, or otherwise disposed of the investment to facilitate the sale of the institution to a third party; (iii) that filed for bankruptcy relief; or (iv) that had a subsidiary bank fail. If a completed transaction resulted in payment to Treasury for all unpaid dividends and interest, SIGTARP does not include the institution’s obligations under unpaid amounts. 2 For First BanCorp and Pacific Capital Bancorp, Treasury had a contractual right to assign an observer to the board of directors. For the remainder, Treasury obtained consent from the institution to assign an observer to the board of directors. 3 Includes unpaid cumulative dividends, non-cumulative dividends, and Subchapter S interest payments but does not include interest accrued on unpaid cumulative dividends. 4 Excludes institutions that missed payments but (i) have fully caught-up or exchanged new securities for missed payments, or (ii) have repaid their investment amounts and exited the Capital Purchase Program. 5 Includes institutions that missed payments and (i) completed an exchange with Treasury for new securities, (ii) purchased their CPP investment from Treasury, or saw a third party purchase its CPP investment from Treasury, or (iii) are in, or have completed bankruptcy proceedings or its subsidiary bank failed. 6 For Midwest Banc Holdings, Inc., the number of missed payments is the number last reported from SIGTARP Quarterly Report to Congress 4/20/2010, prior to bankruptcy filing; missed payment amounts are from Treasury’s response to SIGTARP data call, 10/13/2010. 7 Treasury reported four missed payments by Community Bank of the Bay before it was allowed to transfer from CPP to CDCI. Upon transfer, Treasury reset the number of missed payments to zero. 8 For South Financial Group, Inc. and TIB Financial Corp, the number of missed payments and unpaid amounts reflect figures Treasury reported prior to the sale. 9 For CIT Group Inc., the number of missed payments is from the number last reported from SIGTARP Quarterly Report to Congress 1/30/2010, shortly after the bankruptcy filing; missed payment amounts are from Treasury’s response to SIGTARP data call, 10/13/2010. 10 Completed exchanges: - The exchange between Treasury and Hampton Roads, and the exchange between Treasury and Sterling Financial did not account for unpaid dividends. The number of missed payments and unpaid amounts reflect the figures Treasury reported prior to the exchange. - The exchange between Treasury and Central Pacific Financial Corp., and the exchange between Treasury and Pacific Capital Bancorp did account for unpaid dividends, thereby eliminating any unpaid amounts. The number of missed payments reflects the amount Treasury reported prior to the exchange. 1 Sources: Treasury, Dividends and Interest Report, 10/9/2015; Treasury, response to SIGTARP data call, 10/9/2015. 269 270 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM CPP Recipients: Bankrupt or with Failed Subsidiary Banks As of September 30, 2015, 32 CPP participants had gone bankrupt or had a subsidiary bank fail, as indicated in Table 4.35.321 TABLE 4.35 CPP RECIPIENTS: BANKRUPT OR WITH FAILED SUBSIDIARY BANKS, AS OF 9/30/2015 Company Initial Invested Amount Investment Date Status Bankruptcy/ Failure Datea ($ MILLIONS) Subsidiary Bank $2,330.0 12/31/2008 Bankruptcy proceedings completed with no recovery of Treasury’s investment; subsidiary bank remains active 298.7 11/14/2008 In bankruptcy; subsidiary bank failed 11/6/2009 United Commercial Bank, San Francisco, CA 4.1 1/16/2009 Bankruptcy proceedings completed with no recovery of Treasury’s investment; subsidiary bank failed 11/13/2009 Pacific Coast National Bank, San Clemente, CA 89.4b 12/5/2008 In bankruptcy; subsidiary bank failed 5/14/2010 Midwest Bank and Trust Company, Elmwood Park, IL Sonoma Valley Bancorp, Sonoma, CA 8.7 2/20/2009 Subsidiary bank failed 8/20/2010 Sonoma Valley Bank, Sonoma, CA Pierce County Bancorp, Tacoma, WA 6.8 1/23/2009 Subsidiary bank failed 11/5/2010 Pierce Commercial Bank, Tacoma, WA Tifton Banking Company, Tifton, GA 3.8 4/17/2009 Failed 11/12/2010 N/A Legacy Bancorp, Inc., Milwaukee, WI 5.5 1/30/2009 Subsidiary bank failed 3/11/2011 Legacy Bank, Milwaukee, WI Superior Bancorp, Inc., Birmingham, AL 69.0 12/5/2008 Subsidiary bank failed 4/15/2011 Superior Bank, Birmingham, AL Integra Bank Corporation, Evansville, IN 83.6 2/27/2009 Subsidiary bank failed 7/29/2011 Integra Bank, Evansville, IN 5.5 5/8/2009 Failed 7/15/2011 N/A 7/15/2011 First Peoples Bank, Port Saint Lucie, FL 9/23/2011 Citizens Bank of Northern California, Nevada City, CA CIT Group Inc., New York, NY UCBH Holdings Inc., San Francisco, CA Pacific Coast National Bancorp, San Clemente, CA Midwest Banc Holdings, Inc., Melrose Park, IL One Georgia Bank, Atlanta, GA FPB Bancorp, Port Saint Lucie, FL 5.8 12/5/2008 Subsidiary bank failed Citizens Bancorp, Nevada City, CA 10.4 12/23/2008 Subsidiary bank failed 11/1/2009 CIT Bank, Salt Lake City, UT Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 CPP RECIPIENTS: BANKRUPT OR WITH FAILED SUBSIDIARY BANKS, AS OF 9/30/2015 Company Initial Invested Amount Investment Date Status ($ MILLIONS) (CONTINUED) Bankruptcy/ Failure Datea Subsidiary Bank 10/14/2011 Country Bank, Aledo, IL CB Holding Corp., Aledo, IL $4.1 5/29/2009 Subsidiary bank failed Tennessee Commerce Bancorp, Inc., Franklin, TN 30.0 12/19/2008 Subsidiary bank failed 1/27/2012 Tennessee Commerce Bank, Franklin, TN Blue River Bancshares, Inc., Shelbyville, IN 5.0 3/6/2009 Subsidiary bank failed 2/10/2012 SCB Bank, Shelbyville, IN Fort Lee Federal Savings Bank 1.3 5/22/2009 Failed 4/20/2012 N/A Gregg Bancshares, Inc. 0.9 2/13/2009 Subsidiary bank failed 7/13/2012 Glasgow Savings Bank, Glasgow, MO Premier Bank Holding Company 9.5 3/20/2009 In bankruptcy 8/14/2012 N/A GulfSouth Private Bank 7.5 9/25/2009 Failed 10/19/2012 N/A Investors Financial Corporation of Pettis County, Inc. 4.0 5/8/2009 Subsidiary bank failed 10/19/2012 Excel Bank, Sedalia, MO First Place Financial Corporation 72.9 3/13/2009 In bankruptcy 10/29/2012 First Place Bank, Warren, OH Princeton National Bancorp 25.1 1/23/2009 Subsidiary bank failed 11/2/2012 Citizens First National Bank, Princeton, IL Gold Canyon Bank 1.6 6/26/2009 Failed 4/5/2013 N/A Indiana Bank Corp. 1.3 4/24/2009 In bankruptcy 4/9/2013 N/A 25.0 1/30/2009 In bankruptcy 7/5/2013 N/A 110.0 1/30/2009 Filed for and exited bankruptcy protectionc 8/12/2013 N/A 11.7 1/16/2009 Subsidiary bank failed 12/13/2013 Texas Community Bank, The Woodlands, TX Syringa Bancorp 8.0 1/16/2009 Subsidiary bank failed 1/31/2014 Syringa Bank, Boise, ID Idaho Bancorp, Boise, ID 6.9 1/16/2009 In bankruptcy 4/24/2014 N/A 10/17/2014 NRBS Financial Rising Sun, MD 11/7/2014 Frontier Bank Palm Desert, CA Rogers Bancshares, Inc. Anchor BanCorp Wisconsin Inc. TCB Holding Company Rising Sun Bancorp, Rising Sun, MD 6.0 1/9/2009 Subsidiary bank failed Western Community Bancshares, Inc. Palm Desert, CA 7.3 12/23/2008 Subsidiary bank failed Total $3,259.4 Notes: Numbers may not total due to rounding. a Date is the earlier of the bankruptcy filing by holding company or the failure of subsidiary bank. b The amount of Treasury’s investment prior to bankruptcy was $89,874,000. On 3/8/2010, Treasury exchanged its $84,784,000 of preferred stock in Midwest Banc Holdings, Inc. (MBHI) for $89,388,000 of MCP, which is equivalent to the initial investment amount of $84,784,000, plus $4,604,000 of capitalized previously accrued and unpaid dividends. c Treasury recouped $6 million of its investment once the company’s plan of reorganization became effective. Sources: Treasury, Transactions Report, 9/29/2015. 271 272 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Realized Losses and Write-offs According to Treasury, as of September 30, 2015, Treasury had realized losses and write-offs of $5.1 billion on its CPP investments, including $8.4 million this quarter, as shown in Table 4.36. TABLE 4.36 REALIZED LOSSES AND WRITE-OFFS IN CPP, AS OF 9/30/2015 Institution ($ MILLIONS) TARP Investment Loss $4 $2 12/3/2010 Sale of preferred stock at a loss Date Description Realized Losses The Bank of Currituck Treaty Oak Bancorp, Inc. 3 3 2/15/2011 Sale of preferred stock at a loss 44 6 3/4/2011 Sale of preferred stock at a loss 3 2 3/9/2011 First Federal Bancshares of Arkansas, Inc. 17 11 5/3/2011 Sale of preferred stock at a loss First Community Bank Corporation of America 11 3 5/31/2011 Sale of preferred stock at a loss Cascade Financial Corporation 39 23 6/30/2011 Sale of preferred stock at a loss Green Bankshares, Inc. 72 4 9/7/2011 Sale of preferred stock at a loss Cadence Financial Corporation FBHC Holding Company Santa Lucia Bancorp 4 1 124 14 4/3/2012 Sale of preferred stock at a loss First Financial Holdings Inc. 65 8 4/3/2012 Sale of preferred stock at a loss Banner Corporation/Banner Bank 10/21/2011 Sale of subordinated debentures at a loss Sale of preferred stock at a loss MainSource Financial Group, Inc. 57 4 4/3/2012 Sale of preferred stock at a loss Seacoast Banking Corporation of Florida 50 9 4/3/2012 Sale of preferred stock at a loss Wilshire Bancorp, Inc. 62 4 4/3/2012 Sale of preferred stock at a loss WSFS Financial Corporation Central Pacific Financial Corp. 53 4 135 62 4/3/2012 Sale of preferred stock at a loss 4/4/2012 Sale of common stock at a loss Ameris Bancorp 52 4 6/19/2012 Sale of preferred stock at a loss Farmers Capital Corporation 30 8 6/19/2012 Sale of preferred stock at a loss First Capital Bancorp, Inc. 11 1 6/19/2012 Sale of preferred stock at a loss First Defiance Financial Corp. 37 1 6/19/2012 Sale of preferred stock at a loss LNB Bancorp, Inc. 25 3 6/19/2012 Sale of preferred stock at a loss 105 11 21 4 Taylor Capital Group, Inc. United Bancorp, Inc. 6/19/2012 Sale of preferred stock at a loss 6/19/2012 Sale of preferred stock at a loss Fidelity Southern Corporation 48 5 7/3/2012 Sale of preferred stock at a loss First Citizens Banc Corp 21 2 7/3/2012 Sale of preferred stock at a loss Firstbank Corporation 33 2 7/3/2012 Sale of preferred stock at a loss Metrocorp Bancshares, Inc. 45 1 7/3/2012 Sale of preferred stock at a loss Peoples Bancorp of North Carolina, Inc. 25 2 7/3/2012 Sale of preferred stock at a loss Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 REALIZED LOSSES AND WRITE-OFFS IN CPP, AS OF 9/30/2015 Institution Pulaski Financial Corp. Southern First Bancshares, Inc. Naples Bancorp, Inc. ($ MILLIONS) (CONTINUED) TARP Investment Loss $33 $4 17 2 7/3/2012 Sale of preferred stock at a loss Date 7/3/2012 Description Sale of preferred stock at a loss 4 3 7/12/2012 Sale of preferred stock at a loss Commonwealth Bancshares, Inc. 20 5 8/9/2012 Sale of preferred stock at a loss Diamond Bancorp, Inc. 20 6 8/9/2012 Sale of preferred stock at a loss Fidelity Financial Corporation 36 4 8/9/2012 Sale of preferred stock at a loss Market Street Bancshares, Inc. 20 2 8/9/2012 Sale of preferred stock at a loss CBS Banc-Corp. 24 2 8/10/2012 Sale of preferred stock at a loss Marquette National Corporation 36 10 8/10/2012 Sale of preferred stock at a loss Park Bancorporation, Inc. 23 6 8/10/2012 Sale of preferred stock at a loss 7 2 8/10/2012 Sale of preferred stock at a loss Premier Financial Bancorp, Inc. Trinity Capital Corporation 36 9 8/10/2012 Sale of preferred stock at a loss Exchange Bank 43 5 8/13/2012 Sale of preferred stock at a loss 7 4 8/14/2012 Sale of preferred stock at a loss 303 188 31 2 Millennium Bancorp, Inc. Sterling Financial Corporation BNC Bancorp 8/20/2012 Sale of preferred stock at a loss 8/29/2012 Sale of preferred stock at a loss First Community Corporation 11 0 8/29/2012 Sale of preferred stock at a loss First National Corporation 14 2 8/29/2012 Sale of preferred stock at a loss Mackinac Financial Corporation 11 1 8/29/2012 Sale of preferred stock at a loss Yadkin Valley Financial Corporation 13 5 9/18/2012 Sale of preferred stock at a loss Alpine Banks of Colorado 70 13 9/20/2012 Sale of preferred stock at a loss F&M Financial Corporation (NC) 17 1 9/20/2012 Sale of preferred stock at a loss F&M Financial Corporation (TN) 17 4 9/21/2012 Sale of preferred stock at a loss First Community Financial Partners, Inc. 22 8 9/21/2012 Sale of preferred stock at a loss Central Federal Corporation 7 4 9/26/2012 Sale of preferred stock at a loss Congaree Bancshares, Inc. 3 0.6 10/31/2012 Sale of preferred stock at a loss Metro City Bank 8 0.8 10/31/2012 Sale of preferred stock at a loss 10/31/2012 Sale of preferred stock at a loss 12 3 Germantown Capital Corporation Blue Ridge Bancshares, Inc. 5 0.4 10/31/2012 First Gothenburg Bancshares, Inc. 8 0.7 10/31/2012 Sale of preferred stock at a loss Blackhawk Bancorp, Inc. Sale of preferred stock at a loss 10 0.9 10/31/2012 Sale of preferred stock at a loss Centerbank 2 0.4 10/31/2012 Sale of preferred stock at a loss The Little Bank, Incorporated 8 0.1 10/31/2012 Sale of preferred stock at a loss Oak Ridge Financial Services, Inc. 8 0.6 10/31/2012 Sale of preferred stock at a loss 10/31/2012 Sale of preferred stock at a loss 4 1 Hometown Bankshares Corporation Peoples Bancshares of TN, Inc. 10 0.8 Western Illinois Bancshares, Inc. 10/31/2012 Sale of preferred stock at a loss 11 0.7 11/9/2012 Sale of preferred stock at a loss Capital Pacific Bancorp 4 0.2 11/9/2012 Sale of preferred stock at a loss Three Shores Bancorporation, Inc. 6 0.6 11/9/2012 Sale of preferred stock at a loss Regional Bankshares, Inc. 2 0.1 11/9/2012 Sale of preferred stock at a loss Continued on next page 273 274 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM REALIZED LOSSES AND WRITE-OFFS IN CPP, AS OF 9/30/2015 Institution Timberland Bancorp, Inc. TARP Investment ($ MILLIONS) (CONTINUED) Loss Date Description $17 $2 11/9/2012 First Freedom Bancshares, Inc. 9 0.7 11/9/2012 Sale of preferred stock at a loss Bankgreenville Financial Corporation 1 0.1 11/9/2012 Sale of preferred stock at a loss F&C Bancorp. Inc. 3 0.1 11/13/2012 Sale of subordinated debentures at a loss 12 0.4 11/13/2012 Sale of subordinated debentures at a loss Franklin Bancorp, Inc. 5 2 Sound Banking Company 3 0.2 Farmers Enterprises, Inc. Parke Bancorp, Inc. Sale of preferred stock at a loss 11/13/2012 Sale of preferred stock at a loss 11/13/2012 Sale of preferred stock at a loss 16 5 Country Bank Shares, Inc. 8 0.6 11/29/2012 Clover Community Bankshares, Inc. 3 0.4 11/29/2012 Sale of preferred stock at a loss CBB Bancorp 4 0.3 11/29/2012 Sale of preferred stock at a loss Alaska Pacific Bancshares, Inc. 5 0.5 11/29/2012 Sale of preferred stock at a loss Trisummit Bank 7 2 11/29/2012 Sale of preferred stock at a loss Layton Park Financial Group, Inc. 3 0.6 11/29/2012 Community Bancshares of Mississippi, Inc. (Community Holding Company of Florida, Inc.) 1 0.1 11/30/2012 Sale of preferred stock at a loss FFW Corporation 7 0.7 11/30/2012 Sale of preferred stock at a loss Hometown Bancshares, Inc. 2 0.1 11/30/2012 Sale of preferred stock at a loss Bank of Commerce 3 0.5 11/30/2012 Sale of preferred stock at a loss Corning Savings And Loan Association 1 0.1 11/30/2012 Sale of preferred stock at a loss Carolina Trust Bank 4 0.6 11/30/2012 Sale of preferred stock at a loss Community Business Bank 4 0.3 11/30/2012 Sale of preferred stock at a loss KS Bancorp, Inc. 4 0.7 11/30/2012 Sale of preferred stock at a loss 195 15 16 4 Pacific Capital Bancorp Community West Bancshares 11/29/2012 Sale of preferred stock at a loss 11/30/2012 Sale of preferred stock at a loss Sale of preferred stock at a loss Sale of common stock at a loss 12/11/2012 Sale of preferred stock at a loss Presidio Bank 11 2 12/11/2012 The Baraboo Bancorporation, Inc. 21 7 12/11/2012 Sale of preferred stock at a loss 2 0.7 22 2 Manhattan Bancshares, Inc. 3 0.1 12/11/2012 First Advantage Bancshares, Inc. 1 0.1 12/11/2012 Sale of preferred stock at a loss Community Investors Bancorp, Inc. 3 0.1 12/20/2012 Sale of preferred stock at a loss First Business Bank, National Association 4 0.4 12/20/2012 Sale of preferred stock at a loss Bank Financial Services, Inc. 1 0.1 12/20/2012 Sale of preferred stock at a loss 10 0.2 12/20/2012 Security Bancshares of Pulaski County, Inc. Central Community Corporation Century Financial Services Corporation 12/11/2012 Sale of preferred stock at a loss Sale of preferred stock at a loss 12/11/2012 Sale of preferred stock at a loss Sale of subordinated debentures at a loss Sale of subordinated debentures at a loss Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 REALIZED LOSSES AND WRITE-OFFS IN CPP, AS OF 9/30/2015 Institution Hyperion Bank First Independence Corporation ($ MILLIONS) (CONTINUED) TARP Investment Loss $2 $0.5 12/21/2012 Sale of preferred stock at a loss 3 0.9 12/21/2012 Sale of preferred stock at a loss Date Description First Alliance Bancshares, Inc. 3 1 12/21/2012 Sale of preferred stock at a loss Community Financial Shares, Inc. 7 4 12/21/2012 12 3 6 0.2 Citizens Bancshares Co. 25 12 2/8/2013 Sale of preferred stock at a loss Colony Bankcorp, Inc. 28 6 2/8/2013 Sale of preferred stock at a loss Alliance Financial Services, Inc. Biscayne Bancshares, Inc. Delmar Bancorp Sale of preferred stock at a loss 2/7/2013 Sale of preferred stock at a loss 2/8/2013 Sale of subordinated debentures at a loss 9 3 146 65 F&M Bancshares, Inc. 4 0.5 2/8/2013 Sale of preferred stock at a loss First Priority Financial Corp. 5 1 2/8/2013 Sale of preferred stock at a loss 26 7 2/8/2013 Sale of preferred stock at a loss 6 0.4 2/8/2013 Sale of preferred stock at a loss FC Holdings, Inc. 21 2 2/20/2013 Sale of preferred stock at a loss First Sound Bank 7 4 2/20/2013 Sale of preferred stock at a loss First Trust Corporation 18 4 2/20/2013 National Bancshares, Inc. 25 6 2/20/2013 Sale of preferred stock at a loss Dickinson Financial Corporation II HMN Financial, Inc. Waukesha Bankshares, Inc. 2/8/2013 Sale of preferred stock at a loss 2/8/2013 Sale of preferred stock at a loss Sale of subordinated debentures at a loss Ridgestone Financial Services, Inc. 11 2 2/20/2013 Sale of preferred stock at a loss Carolina Bank Holdings, Inc. 16 1 2/21/2013 Sale of preferred stock at a loss 3 0.4 3/8/2013 Sale of preferred stock at a loss 10 0.4 3/11/2013 Sale of preferred stock at a loss Santa Clara Valley Bank, N.A. Coastal Banking Company, Inc. CoastalSouth Bancshares, Inc. 16 3 3/11/2013 Sale of preferred stock at a loss First Reliance Bancshares, Inc. 15 5 3/11/2013 Sale of preferred stock at a loss Southcrest Financial Group, Inc. 13 1 3/11/2013 Sale of preferred stock at a loss The Queensborough Company 12 0.3 3/11/2013 Sale of preferred stock at a loss Old Second Bancorp, Inc. 73 47 3/27/2013 Sale of preferred stock at a loss Stonebridge Financial Corp. 11 9 3/27/2013 Sale of preferred stock at a loss Alliance Bancshares, Inc. 3 0.1 3/28/2013 Sale of preferred stock at a loss Amfirst Financial Services, Inc 5 0.2 3/28/2013 First Southwest Bancorporation, Inc. Sale of subordinated debentures at a loss 6 0.5 3/28/2013 Sale of preferred stock at a loss Flagstar Bancorp, Inc. 267 24 3/28/2013 Sale of preferred stock at a loss United Community Banks, Inc. 180 7 3/28/2013 Sale of preferred stock at a loss First Security Group, Inc. BancStar, Inc. 33 18 Exchange of preferred stock at 4/11/2013 a loss 9 0.1 4/26/2013 Sale of preferred stock at a loss NewBridge Bancorp 52 1 4/29/2013 Sale of preferred stock at a loss First Financial Service Corporation 20 9 4/29/2013 Sale of preferred stock at a loss Continued on next page 275 276 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM REALIZED LOSSES AND WRITE-OFFS IN CPP, AS OF 9/30/2015 ($ MILLIONS) (CONTINUED) TARP Investment Loss Guaranty Federal Bancshares, Inc. $17 $0.4 4/29/2013 Sale of preferred stock at a loss Intervest Bancshares Corporation 25 1 6/24/2013 Sale of preferred stock at a loss First Western Financial, Inc. Institution Date Description 20 3 6/24/2013 Sale of preferred stock at a loss Worthington Financial Holdings, Inc. 3 0.4 6/24/2013 Sale of preferred stock at a loss Farmers & Merchants Financial Corporation 0 0.1 6/24/2013 Sale of preferred stock at a loss Metropolitan Bank Group, Inc. 82 49 6/28/2013 Sale of preferred stock at a loss Alarion Financial Services, Inc. Anchor Bancorp Wisconsin, Inc. 7 0.1 7/22/2013 Sale of preferred stock at a loss 110 104 9/27/2013 Sale of common stock at a loss Centrue Financial Corporation 33 22 ColoEast Bankshares, Inc. 10 1 Commonwealth Business Bank 20 0.4 7/17/2013 Sale of preferred stock at a loss Crosstown Holding Company 11 0.2 7/22/2013 Sale of preferred stock at a loss Desoto County Bank First Banks, Inc. First Intercontinental Bank Florida Bank Group, Inc. Mountain Valley Bancshares, Inc. RCB Financial Corporation 10/18/2013 Sale of preferred stock at a loss 7/22/2013 Sale of preferred stock at a loss 3 0.5 9/25/2013 Sale of preferred stock at a loss 295 190 9/25/2013 6 3 20 12 8/14/2013 Sale of preferred stock at a loss 3 — 7/22/2013 Sale of preferred stock at a loss Sale of preferred stock at a loss 8/12/2013 Sale of preferred stock at a loss 9 1 9/25/2013 Sale of preferred stock at a loss Severn Bancorp, Inc. 23 — 9/25/2013 Sale of preferred stock at a loss Universal Bancorp 10 0.5 8/12/2013 Sale of preferred stock at a loss 5 2 8/12/2013 Sale of preferred stock at a loss Virginia Company Bank Central Virginia Bankshares, Inc. 11 8 10/1/2013 Sale of preferred stock at a loss 3 2 10/21/2013 Sale of preferred stock at a loss Blue Valley Ban Corp 22 0.5 Spirit Bank Corp Inc. 30 21 6 3 Bank of George Valley Community Bank 10/21/2013 Sale of preferred stock at a loss 10/21/2013 Sale of preferred stock at a loss 10/21/2013 Sale of preferred stock at a loss Monarch Community Bancorp, Inc. 7 2 11/15/2013 Sale of common stock at a loss AB&T Financial Corporation 4 2 11/19/2013 38 28 5 2 Bridgeview Bancorp, Inc. Midtown Bank & Trust Company Sale of preferred stock at a loss 11/19/2013 Sale of preferred stock at a loss 11/19/2013 Sale of preferred stock at a loss Village Bank and Trust Financial Corp 15 9 11/19/2013 Sale of preferred stock at a loss 1st Financial Services Corporation 16 8 12/31/2013 4 2 2/10/2014 Sale of preferred stock at a loss Pacific Commerce Bank Meridian Bank Sale of preferred stock at a loss 13 2 3/17/2014 Sale of preferred stock at a loss IA Bancorp, Inc/Indus American Bank 6 0.1 3/17/2014 Sale of preferred stock at a loss Community First Bancshares, Inc. (AR) 13 0.2 2/10/2014 Sale of preferred stock at a loss 5 3 2/10/2014 Sale of preferred stock at a loss 7 0.1 3/17/2014 Sale of preferred stock at a loss 80 77 4/14/2014 Sale of preferred stock at a loss Georgia Primary Bank Chicago Shore Corporation Hampton Roads Bankshares, Inc. Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 REALIZED LOSSES AND WRITE-OFFS IN CPP, AS OF 9/30/2015 Institution Community First, Inc. TARP Investment Loss ($ MILLIONS) (CONTINUED) Date $18 $12 Northern States Financial Corporation 17 11 4/30/2014 Sale of preferred stock at a loss Provident Community Bancshares, Inc. 9 4 4/30/2014 Sale of preferred stock at a loss 52 41 5/23/2014 Sale of common stock at a loss United American Bank 9 5 7/2/2014 Sale of preferred stock at a loss Maryland Financial Bank 2 1 7/2/2014 Sale of preferred stock at a loss CommunityOne Bancorp/FNB United Corp. Marine Bank & Trust Company 4/14/2014 Description Sale of common stock at a loss 3 1 7/2/2014 Sale of preferred stock at a loss Bank of the Carolinas Corporation 13 10 7/16/2014 Sale of preferred stock at a loss Regent Bancorp, Inc. 10 2 10/17/2014 Sale of preferred stock at a loss Highlands Independent Bancshares, Inc. 7 1 10/24/2014 Lone Star Bank 3 1 Porter Bancorp, Inc.(PBI) Louisville, KY 35 32 12/3/2014 Sale of preferred stock at a loss NCAL Bancorp 10 6 12/10/2014 Sale of preferred stock at a loss First Bancorp (PR) 400 134 3/6/2015 Sale of common stock at a loss U.S. Century Bank 50 38 3/17/2015 Sale of preferred stock at a loss Citizens Bank & Trust Company 2 0.8 6/29/2015 Sale of preferred stock at a loss Metropolitan Capital Bancorp, Inc. 4 0.3 6/29/2015 Sale of preferred stock at a loss Southfirst Bancshares, Inc. 3 — 6/29/2015 Sale of preferred stock at a loss Sale of preferred stock at a loss 12/3/2014 Sale of preferred stock at a loss City National Bancshares Corporation 9 7 8/7/2015 Sale of preferred stock at a loss Goldwater Bank, N.A. 3 1 9/21/2015 Sale of preferred stock at a loss Total CPP Realized Losses $1,680 Write-Offs CIT Group Inc. Pacific Coast National Bancorp South Financial Group, Inc.a $2,330 $2,330 4 4 347 217 12/10/2009 Bankruptcy 2/11/2010 Bankruptcy 9/30/2010 Sale of preferred stock at a loss TIB Financial Corpa 37 25 UCBH Holdings Inc. 299 299 85 85 5/14/2010 Bankruptcy 9 9 8/20/2010 Bankruptcy Midwest Banc Holdings, Inc. Sonoma Valley Bancorp 9/30/2010 Sale of preferred stock at a loss 11/6/2009 Bankruptcy Pierce County Bancorp 7 7 11/5/2010 Bankruptcy Tifton Banking Company 4 4 11/12/2010 Bankruptcy Legacy Bancorp, Inc. 6 6 Superior Bancorp Inc. 69 69 4/15/2011 Bankruptcy 6 6 7/15/2011 Bankruptcy FPB Bancorp, Inc. One Georgia Bank 3/11/2011 Bankruptcy 6 6 7/15/2011 Bankruptcy Integra Bank Corporation 84 84 7/29/2011 Bankruptcy Citizens Bancorp 10 10 9/23/2011 Bankruptcy CB Holding Corp. 4 4 10/14/2011 Bankruptcy Continued on next page 277 278 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM REALIZED LOSSES AND WRITE-OFFS IN CPP, AS OF 9/30/2015 Institution Tennessee Commerce Bancorp, Inc. Blue River Bancshares, Inc. TARP Investment Loss $30 $30 5 5 ($ MILLIONS) (CONTINUED) Date 1/27/2012 Description Bankruptcy 2/10/2012 Bankruptcy Fort Lee Federal Savings Bank, FSB 1 1 4/20/2012 Bankruptcy Gregg Bancshares, Inc. 1 1 7/13/2012 Bankruptcy 10 10 8/14/2012 Bankruptcy GulfSouth Private Bank Premier Bank Holding Company 8 8 10/19/2012 Bankruptcy Investors Financial Corporation of Pettis County, Inc. 4 4 10/19/2012 Bankruptcy First Place Financial Corp. 73 73 Princeton National Bancorp, Inc. 25 25 11/2/2012 Bankruptcy 2 2 4/5/2013 Bankruptcy Gold Canyon Bank Indiana Bank Corp. 10/29/2012 Bankruptcy 1 1 4/9/2013 Bankruptcy Rogers Bancshares, Inc 25 25 7/5/2013 Bankruptcy TCB Holding Company 12 12 8 8 Syringa Bancorp Idaho Bancorp Rising SunBancorp Western Community Bancshares, Inc. 7 7 400 103 10 6 Total CPP Write-Offs $3,386 Total of CPP Realized Losses and Write-Offs $5,067 12/13/2013 Bankruptcy 1/31/2014 Bankruptcy 4/24/2014 Bankruptcy 12/5/2014 Sale of common stock at a loss 12/10/2014 Sale of preferred stock at a loss Notes: Numbers may not total due to rounding. a In the time since these transactions were classified as write-offs, Treasury has changed its practices and now classifies sales of preferred stock at a loss as realized losses. Sources: Treasury, Transactions Report, 9/29/2015; Treasury, response to SIGTARP data call, 10/6/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Restructurings, Recapitalizations, Exchanges, and Sales of CPP Investments Certain CPP institutions continue to experience high losses and financial difficulties, resulting in inadequate capital or liquidity. To avoid insolvency or improve the quality of their capital, these institutions may ask Treasury to convert its CPP preferred shares into a more junior form of equity or to accept a lower valuation, resulting in Treasury taking a discount or loss. If a CPP institution is undercapitalized and/or in danger of becoming insolvent, it may propose to Treasury a restructuring (or recapitalization) plan to avoid failure (or to attract private capital) and to “attempt to preserve value” for Treasury’s investment.322 Treasury may also sell its investment in a troubled institution to a third party at a discount in order to facilitate that party’s acquisition of a troubled institution. According to Treasury, although it may incur partial losses on its investment in the course of these transactions, such an outcome may be deemed necessary to avoid the total loss of Treasury’s investment that would occur if the institution failed.323 Under these circumstances, the CPP participant asks Treasury for a formal review of its proposal. The proposal details the institution’s recapitalization plan and may estimate how much capital the institution plans to raise from private investors and whether Treasury and other preferred shareholders will convert their preferred stock to common stock. The proposal may also involve a proposed discount on the conversion to common stock, although Treasury would not realize any loss until it disposes of the stock.324 In other words, Treasury would not know whether a loss will occur, or the extent of such a loss, until it sells the common stock it receives as part of such an exchange. According to Treasury, when it receives such a request, it asks one of the external asset managers that it has hired to analyze the proposal and perform due diligence on the institution.325 The external asset manager interviews the institution’s managers, gathers non-public information, and conducts loan-loss estimates and capital structure analysis. The manager submits its evaluation to Treasury, which then decides whether to restructure its CPP investment.326 Table 4.37 shows all restructurings, recapitalizations, exchanges, and sales of CPP investments through September 30, 2015. Undercapitalized: Condition in which a financial institution does not meet its regulator’s requirements for sufficient capital to operate under a defined level of adverse conditions. Due Diligence: Appropriate level of attention or care a reasonable person should take before entering into an agreement or a transaction with another party. In finance, it often refers to the process of conducting an audit or review of the institution before initiating a transaction. 279 280 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.37 TREASURY RESTRUCTURINGS, RECAPITALIZATIONS, EXCHANGES, & SALES, AS OF 9/30/2015 Company Investment Date Original Investments Combined Investments ($ MILLIONS) Investment Status Sold at Loss at Auction First Banks, Inc. 12/31/2008 $295.4 Sold at loss in auction Flagstar Bancorp Inc. 1/30/2009 267.0 Sold at loss in auction United Community Banks, Inc. 12/5/2008 180.0 Sold at loss in auction 1/16/2009 146.0 Sold at loss in auction Banner Corporation Dickinson Financial Corporation II 11/21/2008 124.0 Sold at loss in auction Taylor Capital Group 11/21/2008 104.8 Sold at loss in auction 1/16/2009 73.0 Sold at loss in auction Old Second Bancorp, Inc. Alpine Banks of Colorado 3/27/2009 70.0 Sold at loss in auction First Financial Holdings Inc. 12/5/2008 65.0 Sold at loss in auction Wilshire Bancorp, Inc. 12/12/2008 62.2 Sold at loss in auction MainSource Financial Group, Inc. 1/16/2009 57.0 Sold at loss in auction WSFS Financial Corporation 1/23/2009 52.6 Sold at loss in auction NewBridge Bancorp 12/12/2008 52.4 Sold at loss in auction Ameris Bancorp 11/21/2008 52.0 Sold at loss in auction 3/13/2009 51.5 Sold at loss in auction Seacoast Banking Corporation of Florida 12/19/2008 50.0 Sold at loss in auction Fidelity Southern Corporation 12/19/2008 48.2 Sold at loss in auction MetroCorp Bancshares, Inc. 1/16/2009 45.0 Sold at loss in auction CommunityOne Bancorp/FNB United Corp. Cadence Financial Corporation Exchange Bank Reliance Bancshares, Inc. 1/9/2009 44.0 Sold at loss in auction 12/19/2008 43.0 Sold at loss in auction 2/13/2009 40.0 Sold at auction Cascade Financial Corporation 11/21/2008 39.0 Sold at loss in auction Bridgeview Bancorp, Inc. 12/19/2008 38.0 Sold at loss in auction First Defiance Financial Corp. 12/5/2008 37.0 Sold at loss in auction Fidelity Financial Corporation 12/19/2008 36.3 Sold at loss in auction Marquette National Corporation 12/19/2008 35.5 Sold at loss in auction 3/27/2009 35.5 Sold at loss in auction 11/21/2008 35.0 Sold at loss in auction 1/30/2009 33.0 Sold at loss in auction 1/9/2009 32.7 Sold at loss in auction Trinity Capital Corporation Porter Bancorp, Inc. (PBI) Lousiville, KY Firstbank Corporation Centrue Financial Corporation Pulaski Financial Corp 1/16/2009 32.5 Sold at loss in auction BNC Bancorp 12/5/2008 31.3 Sold at loss in auction Royal Bancshares of Pennsylvania, Inc. 2/20/2009 30.4 Sold at auction Spirit Bank Corp. Inc. 3/27/2009 30.0 Sold at loss in auction First United Corporation 1/30/2009 30.0 Sold at loss in auction Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TREASURY RESTRUCTURINGS, RECAPITALIZATIONS, EXCHANGES, & SALES, AS OF 9/30/2015 Investment Date Original Investments Farmers Capital Bank Corporation 1/9/2009 $30.0 Sold at loss in auction Colony Bankcorp, Inc. 1/9/2009 28.0 Sold at loss in auction HMN Financial, Inc 12/23/2008 26.0 Sold at loss in auction Patriot Bancshares, Inc. 12/19/2008 26.0 Sold at loss in auction LNB Bancorp Inc. 12/12/2008 25.2 Sold at loss in auction Peoples Bancorp of North Carolina, Inc. 12/23/2008 25.1 Sold at loss in auction 5/29/2009 25.0 Sold at loss in auction Company Citizens Bancshares Co. Intervest Bancshares Corporation Combined Investments ($ MILLIONS) (CONTINUED) Investment Status 12/23/2008 25.0 Sold at loss in auction National Bancshares, Inc. 2/27/2009 24.7 Sold at loss in auction CBS Banc-Corp 3/27/2009 24.3 Sold at loss in auction 1/9/2009 24.0 Sold at auction 11/21/2008 23.4 Sold at loss in auction Eastern Virginia Bankshares, Inc. Severn Bancorp, Inc. First Citizens Banc Corp 1/23/2009 23.2 Sold at loss in auction Park Bancorporation, Inc. 3/6/2009 23.2 Sold at loss in auction Premier Financial Bancorp, Inc. 10/2/2009 22.3 Sold at loss in auction Central Community Corporation 2/20/2009 22.0 Sold at loss in auction 12/11/2009 22.0 Sold at loss in auction First Community Financial Partners, Inc. Blue Valley Ban Corp 12/5/2008 21.8 Sold at loss in auction FC Holdings, Inc. 6/26/2009 21.0 Sold at loss in auction The Baraboo Bancorporation, Inc. 1/16/2009 20.7 Sold at loss in auction United Bancorp, Inc. 1/16/2009 20.6 Sold at loss in auction Diamond Bancorp, Inc. 5/22/2009 20.4 Sold at loss in auction Commonwealth Bancshares, Inc. 5/22/2009 20.4 Sold at loss in auction 2/6/2009 20.4 Sold at loss in auction First Western Financial, Inc. Market Street Bancshares, Inc. 5/15/2009 20.3 Sold at loss in auction BNCCORP, Inc. 1/16/2009 20.1 Sold at auction First Financial Service Corporation 1/9/2009 20.0 Sold at loss in auction First Trust Corporation 6/5/2009 18.0 Sold at loss in auction Community First Inc. 2/27/2009 17.8 Sold at loss in auction Southern First Bancshares, Inc. 2/27/2009 17.3 Sold at loss in auction F&M Financial Corporation (TN) 2/13/2009 17.2 Sold at loss in auction Northern States Financial Corp. 2/20/2009 17.2 Sold at loss in auction F&M Financial Corporation (NC) 2/6/2009 17.0 Sold at loss in auction Guaranty Federal Bancshares, Inc. 1/30/2009 17.0 Sold at loss in auction White River Bancshares Company 2/20/2009 16.8 Sold at auction Timberland Bancorp Inc. Parke Bancorp Inc. Pacific City Financial Corporation 12/23/2008 16.6 Sold at loss in auction 1/30/2009 16.3 Sold at loss in auction 12/19/2008 16.2 Sold at auction Continued on next page 281 282 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TREASURY RESTRUCTURINGS, RECAPITALIZATIONS, EXCHANGES, & SALES, AS OF 9/30/2015 Company Carolina Bank Holdings, Inc. Investment Date Original Investments Combined Investments ($ MILLIONS) (CONTINUED) Investment Status 1/9/2009 $16.0 Sold at loss in auction CoastalSouth Bancshares, Inc. 8/28/2009 16.0 Sold at loss in auction Community West Bancshares 12/19/2008 15.6 Sold at loss in auction 3/6/2009 15.3 Sold at loss in auction First Reliance Bancshares, Inc. Village Bank and Trust Financial Corp 5/1/2009 14.7 Sold at loss in auction First National Corporation 3/13/2009 13.9 Sold at loss in auction Yadkin Valley Financial Corporation 7/24/2009 13.3 Sold at loss in auction Community First Bancshares, Inc. 4/3/2009 12.7 Sold at loss in auction Alliance Financial Services Inc. 6/26/2009 12.0 Sold at loss in auction Farmers Enterprises, Inc. 6/19/2009 12.0 Sold at loss in auction 1/9/2009 12.0 Sold at loss in auction The Queensborough Company 1/30/2009 11.9 Sold at auction First Community Corporation Plumas Bancorp 11/21/2008 11.4 Sold at loss in auction Western Illinois Bancshares, Inc. 12/23/2008 11.4 Sold at loss in auction 4/3/2009 11.0 Sold at loss in auction First Capital Bancorp, Inc. Mackinac Financial Corporation 4/24/2009 11.0 Sold at loss in auction Ridgestone Financial Services, Inc. 2/27/2009 11.0 Sold at loss in auction Stonebridge Financial Corp. 1/23/2009 11.0 Sold at loss in auction Security State Bank Holding Company 5/1/2009 10.8 Sold at auction Presidio Bank Crosstown Holding Company 11/20/2009 10.8 Sold at loss in auction 1/23/2009 10.7 Sold at loss in auction Northwest Bancorporation, Inc. 2/13/2009 10.5 Sold at auction Blackhawk Bancorp, Inc. 3/13/2009 10.0 Sold at loss in auction Century Financial Services Corporation 6/19/2009 10.0 Sold at loss in auction ColoEast Bankshares, Inc. 2/13/2009 10.0 Sold at loss in auction HomeTown Bankshares Corporation 9/18/2009 10.0 Sold at loss in auction Coastal Banking Company, Inc. 12/5/2008 10.0 Sold at loss in auction Universal Bancorp 5/22/2009 9.9 Sold at loss in auction Provident Community Bancshares, Inc. 3/13/2009 9.3 Sold at loss in auction Delmar Bancorp 12/4/2009 9.0 Sold at loss in auction RCB Financial Corporation 6/19/2009 8.9 Sold at loss in auction United American Bank 2/20/2009 8.7 Sold at loss in auction 12/22/2009 8.7 Sold at loss in auction 4/3/2009 8.6 Sold at loss in auction First Freedom Bancshares, Inc. BancStar, Inc. First Western Financial, Inc. Great River Holding Company 2/6/2009 8.6 Sold at loss in auction 7/17/2009 8.4 Sold at loss in auction Commonwealth Business Bank 1/23/2009 7.7 Sold at loss in auction Metro City Bank 1/30/2009 7.7 Sold at loss in auction Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TREASURY RESTRUCTURINGS, RECAPITALIZATIONS, EXCHANGES, & SALES, AS OF 9/30/2015 Company Investment Date Original Investments Oak Ridge Financial Services, Inc. 1/30/2009 $7.7 Sold at loss in auction First Gothenburg Bancshares, Inc. 2/27/2009 7.6 Sold at loss in auction Country Bank Shares, Inc. Combined Investments ($ MILLIONS) (CONTINUED) Investment Status 1/30/2009 7.5 Sold at loss in auction The Little Bank, Incorporated 12/23/2009 7.5 Sold at loss in auction FFW Corporation 12/19/2008 7.3 Sold at loss in auction 4/3/2009 7.0 Sold at loss in auction 7/31/2009 7.0 Sold at loss in auction 11/13/2009 6.7 Sold at loss in auction TriSummit Bank Chicago Shore Corporation Fidelity Federal Bancorp Alarion Financial Services, Inc. 1/23/2009 6.5 Sold at loss in auction First Intercontinental Bank 3/13/2009 6.4 Sold at loss in auction Biscayne Bancshares, Inc. 6/19/2009 6.4 Sold at loss in auction Premier Financial Bancorp, Inc. 5/22/2009 6.3 Sold at loss in auction Meridian Bank 2/13/2009 6.2 Sold at loss in auction IA Bancorp, Inc. 9/18/2009 6.0 Sold at loss in auction Three Shores Bancorporation, Inc. 1/23/2009 5.7 Sold at loss in auction Boscobel Bancorp Inc. 5/15/2009 5.6 Sold at auction Waukesha Bankshares, Inc. 6/26/2009 5.6 Sold at loss in auction First Southwest Bancorporation, Inc. 3/6/2009 5.5 Sold at loss in auction Valley Community Bank 1/9/2009 5.5 Sold at loss in auction 2/27/2009 5.2 Sold at loss in auction Midtown Bank & Trust Company Franklin Bancorp, Inc. 5/22/2009 5.1 Sold at loss in auction AmFirst Financial Services, Inc. 8/21/2009 5.0 Sold at loss in auction Germantown Capital Corporation 3/6/2009 5.0 Sold at loss in auction Alaska Pacific Bancshares Inc. 2/6/2009 4.8 Sold at loss in auction Virginia Company Bank First Priority Financial Corp. Georgia Primary Bank 6/12/2009 4.7 Sold at loss in auction 12/18/2009 4.6 Sold at loss in auction 5/1/2009 4.5 Sold at loss in auction Community Pride Bank Corporation 11/13/2009 4.4 Sold at loss in auction CBB Bancorp 12/20/2009 4.4 Sold at loss in auction Metropolitan Capital Bancorp, Inc. 4/10/2009 4.4 Sold at loss in auction Bank of Southern California, N.A. 4/10/2009 4.2 Sold at loss in auction 12/23/2008 4.1 Sold at loss in auction 2/6/2009 4.0 Sold at loss in auction 12/23/2008 4.0 Sold at loss in auction 2/27/2009 4.0 Sold at loss in auction Pacific Commerce Bank Carolina Trust Bank Capital Pacific Bancorp Community Business Bank KS Bancorp Inc. 8/21/2009 4.0 Sold at loss in auction Peoples of Bancshares of TN, Inc. 3/20/2009 3.9 Sold at loss in auction Pathway Bancorp 3/27/2009 3.7 Sold at auction F & M Bancshares, Inc. 11/6/2009 3.5 Sold at loss in auction AB&T Financial Corporation 1/23/2009 3.5 Sold at loss in auction Continued on next page 283 284 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TREASURY RESTRUCTURINGS, RECAPITALIZATIONS, EXCHANGES, & SALES, AS OF 9/30/2015 Investment Date Original Investments First Alliance Bancshares, Inc. 6/26/2009 $3.4 Sold at loss in auction Madison Financial Corporation 3/13/2009 3.4 Sold at auction Company Congaree Bancshares, Inc. Mountain Valley Bancshares, Inc. Combined Investments ($ MILLIONS) (CONTINUED) Investment Status 1/9/2009 3.3 Sold at loss in auction 9/25/2009 3.3 Sold at loss in auction First Independence Corporation 8/28/2009 3.2 Sold at loss in auction Oregon Bancorp, Inc. 4/24/2009 3.2 Sold at auction Sound Banking Co. 1/9/2009 3.1 Sold at loss in auction Lone Star Bank 2/6/2009 3.1 Sold at loss in auction Marine Bank & Trust Company 3/6/2009 3.0 Sold at loss in auction Alliance Bancshares, Inc. 6/26/2009 3.0 Sold at loss in auction Bank of Commerce 1/16/2009 3.0 Sold at loss in auction Clover Community Bankshares, Inc. 3/27/2009 3.0 Sold at loss in auction F&C Bancorp. Inc. 5/22/2009 3.0 Sold at loss in auction Layton Park Financial Group, Inc. 12/18/2009 3.0 Sold at loss in auction Tennessee Valley Financial Holdings, Inc. 12/23/2008 3.0 Sold at auction Santa Clara Valley Bank, N.A. 2/13/2009 2.9 Sold at loss in auction Omega Capital Corp. 4/17/2009 2.8 Sold at loss in auction 4/3/2009 2.8 Sold at auction 6/12/2009 2.8 Sold at loss in auction Prairie Star Bancshares, Inc. Southfirst Bancshares Bank of George 3/13/2009 2.7 Sold at loss in auction Worthington Financial Holdings, Inc. 5/15/2009 2.7 Sold at loss in auction Community Investors Bancorp, Inc. 12/23/2008 2.6 Sold at loss in auction 6/19/2009 2.6 Sold at loss in auction Manhattan Bancshares, Inc. Plato Holdings Inc. 7/17/2009 2.5 Sold at loss in auction Brogan Bankshares, Inc. 5/15/2009 2.4 Sold at auction Citizens Bank & Trust Company 3/20/2009 2.4 Sold at loss in auction CSRA Bank Corp. 3/27/2009 2.4 Sold at auction 5/1/2009 2.3 Sold at loss in auction Security Bancshares of Pulaski County, Inc. 2/13/2009 2.2 Sold at loss in auction Market Bancorporation, Inc. 2/20/2009 2.1 Sold at auction 12/29/2009 2.0 Sold at auction CenterBank Atlantic Bancshares, Inc. Hometown Bancshares, Inc. 2/13/2009 1.9 Sold at loss in auction Maryland Financial Bank 3/27/2009 1.7 Sold at loss in auction Hyperion Bank Regional Bankshares Inc. 2/6/2009 1.6 Sold at loss in auction 2/13/2009 1.5 Sold at loss in auction Desoto County Bank 2/13/2009 1.2 Sold at loss in auction First Advantage Bancshares, Inc. 5/22/2009 1.2 Sold at loss in auction 2/6/2009 1.1 Sold at loss in auction Community Bancshares of MS Continued on next page 285 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TREASURY RESTRUCTURINGS, RECAPITALIZATIONS, EXCHANGES, & SALES, AS OF 9/30/2015 Company Investment Date Original Investments BankGreenville Financial Corp. 2/13/2009 $1.0 Sold at loss in auction Bank Financial Services, Inc. 8/14/2009 1.0 Sold at loss in auction Corning Savings and Loan Association 2/13/2009 0.6 Sold at loss in auction Farmers & Merchants Financial Corporation 3/20/2009 0.4 Sold at loss in auction 2/6/2009 0.3 Sold at auction Freeport Bancshares, Inc. Combined Investments ($ MILLIONS) (CONTINUED) Investment Status Sold at Loss South Financial Group, Inc. 12/5/2008 $347.0 Sold Whitney Holding Corporation 12/19/2008 300.0 Sold Green Bankshares 12/23/2008 72.3 Sold 8/7/2009 52.2 Sold U.S. Century PremierWest Bancorp Capital Bank Corporation TIB Financial Corp. 2/13/2009 41.4 Sold 12/12/2008 41.3 Sold 12/5/2008 37.0 Sold First Security Group, Inc. 1/9/2009 33.0 Sold Florida Bank Group, Inc. 7/24/2009 20.5 Sold 3/6/2009 16.5 Sold 11/14/2008 16.4 Sold 6/19/2009 15.0 Sold First Federal Bankshares of Arkansas, Inc. 1st Financial Services Corporation Suburban Illinois Bancorp, Inc. First Community Bancshares, Inc. 5/15/2009 14.8 Sold Bank of the Carolinas Corporation 4/17/2009 13.2 Sold SouthCrest Financial Group, Inc. 7/17/2009 12.9 Sold Central Virginia Bankshares 1/30/2009 11.4 Sold First Community Bank Corporation of America 12/23/2008 11.0 Sold NCAL Bancorp 12/19/2008 10.0 Sold 4/10/2009 9.4 Sold 12/23/2008 7.4 Sold City National Bancshares Corporation First Sound Bank Millennium Bancorp, Inc. 4/3/2009 7.3 Sold Central Federal Corporation 12/5/2008 7.2 Sold Community Financial Shares, Inc. 5/15/2009 7.0 Sold Monarch Community Bancorp, Inc. 2/6/2009 6.8 Sold Highlands Independent Bancshares, Inc. 3/6/2009 6.7 Sold 2/6/2009 4.0 Sold 12/19/2008 4.0 Sold Bank of Currituck Santa Lucia Bancorp Naples Bancorp, Inc. 3/27/2009 4.0 Sold Treaty Oak Bancorp, Inc. 1/16/2009 3.3 Sold FBHC Holding Company 12/29/2009 3.0 Sold 1/30/2009 2.6 Sold Goldwater Bank, NA Continued on next page 286 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TREASURY RESTRUCTURINGS, RECAPITALIZATIONS, EXCHANGES, & SALES, AS OF 9/30/2015 Investment Date Original Investments Citigroup Inc. 10/28/2008 $2,500.0 Provident Bankshares 11/14/2008 151.5 M&T Bank Corporation 12/23/2008 600.0 Wilmington Trust Corporation 12/12/2008 330.0 12/5/2008 935.0 Exchanged for trust preferred securities Company Combined Investments ($ MILLIONS) (CONTINUED) Investment Status Exchanges Popular, Inc. First BanCorp Sterling Financial Corporation Pacific Capital Bancorp Central Pacific Financial Corp. Exchanged for common stock/warrants and sold $1,081.5a Provident preferred stock exchanged for new M&T Bank Corporation preferred stock; Wilmington Trust preferred stock redeemed by M&T Bank Corporation; Sold 1/6/2009 400.0 Exchanged for mandatorily convertible preferred stock 12/5/2008 303.0 Exchanged for common stock, Sold 11/21/2008 195.0 Exchanged for common stock Exchanged for common stock 1/9/2009 135.0 BBCN Bancorp, Inc. 11/21/2008 67.0 Center Financial Corporation 12/12/2008 55.0 2/20/2009 116.0 Metropolitan Bank Group Inc. 6/26/2009 71.5 NC Bancorp, Inc. 6/26/2009 6.9 Hampton Roads Bankshares 12/31/2008 80.3 Exchanged for common stock Independent Bank Corporation 12/12/2008 72.0 Exchanged for mandatorily convertible preferred stock Superior Bancorp, Inc.d 12/5/2008 69.0 Exchanged for trust preferred securities Standard Bancshares Inc. 4/24/2009 60.0 Exchanged for common stock and securities purchase agreements First Merchants Crescent Financial Bancshares, Inc. 122.0b Exchanged for a like amount of securities of BBCN Bancorp, Inc. Exchanged for trust preferred securities and preferred stock 81.9c Exchanged for new preferred stock in Metropolitan Bank Group, Inc. and later sold at loss 1/9/2009 24.9 1/16/2009 17.9 11/14/2008 15.0 Exchanged for common stock 3/6/2009 10.0 Exchanged preferred stock/warrant preferred stock for common stock and sold Fidelity Resources Company 6/26/2009 3.0 Exchanged for preferred stock in Veritex Holding Berkshire Bancorp 6/12/2009 2.9 Exchanged for preferred stock in Customers Bancorp ECB Bancorp, Inc. Broadway Financial Corporation Regent Bancorp 42.8e Exchanged for a like amount of securities of Crescent Financial Bancshares, Inc. Notes: Numbers may be affected due to rounding. a M&T Bank Corporation (“M&T”) has redeemed the entirety of the preferred shares issued by Wilmington Trust Corporation plus accrued dividends. In addition, M&T has also repaid Treasury’s original $600 million investment. On August 21, 2012, Treasury sold all of its remaining investment in M&T at par. b The new investment amount of $122 million includes the original investment amount in BBCN Bancorp, Inc. (formerly Nara Bancorp, Inc.) of $67 million and the original investment of Center Financial Corporation of $55 million. c The new investment amount of $81.9 million includes the original investment amount in Metropolitan Bank Group, Inc. of $71.5 million plus the original investment amount in NC Bank Group, Inc. of $6.9 million plus unpaid dividends of $3.5 million. d The subsidiary bank of Superior Bancorp, Inc. failed on April 15, 2011. All of Treasury’s TARP investment in Superior Bancorp is expected to be lost. e The new investment amount of $42.8 million includes the original investment amount in Crescent Financial Bancshares, Inc. (formerly Crescent Financial Corporation) of $24.9 million and the original investment of ECB Bancorp, Inc. of $17.9 million. Source: Treasury, Transactions Report, 9/29/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Overview of CPP Preferred Stock Auctions From March 2012 through September 30, 2015, Treasury has held 28 sets of auctions in which it has sold all of its preferred stock investments in 190 CPP banks at a total loss of $1.1 billion.327 For publicly traded banks, Treasury auctioned the shares through a placement agent. For private banks, Treasury auctioned the shares directly to qualified purchasers. The preferred stock for 167 banks sold at a discounted price and resulted in losses to Treasury at a discount of up to 90%.328 Treasury forfeited the right to collect missed dividends and interest payments from 67 of those 78 banks, which had missed six or more dividends, and Treasury gave up its right to appoint up to two directors to the board of directors of those banks. As of September 30, 2015, Treasury lost a total of $1.1 billion in the auctions, which includes $813.5 million lost on principal investments sold at a discount and $253.5 million on forfeited missed dividends and interest.329 In auctions, 38 banks bought back some of their shares at the discounted price.330 Table 4.40 shows details for the auctions of preferred stock in CPP banks through September 30, 2015. For more information on Treasury’s auctions of CPP shares, see “The Legacy of TARP’s Bank Bailout Known as the Capital Purchase Program,” in SIGTARP’s January 2015 Quarterly Report, pages 83102. On October 9, 2012, SIGTARP made three recommendations regarding CPP preferred stock auctions, which are discussed in detail in SIGTARP’s October 2012 Quarterly Report, pages 180-183. Buyers of CPP Shares at Treasury Auctions Private fund investors, including hedge funds and private equity firms, have purchased 70% of Treasury’s total auctioned shares in 178 of 190 banks. These investors are mostly unknown to the banks and not from the banks’ communities. As of September 30, 2015, more than two-thirds (70%) of Treasury’s auctioned TARP shares in CPP community banks were purchased by private fund investors. Additional successful auction buyers included brokers purchasing shares on behalf of other entities (12%), CPP banks repurchasing their own shares (8%), other banks (4%), institutional investors (3%), and a small number of senior executives and board members of CPP banks (3%). Figure 4.66 shows the percentage of Treasury’s TARP shares in CPP community banks purchased by each category of auction buyer. These private funds only have an interest in making a profit from these shares. Three private funds alone purchased nearly half (47%) of all shares in CPP community banks auctioned by Treasury. One capital management company was successful in its bids on 91 banks, and acquired 24% of all TARP shares in CPP community banks auctioned by Treasury. Another capital management company successfully bid on 109 banks, acquiring 13% of all TARP shares in CPP community banks auctioned by Treasury. An additional asset management company successfully acquired shares in 40 banks, or 9% of all TARP shares in CPP community banks auctioned by Treasury. In addition, household-name brokers, presumably purchasing shares on behalf of other entities, successfully bid on 23 banks and acquired 12% of all TARP shares in CPP community banks auctioned by Treasury. Just one such broker successfully bid on 15 banks and purchased 4% of all TARP shares in CPP community banks auctioned by Treasury. Some banks tried to buy back all of Treasury’s TARP shares in their banks at auction, but only two banks were successful in doing so. Only 8% of total TARP FIGURE 4.66 PERCENTAGES OF SHARES PURCHASED BY BUYER TYPE 4% 3% 3% 8% 12% 70% Private Funds Brokers CPP Banks Other Banks Institutional Investors Senior Executives and Board Members of CPP Banks Note: Numbers may not total due to rounding. Source: Treasury, response to SIGTARP data call, 10/9/2015. 287 288 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.38 PERCENTAGE OF SHARES REPURCHASED BY CPP BANKS, AS OF 9/30/2015 CPP Banks Percentage 2 0-10% 2 10-20% 6 20-30% 5 30-40% 3 40-50% 7 50-60% 2 60-70% 2 70-80% 3 80-90% 6 90-100% Source: Treasury, response to SIGTARP data call, 10/9/2015. TABLE 4.39 PERCENT OWNERSHIP STAKE IN TARP FUNDS FOR EACH SUCCESSFUL BID, AS OF 9/30/2015 Number of Successful Bids Percentage Ownership Stake in TARP Funds 328 0-5% 161 5-10% 132 10-20% 94 20-30% 64 30-40% 45 40-50% 36 50-60% 29 60-70% 23 70-80% 20 80-90% 27 90-100% Source: Treasury, response to SIGTARP data call, 10/9/2015. shares in CPP community banks auctioned by Treasury were repurchased by 38 CPP banks. Only half (53%) of those 38 banks were successful in repurchasing more than half of the outstanding TARP investment in their banks, which they did at discounts as large as 40%. Table 4.38 shows the percent of outstanding TARP shares repurchased by CPP community banks at auction. Other (16) non-TARP banks successfully bid on 33 banks to win 4% of total TARP shares auctioned in CPP community banks. Two banks were each successful in their bids on shares of 12 banks, while the other banks mostly made bids on just one or two banks. Institutional investors successfully bid for 3% of all TARP shares auctioned by Treasury in CPP community banks. This consisted mostly of one large retirement fund that was successful in its bids on 41 banks. An additional four institutional investment funds were successful in purchasing Treasury’s auctioned TARP shares in six CPP community banks. Senior executives, including presidents, CEOs, and members of the board of directors of CPP banks, successfully bid to purchase 3% of total TARP shares in CPP community banks auctioned by Treasury. These shares were purchased by 72 senior executives and board members of 20 CPP banks. While only two CPP banks were able to repurchase 100% of their TARP shares Treasury auctioned, four auction buyers bought the full TARP investment in an additional 10 community banks. These buyers include one bank holding company (purchased 100% of TARP shares in two banks in its region), two private fund investors (one purchased 100% of TARP shares in seven banks and another in one bank), and one senior executive of a CPP bank who purchased the outstanding TARP shares at his bank. See Table 4.39 for a breakdown of percent of ownership stake in Treasury’s auctioned TARP shares in community banks for each successful bid. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 289 TABLE 4.40 INVESTMENTS IN CPP BANKS SOLD AT A LOSS AT AUCTION, AS OF 9/30/2015 Institution Auction Date Investment Net Proceeds Percentage of Shares Discount Repurchased Auction Loss Percentage by Institution Number of Missed Dividends Missed Dividends Total Loss from Auction Sales and Missed Dividends Porter Bancorp, Inc. 12/4/2014 $35,000,000 $3,500,000 $31,500,000 90% 13 $6,737,500 $38,237,500 Stonebridge Financial Corp. 3/15/2013 10,973,000 1,879,145 9,093,855 83% 12 1,794,180 10,888,035 AB&T Financial Corporation 11/19/2013 3,500,000 914,215 2,585,785 74% 11 481,250 3,067,035 Bridgeview Bancorp, Inc. 11/19/2013 38,000,000 10,450,000 27,550,000 73% 15 7,766,250 35,316,250 7/2/2014 1,700,000 502,000 1,198,000 70% 7 162,138 1,360,138 Spirit Bank Corp. Inc. 11/19/2013 30,000,000 9,000,000 21,000,000 70% 12 4,905,000 25,905,000 Community First Inc. 4/14/2014 17,806,000 5,350,703 12,455,297 70% 12 2,911,200 15,366,497 Georgia Primary Bank 2/10/2014 4,500,000 1,531,145 2,968,855 66% 18 1,113,163 4,082,018 3/1/2013 73,000,000 25,547,320 47,452,680 65% 10 9,125,000 56,577,680 First Banks, Inc. 8/12/2013 295,400,000 104,749,295 190,650,705 65% 17 64,543,063 255,193,768 Centrue Financial Corporation 10/21/2013 32,668,000 10,631,697 21,186,665 65% 18 6,959,475 28,146,140 Bank of George Maryland Financial Bank Old Second Bancorp, Inc.a 10/21/2013 2,672,000 955,240 1,716,760 64% 10 364,150 2,080,910 United American Bank 7/2/2014 8,700,000 3,294,050 5,405,950 62% 21 2,482,702 7,888,652 Village Bank and Trust Financial Corp 11/19/2013 14,738,000 5,672,361 9,065,639 62% 11 2,026,475 11,092,114 Valley Community Bank 10/21/2013 5,500,000 2,296,800 3,203,200 58% 10 749,375 3,952,575 First Priority Financial Corp. 1/29/2013 9,175,000 4,012,094 5,162,906 56% First Intercontinental Bank 8/12/2013 6,398,000 3,222,113 3,175,887 50% 8 697,400 3,873,287 Citizens Bancshares Co. 1/29/2013 24,990,000 12,679,301 12,310,699 49% 12 4,086,000 16,396,699 First Financial Service Corporation 4/29/2013 20,000,000 10,733,778 9,266,222 46% 10 2,500,000 11,766,222 Dickinson Financial Corporation II 1/29/2013 146,053,000 79,903,245 66,149,755 45% 14 27,859,720 94,009,475 Midtown Bank & Trust Company 11/19/2013 5,222,000 3,133,200 2,088,800 40% 15 1,067,213 3,156,013 Delmar Bancorp 1/29/2013 9,000,000 5,453,900 3,546,100 39% 5 613,125 4,159,225 5,162,906 100% Continued on next page 290 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM INVESTMENTS IN CPP BANKS SOLD AT A LOSS AT AUCTION, AS OF 9/30/2015 Institution Auction Date Investment Net Proceeds (CONTINUED) Percentage of Shares Discount Repurchased Auction Loss Percentage by Institution Number of Missed Dividends Missed Dividends Total Loss from Auction Sales and Missed Dividends Virginia Company Bank 8/12/2013 $4,700,000 $2,843,974 $1,856,026 39% 3 $185,903 $2,041,929 Pacific Commerce Bank 2/10/2014 4,060,000 2,494,961 1,565,039 39% 13 695,771 2,260,810 Lone Star Bank 12/4/2014 3,072,000 1,908,480 1,163,520 38% 23 1,059,242 2,222,762 Franklin Bancorp, Inc. 11/9/2012 5,097,000 3,191,614 1,905,386 37% 1,905,386 12/20/2012 1,552,000 983,800 568,200 37% 568,200 9/12/2012 22,000,000 14,211,450 7,788,550 35% 7,788,550 The Baraboo Bancorporation, Inc. 12/11/2012 20,749,000 13,399,227 7,349,773 35% 2 565,390 7,915,163 Citizens Bank & Trust Company 6/29/2015 2,400,000 1,560,312 839,688 35% 5 163,500 1,003,188 Marine Bank & Trust Company 7/2/2014 3,000,000 1,985,000 1,015,000 34% 15 613,125 1,628,125 First Reliance Bancshares, Inc. 3/1/2013 15,349,000 0,327,021 5,021,979 33% 6 1,254,720 6,276,699 Security Bancshares of Pulaski County, Inc. 12/11/2012 2,152,000 1,475,592 676,408 31% First Alliance Bancshares, Inc. 12/20/2012 3,422,000 2,370,742 1,051,258 31% 7/27/2012 35,500,000 25,313,186 10,186,814 29% Parke Bancorp, Inc. 11/30/2012 16,288,000 11,595,735 4,692,265 29% 4,692,265 First Independence Corporation 12/20/2012 3,223,000 2,286,675 936,325 29% 936,325 HMN Financial, Inc. 1/29/2013 26,000,000 18,571,410 7,428,590 29% Farmers Capital Bank Corporation 6/13/2012 30,000,000 21,594,229 8,405,771 28% 8,405,771 Diamond Bancorp, Inc. 7/27/2012 20,445,000 14,780,662 5,664,338 28% 5,664,338 Park Bancorporation, Inc. 7/27/2012 23,200,000 16,772,382 6,427,618 28% Community West Bancshares 12/11/2012 15,600,000 11,181,456 4,418,544 28% Commonwealth Bancshares, Inc. 7/27/2012 20,400,000 15,147,000 5,253,000 26% Trinity Capital Corporation 7/27/2012 35,539,000 26,396,503 9,142,497 26% Hyperion Bank First Community Financial Partners, Inc.b Marquette National Corporation 676,408 2 93,245 31% 10,186,814 8 2,600,000 30% 10,028,590 6,427,618 3 26% 1,144,503 585,000 5,003,544 5,253,000 9,142,497 Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 INVESTMENTS IN CPP BANKS SOLD AT A LOSS AT AUCTION, AS OF 9/30/2015 Institution Auction Date Investment Net Proceeds 291 (CONTINUED) Percentage of Shares Discount Repurchased Auction Loss Percentage by Institution Number of Missed Dividends Missed Dividends Total Loss from Auction Sales and Missed Dividends TriSummit Bank 11/30/2012 $7,002,000 $5,198,984 $1,803,016 26% Alliance Financial Services, Inc. 1/29/2013 12,000,000 8,912,495 3,087,505 26% 12 $3,020,400 6,107,905 National Bancshares, Inc. 2/7/2013 24,664,000 18,318,148 6,345,852 26% 9 3,024,383 9,370,235 Blue Ridge Bancshares, Inc. 10/31/2012 12,000,000 8,969,400 3,030,600 25% 3,030,600 Peoples Bancshares of TN, Inc. 10/31/2012 3,900,000 2,919,500 980,500 25% 980,500 2/7/2013 17,969,000 13,612,558 4,356,442 24% 4,356,442 Colony Bankcorp, Inc. 1/29/2013 28,000,000 21,680,089 6,319,911 23% F&M Financial Corporation (TN) 9/12/2012 17,243,000 13,443,074 3,799,926 22% 3,799,926 Layton Park Financial Group, Inc. 11/30/2012 3,000,000 2,345,930 654,070 22% 654,070 CoastalSouth Bancshares, Inc. 3/1/2013 16,015,000 12,606,191 3,408,809 21% Seacoast Banking Corporation of Florida 3/28/2012 50,000,000 40,404,700 9,595,300 19% 9,595,300 United Bancorp, Inc. 6/13/2012 20,600,000 16,750,221 3,849,779 19% 3,849,779 Alpine Banks of Colorado 9/12/2012 70,000,000 56,430,297 13,569,703 19% 13,569,703 10/31/2012 2,250,000 1,831,250 418,750 19% 418,750 2/7/2013 10,900,000 8,876,677 2,023,323 19% Congaree Bancshares Inc. 10/31/2012 3,285,000 2,685,979 599,021 18% Corning Savings and Loan Association 11/30/2012 638,000 523,680 114,320 18% 114,320 KS Bancorp, Inc. 11/30/2012 4,000,000 3,283,000 717,000 18% 717,000 DeSoto County Bank 9/25/2013 2,681,000 2,196,896 484,104 18% Meridian Bank 3/17/2014 12,535,000 10,328,152 2,206,848 18% 2,206,848 First Western Financial, Inc.c 7/27/2012 20,440,000 17,022,298 3,417,702 17% 3,417,702 Bank of Commerce 11/30/2012 3,000,000 2,477,000 523,000 17% 3 122,625 645,625 Carolina Trust Bank 11/30/2012 4,000,000 3,362,000 638,000 16% 3 150,000 788,000 First Trust Corporation CenterBank Ridgestone Financial Services, Inc. $1,803,016 4 8 14 1,400,000 1,687,900 2,079,175 35% 7,719,911 5,096,709 4,102,498 599,021 79% 484,104 Continued on next page 292 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM INVESTMENTS IN CPP BANKS SOLD AT A LOSS AT AUCTION, AS OF 9/30/2015 Institution Presidio Bank Auction Date Investment Net Proceeds (CONTINUED) Percentage of Shares Discount Repurchased Auction Loss Percentage by Institution Number of Missed Dividends Missed Dividends Total Loss from Auction Sales and Missed Dividends 12/11/2012 $10,800,000 $9,058,369 $1,741,631 16% 3/1/2013 2,900,000 2,440,379 459,621 16% Timberland Bancorp, Inc. 11/9/2012 16,641,000 14,209,334 2,431,666 15% Worthington Financial Holdings, Inc. 6/24/2013 2,720,000 2,318,851 401,149 15% First Financial Holdings Inc. 3/28/2012 65,000,000 55,926,478 9,073,522 14% 9,073,522 11/30/2012 3,000,000 2,593,700 406,300 14% 406,300 Banner Corporation 3/28/2012 124,000,000 108,071,915 15,928,085 13% 15,928,085 LNB Bancorp Inc. 6/13/2012 25,223,000 21,863,750 3,359,250 13% 3,359,250 Pulaski Financial Corp 6/27/2012 32,538,000 28,460,338 4,077,662 13% 4,077,662 Exchange Bank 7/27/2012 43,000,000 37,259,393 5,740,607 13% First National Corporation 8/23/2012 13,900,000 12,082,749 1,817,251 13% 1,817,251 Taylor Capital Group 6/13/2012 104,823,000 92,254,460 12,568,540 12% 12,568,540 Fidelity Financial Corporation 7/27/2012 36,282,000 32,013,328 4,268,672 12% Yadkin Valley Financial Corporationd 9/12/2012 49,312,000 43,486,820 5,825,180 12% 5,825,180 Three Shores Bancorporation, Inc. 11/9/2012 5,677,000 4,992,788 684,212 12% 684,212 Alaska Pacific Bancshares, Inc. 11/30/2012 4,781,000 4,217,568 563,432 12% 563,432 Fidelity Southern Corporation 6/27/2012 48,200,000 42,757,786 5,442,214 11% 5,442,214 First Citizens Banc Corp 6/27/2012 23,184,000 20,689,633 2,494,367 11% 2,494,367 Southern First Bancshares, Inc. 6/27/2012 17,299,000 15,403,722 1,895,278 11% 6% 1,895,278 Market Street Bancshares, Inc. 7/27/2012 20,300,000 18,069,213 2,230,787 11% 89% 2,230,787 Premier Financial Bancorp, Inc. 7/27/2012 22,252,000 19,849,222 2,402,778 11% 46% 2,402,778 Metro City Bank 10/31/2012 7,700,000 6,861,462 838,538 11% 15% 838,538 BankGreenville Financial Corporation 11/9/2012 1,000,000 891,000 109,000 11% Santa Clara Valley Bank, N.A. Clover Community Bankshares, Inc. $1,741,631 12 $474,150 933,771 2,431,666 6 47% 58% 222,360 623,509 5,740,607 4,268,672 109,000 Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 INVESTMENTS IN CPP BANKS SOLD AT A LOSS AT AUCTION, AS OF 9/30/2015 Institution Auction Date Investment Net Proceeds 293 (CONTINUED) Percentage of Shares Discount Repurchased Auction Loss Percentage by Institution Number of Missed Dividends Missed Dividends Total Loss from Auction Sales and Missed Dividends FFW Corporation 11/30/2012 $7,289,000 $6,515,426 $773,574 11% $773,574 First Advantage Bancshares, Inc. 12/11/2012 1,177,000 1,046,621 130,379 11% 130,379 FC Holdings, Inc. 2/7/2013 21,042,000 18,685,927 2,356,073 11% 14 $4,013,730 6,369,803 First Southwest Bancorporation, Inc. 3/15/2013 5,500,000 4,900,609 599,391 11% 13 974,188 1,573,579 ColoEast Bankshares, Inc. 7/22/2013 10,000,000 8,947,125 1,052,875 11% 8 1,090,000 2,142,875 WSFS Financial Corporation 3/28/2012 52,625,000 47,435,299 5,189,701 10% CBS Banc-Corp. 7/27/2012 24,300,000 21,776,396 2,523,604 10% Blackhawk Bancorp Inc. 10/31/2012 10,000,000 9,009,000 991,000 10% 991,000 First Gothenburg Banschares, Inc. 10/31/2012 7,570,000 6,822,136 747,864 10% 747,864 Bank Financial Services, Inc. 12/20/2012 1,004,000 907,937 96,063 10% 96,063 3/1/2013 12,900,000 11,587,256 1,312,744 10% 9 1,581,863 2,894,607 Flagstar Bancorp, Inc. 3/15/2013 266,657,000 240,627,277 26,029,723 10% 5 16,666,063 42,695,786 First Capital Bancorp, Inc. 6/13/2012 10,958,000 9,931,327 1,026,673 9% 1,026,673 BNC Bancorp 8/23/2012 31,260,000 28,365,685 2,894,315 9% 2,894,315 Germantown Capital Corporation, Inc. 10/31/2012 4,967,000 4,495,616 471,384 9% HomeTown Bankshares Corporation 10/31/2012 10,000,000 9,093,150 906,850 9% 906,850 Oak Ridge Financial Services, Inc. 10/31/2012 7,700,000 7,024,595 675,405 9% 675,405 First Freedom Bancshares, Inc. 11/9/2012 8,700,000 7,945,492 754,508 9% Sound Banking Company 11/9/2012 3,070,000 2,804,089 265,911 9% 265,911 Country Bank Shares, Inc. 11/30/2012 7,525,000 6,838,126 686,874 9% 686,874 Bank of Southern California, N.A. 12/20/2012 4,243,000 3,850,150 392,850 9% 6/24/2013 442,000 400,425 41,575 9% SouthCrest Financial Group, Inc. Farmers & Merchants Financial Corporation 5,189,701 95% 25% 69% 30% 2,523,604 471,384 754,508 392,850 41,575 Continued on next page 294 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM INVESTMENTS IN CPP BANKS SOLD AT A LOSS AT AUCTION, AS OF 9/30/2015 Institution Auction Date Investment Net Proceeds (CONTINUED) Percentage of Shares Discount Repurchased Auction Loss Percentage by Institution Number of Missed Dividends Missed Dividends Total Loss from Auction Sales and Missed Dividends 9 $1,055,520 $1,882,241 RCB Financial Corporation 9/25/2013 $8,900,000 $8,073,279 $826,721 9% MainSource Financial Group, Inc. 3/28/2012 57,000,000 52,277,171 4,722,829 8% 4,722,829 Ameris Bancorp 6/13/2012 52,000,000 47,665,332 4,334,668 8% 4,334,668 Peoples Bancorp of North Carolina, Inc. 6/27/2012 25,054,000 23,033,635 2,020,365 8% 2,020,365 Regional Bankshares, Inc. 11/9/2012 1,500,000 1,373,625 126,375 8% 47% 126,375 CBB Bancorp 11/30/2012 4,397,000 4,066,752 330,248 8% 35% 330,248 Central Community Corporation 12/11/2012 22,000,000 20,172,636 1,827,364 8% 1,827,364 Waukesha Bankshares, Inc. 1/29/2013 5,625,000 5,161,674 463,326 8% 463,326 Wilshire Bancorp, Inc. 3/28/2012 62,158,000 57,766,994 4,391,006 7% 4,391,006 Firstbank Corporation 6/27/2012 33,000,000 30,587,530 2,412,470 7% Capital Pacific Bancorp 11/9/2012 4,000,000 3,715,906 284,094 7% Western Illinois Bancshares, Inc. 11/9/2012 11,422,000 10,616,305 805,695 7% 89% 805,695 Community Bancshares of Mississippi, Inc. 11/30/2012 1,050,000 977,750 72,250 7% 52% 72,250 Community Business Bank 11/30/2012 3,976,000 3,692,560 283,440 7% Hometown Bancshares, Inc. 11/30/2012 1,900,000 1,766,510 133,490 7% 1/29/2013 8,144,000 7,598,963 545,037 7% 545,037 2/7/2013 16,000,000 14,811,984 1,188,016 7% 1,188,016 Mackinac Financial Corporation 8/23/2012 11,000,000 10,380,905 619,095 6% 619,095 F&M Financial Corporation (NC) 9/12/2012 17,000,000 15,988,500 1,011,500 6% 84% 1,011,500 12/20/2012 2,600,000 2,445,000 155,000 6% 54% 155,000 Commonwealth Business Bank 7/22/2013 7,701,000 7,250,414 450,586 6% 100% Universal Bancorp 8/12/2013 9,900,000 9,312,028 587,972 6% F & M Bancshares, Inc. Carolina Bank Holdings, Inc. Community Investors Bancorp, Inc. 48% 2,412,470 284,094 283,440 39% 133,490 10 1,049,250 1,499,836 587,972 Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 INVESTMENTS IN CPP BANKS SOLD AT A LOSS AT AUCTION, AS OF 9/30/2015 Institution Auction Date Investment Net Proceeds 295 (CONTINUED) Percentage of Shares Discount Repurchased Auction Loss Percentage by Institution Number of Missed Dividends Missed Dividends Total Loss from Auction Sales and Missed Dividends Metropolitan Capital Bancorp, Inc. 6/29/2015 $4,388,000 $4,135,655 $252,345 6% $252,345 First Defiance Financial Corp. 6/13/2012 37,000,000 35,084,144 1,915,856 5% 1,915,856 F&C Bancorp, Inc. 11/9/2012 2,993,000 2,840,903 152,097 5% 152,097 Farmers Enterprises, Inc. 11/9/2012 12,000,000 11,439,252 560,748 5% Coastal Banking Company, Inc. 3/1/2013 9,950,000 9,408,213 541,787 5% Alliance Bancshares, Inc. 3/15/2013 2,986,000 2,831,437 154,563 5% 154,563 AmFirst Financial Services, Inc. 3/15/2013 5,000,000 4,752,000 248,000 5% 248,000 United Community Banks, Inc. 3/15/2013 180,000,000 171,517,500 8,482,500 5% 8,482,500 Biscayne Bancshares, Inc. 1/29/2013 6,400,000 6,170,630 229,370 4% Guaranty Federal Bancshares, Inc.e 4/29/2013 12,000,000 11,493,900 506,100 4% Intervest Bancshares Corporation 6/24/2013 25,000,000 24,007,500 992,500 4% MetroCorp Bancshares, Inc. 6/27/2012 45,000,000 43,490,360 1,509,640 3% First Community Corporation 8/23/2012 11,350,000 10,987,794 362,206 3% 33% 362,206 The Little Bank, Incorporated 10/31/2012 7,500,000 7,285,410 214,590 3% 63% 214,590 Manhattan Bancshares, Inc. 12/11/2012 2,639,000 2,560,541 78,459 3% 96% 78,459 3/1/2013 12,000,000 11,605,572 394,428 3% BancStar, Inc. 4/29/2013 8,600,000 8,366,452 233,548 3% NewBridge Bancorp 4/29/2013 52,372,000 50,837,239 1,534,761 3% Alarion Financial Services, Inc. 7/22/2013 6,514,000 6,338,584 175,416 3% Crosstown Holding Company 7/22/2013 10,650,000 10,356,564 293,436 3% 293,436 Century Financial Services Corporation 12/20/2012 10,000,000 9,751,500 248,500 2% 248,500 Mountain Valley Bancshares, Inc. 7/22/2013 3,300,000 3,242,000 58,000 2% The Queensborough Company 99% 560,748 6 $746,250 53% 1,288,037 229,370 506,100 25% 992,500 1,509,640 11 1,798,500 12% 2,192,928 233,548 1,534,761 6 91% 532,560 707,976 58,000 Continued on next page 296 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM INVESTMENTS IN CPP BANKS SOLD AT A LOSS AT AUCTION, AS OF 9/30/2015 Institution Blue Valley Ban Corp Auction Date Investment Net Proceeds (CONTINUED) Percentage of Shares Discount Repurchased Auction Loss Percentage by Institution Number of Missed Dividends Missed Dividends Total Loss from Auction Sales and Missed Dividends 18 $4,893,750 $5,380,733 10/21/2013 $21,750,000 $21,263,017 $486,983 2% Community First Bancshares, Inc. 2/10/2014 12,725,000 12,446,703 278,297 2% IA Bancorp, Inc. 3/17/2014 5,976,000 5,863,113 112,887 2% 6 472,365 585,252 SouthFirst Bancshares, Inc. 6/29/2015 2,760,000 2,722,050 37,950 1% 14 609,270 647,220 Plato Holdings Inc. 4/29/2013 2,500,000 2,478,750 21,250 1% 4 207,266 228,516 Fidelity Federal Bancorp 7/22/2013 6,657,000 6,586,509 70,491 1% 14 1,229,924 1,300,415 Omega Capital Corp. 7/22/2013 2,816,000 2,791,000 25,000 1% 15 575,588 600,588 Premier Financial Corp. 7/22/2013 6,349,000 6,270,436 78,564 1% 12 1,597,857 1,676,421 Community Pride Bank Corporation 8/12/2013 4,400,000 4,351,151 48,849 1% 9 803,286 852,135 Chicago Shore Corporation 3/17/2014 7,000,000 6,937,000 63,000 1% Severn Bancorp, Inc. 9/25/2013 23,393,000 23,367,268 25,732 0% Oregon Bancorp, Inc. 10/21/2013 3,216,000 3,216,000 0 0% Freeport Bancshares, Inc. 4/14/2014 301,000 301,000 0 0% Prairie Star Bancshares, Inc. 6/29/2015 2,800,000 2,800,000 0 0% 21 913,150 913,150 CSRA Bank Corp. 6/29/2015 2,400,000 2,400,000 0 0% 19 717,300 717,300 Reliance Bancshares, Inc. 9/25/2013 40,000,000 40,196,000 (196,000) 0% 11 5,995,000 5,799,000 BNCCORP, Inc. 3/17/2014 20,093,000 20,114,700 (21,700) 0% (21,700) First United Corporation 12/4/2014 30,000,000 30,060,300 (60,300) 0% (60,300) Tennessee Valley Financial Holdings, Inc. 4/29/2013 3,000,000 3,041,330 (41,330) (1%) 13 531,375 490,045 3/1/2013 10,500,000 10,728,783 (228,783) (2%) 12 1,716,750 1,487,967 Madison Financial Corporation 11/19/2013 3,370,000 3,446,196 (76,196) (2%) 15 688,913 612,717 Brogan Bankshares, Inc. 4/29/2013 2,400,000 2,495,024 (95,024) (4%) 7 352,380 257,356 7/2/2014 16,800,000 17,683,309 (883,309) (5%) 14 3,204,600 2,321,291 4/29/2013 11,949,000 12,907,297 (958,297) (8%) 12 1,792,350 834,053 Northwest Bancorporation, Inc. White River Bancshares Company Plumas Bancorp 278,297 60% 63,000 6 1,754,475 78% 1,780,207 0 0 58% Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 INVESTMENTS IN CPP BANKS SOLD AT A LOSS AT AUCTION, AS OF 9/30/2015 Auction Date Institution Boscobel Bancorp, Inc. Investment Net Proceeds 297 (CONTINUED) Percentage of Shares Discount Repurchased Auction Loss Percentage by Institution Number of Missed Dividends Missed Dividends Total Loss from Auction Sales and Missed Dividends 3/1/2013 $5,586,000 $6,116,943 ($530,943) (10%) 11 $1,288,716 $757,773 Eastern Virginia Bankshares, Inc. 10/21/2013 24,000,000 26,498,640 (2,498,640) (10%) 11 3,300,000 801,360 Atlantic Bancshares, Inc. 2/10/2014 2,000,000 2,275,000 (275,000) (14%) 11 299,255 24,255 Patriot Bancshares, Inc. 4/14/2014 26,038,000 29,736,177 (3,698,177) (14%) 13 4,612,010 913,833 Security State Bank Holding Company 6/24/2013 10,750,000 12,409,261 (1,659,261) (15%) 10 2,254,985 595,724 Pathway Bancorp 6/24/2013 3,727,000 4,324,446 (597,446) (16%) 15 761,588 164,142 Great River Holding Company 4/14/2014 8,400,000 9,920,988 (1,520,988) (18%) 14 2,466,660 945,672 Royal Bancshares of Pennsylvania, Inc. 7/2/2014 30,407,000 36,337,548 (5,930,548) (20%) 20 7,601,750 1,671,202 Market Bancorporation, Inc. 7/2/2014 2,060,000 2,467,662 (407,662) (20%) 16 449,080 41,418 11/19/2013 16,200,000 19,685,754 (3,485,754) (22%) 18 3,973,050 487,296 Pacific City Financial Corporation Total Auction Losses Total Missed Dividends 38% 53% $813,526,950 $253,511,885 Notes: Numbers may not total due to rounding. a Treasury sold 70,028 of its shares in Old Second in the 3/1/2013 auction and the remaining 2,972 shares in the 3/15/2013 auction. b Treasury additionally sold 1,100 shares of its Series C stock in First Community Financial Partners, Inc. in this auction, but its largest investment in the bank was sold in the auction that closed on 9/12/2012, and the data for the disposition of its investment is listed under the 9/12/2012 auction in this table. c Treasury sold 8,000 of its shares in First Western Financial, Inc. on 7/27/2012 and the remaining 12,440 in the 6/24/2013 auction. d This institution was auctioned separately from the other set that closed on the same date because it is a publicly traded company. e The original investment in Guaranty Federal Bancshares, Inc. was $17 million. The bank had previously paid down $5 million, leaving a $12 million investment remaining. Sources: Treasury, Transactions Report, 9/29/2015; SNL Financial LLC data. 298 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM For a discussion of SIGTARP’s August 20, 2013, recommendation to Treasury regarding the inclusion of SBLF funds as TARP repayments, see SIGTARP’s October 2013 Quarterly Report, pages 281-282. For information on TARP banks that refinanced into SBLF, see SIGTARP’s April 9, 2013, audit report, “Banks that Used the Small Business Lending Fund to Exit TARP.” For a detailed list of CPP banks that refinanced into SBLF, see SIGTARP’s October 2012 Quarterly Report, pages 88-92. For a discussion of the impact of TARP and SBLF on community banks, see SIGTARP’s April 2012 Quarterly Report, pages 145-167. For more information on warrant disposition, see SIGTARP’s audit report of May 10, 2010, “Assessing Treasury’s Process to Sell Warrants Received from TARP Recipients.” CPP Banks Refinancing into CDCI and SBLF On October 21, 2009, the Administration announced the Community Development Capital Initiative (“CDCI”) as another TARP-funded program.331 Under CDCI, TARP made $570.1 million in investments in 84 eligible banks and credit unions.332 Qualifying CPP banks applied for the new TARP program, and 28 banks were accepted. The 28 banks refinanced $355.7 million in CPP investments into CDCI.333 For more information on CDCI, see “Community Development Capital Initiative” in this section. Treasury converted another 137 CPP participants into non-TARP program SBLF with financing of $2.7 billion. The 137 banks in turn refinanced $2.2 billion of Treasury’s TARP preferred stock with the SBLF investments.334 Warrant Disposition For publicly traded institutions, Treasury received warrants of 15% of the value of the original CPP investment, which gave Treasury the right to purchase a certain number of shares of common stock at a predetermined price.335 Because the warrants rise in value as a company’s share price rises, they permit Treasury (and the taxpayer) to benefit from a firm’s potential recovery.336 Treasury estimated the fair market value of the warrants using market quotes, financial models, and/or third-party valuations.337 As of September 30, 2015, Treasury had not exercised any of these warrants.338 For privately held institutions, Treasury received warrants to purchase additional preferred stock or debt in an amount equal to 5% of the CPP investment. Treasury exercised these warrants immediately.339 As of September 30, 2015, Treasury had received $8.1 billion through the sale of CPP warrants, including from 188 CPP institutions who bought back $3.9 billion worth of warrants (of which $2.5 million was purchased this quarter). As of that same date, 302 privately held institutions, the warrants of which had been immediately exercised, bought back the resulting additional preferred shares for a total of $182.5 million, of which $1.9 million was bought back this quarter.340 Table 4.41 lists publicly traded institutions that repaid TARP and repurchased warrants in the quarter ended September 30, 2015. Table 4.42 lists privately held institutions that had done so in the same quarter.341 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TABLE 4.41 CPP WARRANT SALES AND REPURCHASES (PUBLIC) FOR THE QUARTER ENDING 9/30/2015 Repurchase Date Company 7/1/2015 First Financial Service Corporation Total Number of Warrants Repurchased Amount of Repurchase ($ Thousands) 215,983 $2,500.0 215,983 $2,500.0 Notes: Numbers may not total due to rounding. This table represents warrants for common stock issued to Treasury by publicly traded TARP recipients. Treasury may hold one warrant for millions of underlying shares rather than millions of warrants of an individual financial institution. Sources: Treasury, Transactions Report, 9/29/2015; Treasury, response to SIGTARP data call, 10/9/2015. TABLE 4.42 CPP WARRANT SALES AND REPURCHASES (PRIVATE) FOR THE QUARTER ENDING 9/30/2015 Repurchase Date Company 7/16/2015 Suburban Illinois Bancorp, Inc.a Number of Warrants Repurchased Amount of Repurchase ($ Thousands) 750,000 $750.0 7/15/2015 Farmers & Merchants Bancshares, Inc. 550,000 550.0 8/28/2015 Patapsco Bancorp, Inc. 300,000 300.0 9/21/2015 Goldwater Bank, N.A. 128,000 128.0 7/8/2015 Grand Financial Corporation Total a 122,000 122.0 1,850,000 $1,850.0 Notes: Numbers may not total due to rounding. This table represents the preferred shares held by Treasury as a result of the exercise of warrants issued by non-publicly traded TARP recipients. These warrants were exercised immediately upon the transaction date. Treasury may hold one warrant for millions of underlying shares rather than millions of warrants of an individual financial institution. a S-Corporation Institution: issued subordinated debt instead of preferred stock. Sources: Treasury, Transactions Report, 9/29/2015; Treasury response to SIGTARP data call, 10/9/2015. Treasury Warrant Auctions If Treasury and the repaying institution cannot agree upon the price for the institution to repurchase its warrants, Treasury may conduct a public or private offering to auction the warrants.342 Through September 30, 2015, Treasury had held 26 public auctions for warrants it received under CPP, TIP, and AGP, raising a total of approximately $5.4 billion, as shown in Table 4.43 299 300 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.43 PUBLIC TREASURY WARRANT AUCTIONS, AS OF 9/30/2015 Auction Date 3/3/2010 Number of Warrants Offered Minimum Bid Price Selling Price Proceeds to Treasury ($ Millions) Bank of America A Auction (TIP)a 150,375,940 $7.00 $8.35 $1,255.6 Bank of America B Auction (CPP)a 121,792,790 1.50 2.55 310.6 Company 12/10/2009 JPMorgan Chase 5/20/2010 Wells Fargo and Company 88,401,697 8.00 10.75 950.3 110,261,688 6.50 7.70 849.0 9/21/2010 4/29/2010 Hartford Financial Service Group, Inc. 52,093,973 10.50 13.70 713.7 PNC Financial Services Group, Inc. 16,885,192 15.00 19.20 324.2 Citigroup A Auction (TIP & AGP) 255,033,142 0.60 1.01 257.6 Citigroup B Auction (CPP)a 210,084,034 0.15 0.26 54.6 a 1/25/2011 9/16/2010 Lincoln National Corporation 13,049,451 13.50 16.60 216.6 5/6/2010 Comerica Inc. 11,479,592 15.00 16.00 183.7 12/3/2009 Capital One 12,657,960 7.50 11.75 148.7 11/29/2012 M&T Bank Corporation 1,218,522 23.50 1.35 32.3 2/8/2011 Wintrust Financial Corporation 1,643,295 13.50 15.80 26.0 6/2/2011 Webster Financial Corporation 3,282,276 5.50 6.30 20.4 SunTrust A Auctionb 6,008,902 2.00 2.70 16.2 SunTrust B Auctionb 11,891,280 1.05 1.20 14.2 1,707,456 5.00 5.00 15.6 595,829 16.00 19.00 11.3 9/22/2011 3/9/2010 Washington Federal, Inc. 3/10/2010 Signature Bank 12/15/2009 TCF Financial 3,199,988 1.50 3.00 9.6 12/5/2012 Zions Bancorporation 5,789,909 23.50 26.50 7.8 3/11/2010 Texas Capital Bancshares, Inc. 2/1/2011 Boston Private Financial Holdings, Inc. 758,086 6.50 6.50 6.7 2,887,500 1.40 2.20 6.4 5/18/2010 Valley National Bancorp 2,532,542 1.70 2.20 5.6 11/30/2011 Associated Banc-Corpc 3,983,308 0.50 0.90 3.6 6/2/2010 First Financial Bancorp 6/9/2010 Sterling Bancshares Inc. Total 465,117 4.00 6.70 3.1 2,615,557 0.85 1.15 3.0 1,090,695,026 $5,446.4 Notes: Numbers may not total due to rounding. a Treasury held two auctions each for the sale of Bank of America and Citigroup warrants. b Treasury held two auctions for SunTrust’s two CPP investments dated 11/14/2008 (B auction) and 12/31/2008 (A auction). c According to Treasury, the auction grossed $3.6 million and netted $3.4 million. Sources: The PNC Financial Services Group, Inc., “Final Prospectus Supplement,” 4/29/2010, www.sec.gov/Archives/edgar/data/713676/000119312510101032/d424b5.htm, accessed 10/1/2015; Valley National Bancorp, “Final Prospectus Supplement,” 5/18/2010, www.sec.gov/Archives/edgar/data/714310/000119312510123896/d424b5.htm, accessed 10/1/2015; Comerica Incorporated, “Final Prospectus Supplement,” 5/6/2010, www.sec.gov/Archives/edgar/data/28412/000119312510112107/d424b5.htm, accessed 10/1/2015; Wells Fargo and Company, “Definitive Prospectus Supplement,” 5/20/2010, www.sec.gov/Archives/edgar/data/72971/000119312510126208/d424b5.htm, accessed 10/1/2015; First Financial Bancorp, “Prospectus Supplement,” 6/2/2010, www.sec.gov/Archives/edgar/data/708955/000114420410031630/v187278_424b5.htm, accessed 10/1/2015; Sterling Bancshares, Inc., “Prospectus Supplement,” 6/9/2010, www.sec.gov/Archives/edgar/data/891098/000119312510136584/dfwp.htm, accessed 10/1/2015; Signature Bank, “Prospectus Supplement,” 3/10/2010, files.shareholder.com/downloads/ SBNY/1456015611x0x358381/E87182B5-A552-43DD-9499-8B56F79AEFD0/8-K Reg_FD_Offering_Circular.pdf, accessed 10/1/2015; Texas Capital Bancshares, Inc., “Prospectus Supplement,” 3/11/2010, www.sec.gov/Archives/edgar/data/1077428/000095012310023800/d71405ae424b5.htm, accessed 10/1/2015; Bank of America, “Form 8-K,” 3/3/2010, www.sec.gov/Archives/edgar/ data/70858/000119312510051260/d8k.htm, accessed 10/1/2015; Bank of America, “Prospectus Supplement,” 3/1/2010, www.sec.gov/Archives/edgar/data/70858/000119312510045775/ d424b2.htm, accessed 10/1/2015; Washington Federal, Inc., “Prospectus Supplement,” 3/9/2010, www.sec.gov/Archives/edgar/data/936528/000119312510052062/d424b5.htm, accessed 10/1/2015; TCF Financial, “Prospectus Supplement,” 12/16/2009, www.sec.gov/Archives/edgar/data/814184/000104746909010786/a2195869z424b5.htm, accessed 10/1/2015; JPMorgan Chase, “Prospectus Supplement,” 12/11/2009, www.sec.gov/Archives/edgar/data/19617/000119312509251466/d424b5.htm, accessed 10/1/2015; Capital One Financial, “Prospectus Supplement,” 12/3/2009, www.sec.gov/Archives/edgar/data/927628/000119312509247252/d424b5.htm, accessed 10/1/2015; Treasury, Transactions Report, 9/30/2013; Hartford Financial Services Group, Prospectus Supplement to Prospectus filed with the SEC 8/4/2010, www.sec.gov/Archives/edgar/data/874766/000095012310087985/y86606b5e424b5.htm, accessed 10/1/2015; Treasury, “Treasury Announces Pricing of Public Offering to Purchase Common Stock of The Hartford Financial Services Group, Inc.,” 9/22/2010, www.treasury.gov/press-center/press-releases/Pages/tg865. aspx, accessed 10/1/2015; Lincoln National Corporation, Prospectus Supplement to Prospectus filed with SEC 3/10/2009, www.sec.gov/Archives/edgar/data/59558/000119312510211941/ d424b5.htm, accessed 10/1/2015; Lincoln National Corporation, 8-K, 9/22/2010, www.sec.gov/Archives/edgar/data/59558/000119312510214540/d8k.htm, accessed 10/1/2015; Treasury, Section 105(a) Report, 1/31/2011; Treasury, “Treasury Announces Public Offerings of Warrants to Purchase Common Stock of Citigroup Inc.,” 1/24/2011, www.treasury.gov/press-center/pressreleases/Pages/tg1033.aspx, accessed 10/1/2015; Citigroup, Prospectus, 1/24/2011, www.sec.gov/Archives/edgar/data/831001/000095012311004665/y89177b7e424b7.htm, accessed 10/1/2015; Citigroup, Prospectus, 1/24/2011, www.sec.gov/Archives/edgar/data/831001/000095012311004665/y89177b7e424b7.htm, accessed 10/1/2015; Boston Private Financial Holdings, Inc., Prospectus, 1/28/2011, www.sec.gov/Archives/edgar/data/821127/000119312511021392/d424b5.htm, accessed 10/1/2015; Boston Private Financial Holdings, Inc. 8-K, 2/7/2011, www. sec.gov/Archives/edgar/data/821127/000144530511000189/tarpwarrant020711.htm, accessed 10/1/2015; Wintrust Financial Corporation, Prospectus, 2/8/2011, www.sec.gov/Archives/edgar/ data/1015328/000095012311011007/c62806b5e424b5.htm, accessed 10/1/2015; Treasury, Section 105(a) Report, 1/31/2011; Treasury, “Treasury Announces Public Offerings of Warrants to Purchase Common Stock of Citigroup Inc.,” 1/24/2011, www.treasury.gov/press-center/press-releases/Pages/tg1033.aspx, accessed 10/1/2015; Treasury, Citigroup Preliminary Prospectus – CPP Warrants, 1/24/2011, www.sec.gov/Archives/edgar/data/831001/000095012311004666/y89178b7e424b7.htm, accessed 10/1/2015; Citigroup, Preliminary Prospectus – TIP & AGP Warrants, 1/24/2011, www.sec.gov/Archives/edgar/data/831001/000095012311004665/y89177b7e424b7.htm, accessed 10/1/2015; Treasury, responses to SIGTARP data call, 4/6/2011, 7/14/2011, 10/5/2011, 10/11/2011, and 1/11/2012; Treasury Press Release, “Treasury Department Announces Public Offerings of Warrants to Purchase Common Stock of SunTrust Banks, Inc.,” 9/21/2011, www.treasury.gov/press-center/press-releases/Pages/tg1300.aspx, accessed 10/1/2015; “Treasury Department Announces Public Offering of Warrants to Purchase Common Stock of Associated Banc-Corp,” 11/29/2011, www.treasury.gov/press-center/press-releases/Pages/tg1372.aspx, accessed 10/1/2015; Treasury, “Treasury Department Announces Public Offering of Warrant to Purchase Common Stock of M&T Bank Corporation,” 12/10/2012, www.treasury.gov/press-center/press-releases/Pages/tg1793.aspx, accessed 10/1/2015; Treasury, “Treasury Department Announces Public Offering of Warrants to Purchase Common Stock of Zions Bancorporation,” 11/28/2012, www.treasury.gov/press-center/press-releases/Pages/tg1782.aspx, accessed 10/1/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Private Warrant Auctions Treasury has conducted three private auctions to sell the warrants of 44 CPP institutions for $75.9 million, as listed in Table 4.44. Treasury stated that the warrants were offered only in private transactions.343 TABLE 4.44 PRIVATE TREASURY WARRANT AUCTIONS AS OF 9/30/2015 Date Company Number of Warrants Offered Proceeds to Treasury 11/17/2011 Eagle Bancorp, Inc. 385,434 $2,794,422 11/17/2011 Horizon Bancorp 212,188 1,750,551 11/17/2011 Bank of Marin Bancorp 154,908 1,703,984 11/17/2011 First Bancorp (of North Carolina) 616,308 924,462 11/17/2011 Westamerica Bancorporation 246,698 878,256 11/17/2011 Lakeland Financial Corp 198,269 877,557 11/17/2011 F.N.B. Corporation 651,042 690,100 11/17/2011 Encore Bancshares 364,026 637,071 11/17/2011 LCNB Corporation 217,063 602,557 11/17/2011 Western Alliance Bancorporation 787,107 415,000 11/17/2011 First Merchants Corporation 991,453 367,500 11/17/2011 1st Constitution Bancorp 231,782 326,576 11/17/2011 Middleburg Financial Corporation 104,101 301,001 11/17/2011 MidSouth Bancorp, Inc. 104,384 206,557 11/17/2011 CoBiz Financial Inc. 895,968 143,677 11/17/2011 First Busey Corporation 573,833 63,677 11/17/2011 First Community Bancshares, Inc. 88,273 30,600 6/6/2013 Banner Corporation 243,998 134,201 6/6/2013 Carolina Trust Bank 86,957 19,132 6/6/2013 Central Pacific Financial Corp. 79,288 751,888 6/6/2013 Colony Bankcorp, Inc. 500,000 810,000 6/6/2013 Community West Bancshares 521,158 698,351 6/6/2013 Flagstar Bancorp, Inc. 645,138 12,905 6/6/2013 Heritage Commerce Corp 462,963 $140,000 6/6/2013 International Bancshares Corporation 1,326,238 4,018,511 6/6/2013 Mainsource Financial Group, Inc. 571,906 1,512,177 6/6/2013 Metrocorp Bancshares, Inc. 771,429 2,087,368 6/6/2013 Old Second Bancorp, Inc. 815,339 106,891 6/6/2013 Parke Bancorp, Inc. 438,906 1,650,288 6/6/2013 S&T Bancorp, Inc. 517,012 527,361 6/6/2013 Timberland Bancorp, Inc. 370,899 1,301,856 Continued on next page 301 302 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM PRIVATE TREASURY WARRANT AUCTIONS AS OF 9/30/2015 (CONTINUED) Number of Warrants Offered Proceeds to Treasury 219,908 $6,677 Yadkin Financial Corporation 91,178 55,677 6/6/2013 Yadkin Financial Corporation 128,663 20,000 5/28/2015 BBCN Bancorp, Inc. 350,767 1,115,500 Date Company 6/6/2013 United Community Banks, Inc. 6/6/2013 5/28/2015 City Holding Company 61,796 873,485 5/28/2015 Community One Bancorp 22,071 10,357 5/28/2015 Fidelity Southern Corporation 2,693,747 31,429,313 5/28/2015 First United Corporation 326,323 117,162 5/28/2015 Parkvale Financial Corporation/ F.N.B. Corporation 819,640 6,025,650 5/28/2015 Annapolis Bancorp, Inc./F.N.B. Corporation 367,916 3,735,578 5/28/2015 HMN Financial, Inc. 833,333 5,529,582 5/28/2015 The First Bancorp, Inc. 226,819 389,078 5/28/2015 Valley National Bancorp 488,847 100,567 20,725,790 $75,893,102 Total Sources: “Treasury Announces Completion of Private Auction to Sell Warrant Positions,” 11/18/2011, www.treasury.gov/presscenter/press-releases/Pages/tg1365.aspx, accessed 10/1/2015; “Treasury Completes Auction to Sell Warrants Positions,” 6/6/2013, www.treasury.gov/press-center/press-releases/Pages/jl1972.aspx, accessed 10/1/2015; “Treasury Completes Auction to Sell Warrant Positions,” 5/21/2015, www.treasury.gov/press-center/press-releases/Pages/jl10058.aspx, accessed 10/1/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Community Development Capital Initiative The Administration announced the Community Development Capital Initiative (“CDCI”) on October 21, 2009. According to Treasury, the program was intended to help small businesses obtain credit.344 Under CDCI, TARP made $570.1 million in investments in the preferred stock or subordinated debt of 84 eligible banks, bank holding companies, thrifts, and credit unions certified as Community Development Financial Institutions (“CDFIs”) by Treasury. According to Treasury, these lower-cost capital investments were intended to strengthen the capital base of CDFIs and enable them to make more loans in low and moderate-income communities.345 CDCI was open to certified, qualifying CDFIs or financial institutions that applied for CDFI status by April 30, 2010.346 According to Treasury, CPP-participating CDFIs that were in good standing could exchange their CPP investments for CDCI investments.347 CDCI closed to new investments on September 30, 2010.348 Treasury invested $570.1 million in 84 institutions under the program — 36 banks or bank holding companies and 48 credit unions.349 Of the 36 investments in banks and bank holding companies, 28 were conversions from CPP (representing $363.3 million of the total $570.1 million); the remaining eight were not CPP participants. Treasury provided an additional $100.7 million in CDCI funds to 10 of the banks converting CPP investments. Only $106 million of the total CDCI funds went to institutions that were not in CPP. Status of Funds As of September 30, 2015, 62 institutions remained in CDCI. Twenty institutions have fully repaid Treasury and have exited CDCI. Five institutions have partially repaid and remain in the program. One CDCI credit union merged with another CDCI credit union, leaving only one of the credit unions remaining in the program. Premier Bancorp, Inc., Wilmette, Illinois, previously had its subsidiary bank fail and almost all of Treasury’s $6.8 million investment was lost.350 As of September 30, 2015, taxpayers were still owed $445.9 million related to CDCI.351 According to Treasury, it had realized losses of $6.7 million in the program that will never be recovered, leaving $455.9 million outstanding.352 According to Treasury, $117.5 million of the CDCI principal (or 21%) had been repaid as of September 30, 2015.353 As of September 30, 2015, Treasury had received approximately $52.4 million in dividends and interest from CDCI recipients.354 Tables 4.45 through 4.51 show banks and credit unions remaining in CDCI by region and state as of September 30, 2015. Table 4.52 lists the current status of all CDCI investments as of September 30, 2015. For more information on CDCI institutions that remain in TARP and their use of TARP funds, see the report in SIGTARP’s April 2014 Quarterly Report: “Banks and Credit Unions in TARP’s CDCI Program Face Challenges.” Community Development Financial Institutions (“CDFIs”): Financial institutions eligible for Treasury funding to serve urban and rural low-income communities through the CDFI Fund. CDFIs were created in 1994 by the Riegle Community Development and Regulatory Improvement Act. 303 304 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.45 BANKS AND CREDIT UNIONS WITH CDCI PRINCIPAL REMAINING, BY REGION, AS OF 9/30/2015 Original Number of Participants Remaining Number of Participants Remaining Investment Remaining Number of Banks Remaining Number of Credit Unions Mid-Atlantic/Northeast 24 20 $67,151,000 5 15 Southeast 22 17 272,563,000 15 2 West 14 10 25,496,000 2 8 Southwest/South Central 11 7 54,765,000 2 5 Midwest 11 8 25,940,400 4 4 Mountain West/Plains Total 2 0 0 0 0 84 62 $445,915,400 28 34 Source: Treasury, Transactions Report, 9/29/2015. FIGURE 4.67 AMOUNT OF CDCI PRINCIPAL INVESTMENT REMAINING, BY REGION, AS OF 9/30/2015 AK MOUNTAIN WEST/ PLAINS $0 WA MT OR ID WEST $25 MILLION GU HI CA NV ND WY MN AZ WI SD CO IL KS OK NM MO AR NY OH IN PA WV VA KY ME MID-ATLANTIC/ NORTHEAST $67 MILLION NH MA CT RI NJ DE MD NC TN MS AL TX VT MI IA NE UT MIDWEST $26 MILLION SC GA SOUTHEAST $273 MILLION LA FL SOUTHWEST/ SOUTH CENTRAL $55 MILLION WEST MOUNTAIN WEST/PLAINS SOUTHWEST/SOUTH CENTRAL MIDWEST MID-ATLANTIC/NORTHEAST SOUTHEAST PR 305 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Mid-Atlantic/Northeast TABLE 4.46 BANKS AND CREDIT UNIONS WITH CDCI PRINCIPAL REMAINING, BY STATE, AS OF 9/30/2015 ME VT NH MA NY CT NJ DE MD DC PA WV VA WV RI Original Number of Participants Remaining Number of Participants Remaining Investment Remaining Number of Banks Remaining Number of Credit Unions CT 1 1 $7,000 0 1 DC 3 3 13,303,000 2 1 NJ 2 1 31,000 0 1 NY 13 11 42,660,000 2 9 PA 1 1 100,000 0 1 VA 3 2 9,959,000 1 1 VT MID-ATLANTIC/ NORTHEAST >$10 million $1 million-$10 million $1-$1 million $0 Principal investment remaining in CDCI banks Total 1 1 1,091,000 0 1 24 20 $67,151,000 5 15 Source: Treasury, Transactions Report, 9/29/2015. Southeast TABLE 4.47 BANKS AND CREDIT UNIONS WITH CDCI PRINCIPAL REMAINING, BY STATE, AS OF 9/30/2015 NC TN MS AL SC GA PR FL SOUTHEAST Principal investment remaining in CDCI banks >$10 million $1 million-$10 million $1-1 million $0 Original Number of Participants Remaining Number of Participants Remaining Investment Remaining Number of Banks Remaining Number of Credit Unions AL 3 3 $16,698,000 2 1 GA 2 1 11,841,000 1 0 MS 12 10 207,494,000 9 1 NC 3 1 11,735,000 1 0 SC 1 1 22,000,000 1 0 TN 1 1 2,795,000 1 0 22 17 $272,563,000 15 2 Total Source: Treasury, Transactions Report, 9/29/2015. 306 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM West TABLE 4.48 BANKS AND CREDIT UNIONS WITH CDCI PRINCIPAL REMAINING, BY STATE, AS OF 9/30/2015 WA AK OR Original Number of Participants Remaining Number of Participants Remaining Investment Remaining Number of Banks Remaining Number of Credit Unions AK 1 1 $1,600,000 0 1 CA 9 6 20,473,000 2 4 GU 1 1 2,650,000 0 1 HI 2 1 698,000 0 1 WA GU Total CA 1 1 75,000 0 1 14 10 $25,496,000 2 8 Source: Treasury, Transactions Report, 9/29/2015. HI WEST Principal investment remaining in CDCI banks >$10 million $1 million-$10 million $1-$1 million $0 Southwest/South Central TABLE 4.49 BANKS AND CREDIT UNIONS WITH CDCI PRINCIPAL REMAINING, BY STATE, AS OF 9/30/2015 AZ OK NM TX AR LA Original Number of Participants Remaining Number of Participants Remaining Investment Remaining Number of Banks Remaining Number of Credit Unions AR 1 1 $33,800,000 1 0 AZ 1 1 2,500,000 0 1 LA 6 4 18,204,000 1 3 TX 3 1 261,000 0 1 11 7 $54,765,000 2 5 Total SOUTHWEST/ SOUTH CENTRAL Principal investment remaining in CDCI banks >$10 million $1 million-$10 million $1-$1 million $0 Source: Treasury, Transactions Report, 9/29/2015. 307 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Midwest TABLE 4.50 BANKS AND CREDIT UNIONS WITH CDCI PRINCIPAL REMAINING, BY STATE, AS OF 9/30/2015 MN WI MI IA OH IN IL MO Remaining Number of Participants Remaining Investment Remaining Number of Banks Remaining Number of Credit Unions IL 7 6 $25,193,000 4 2 IN 2 2 747,400 0 2 MN 1 0 0 0 0 WI 1 0 0 0 0 11 8 $25,940,400 4 4 Total KY MIDWEST Original Number of Participants Source: Treasury, Transactions Report, 9/29/2015. >$10 million $1 million -$10 million $1-$1 million $0 Principal investment remaining in CDCI banks Mountain West/Plains TABLE 4.51 BANKS AND CREDIT UNIONS WITH CDCI PRINCIPAL REMAINING, BY STATE, AS OF 9/30/2015 MT ID NV ND WY MT SD NE UT CO MOUNTAIN WEST/ PLAINS Principal investment remaining in CDCI banks Original Number of Participants Remaining Number of Participants Remaining Investment Remaining Number of Banks Remaining Number of Credit Unions 1 0 $0 0 0 WY 1 0 0 0 0 Total 2 0 $0 0 0 Source: Treasury, Transactions Report, 9/29/2015. KS >$10 million $1 million-$10 million $1-$1 million $0 308 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 4.52 CDCI INVESTMENT SUMMARY, AS OF 9/30/2015 Institution Amount from CPP Additional Investment Total CDCI Investment $50,400,000 $30,514,000 $80,914,000 Institutions Remaining in CDCI BancPlus Corporation Community Bancshares of Mississippi, Inc. 54,600,000 Southern Bancorp, Inc. 11,000,000 22,800,000 33,800,000 Security Federal Corporation 18,000,000 4,000,000 22,000,000 Carver Bancorp, Inc 18,980,000 Security Capital Corporation 17,910,000 The First Bancshares, Inc. 5,000,000 54,600,000 18,980,000 17,910,000 12,123,000 17,123,000 First American International Corp. 17,000,000 17,000,000 State Capital Corporation 15,750,000 15,750,000 Guaranty Capital Corporation 14,000,000 14,000,000 Citizens Bancshares Corporation M&F Bancorp, Inc. 7,462,000 4,379,000 11,735,000 11,841,000 11,735,000 Liberty Financial Services, Inc. 5,645,000 5,689,000 11,334,000 Mission Valley Bancorp 5,500,000 4,836,000 10,336,000 United Bancorporation of Alabama, Inc. IBC Bancorp, Inc. 10,300,000 4,205,000 10,300,000 3,881,000 Fairfax County Federal Credit Union 8,044,000 The Magnolia State Corporation First Eagle Bancshares, Inc. 8,086,000 7,922,000 7,875,000 7,875,000 Carter Federal Credit Union* 6,300,000 First Vernon Bancshares, Inc. 6,245,000 6,245,000 IBW Financial Corporation 6,000,000 6,000,000 CFBanc Corporation 5,781,000 American Bancorp of Illinois, Inc. Lafayette Bancorp, Inc. 5,457,000 4,551,000 4,551,000 Hope Federal Credit Union Community Bank of the Bay 4,520,000 1,747,000 Kilmichael Bancorp, Inc. PGB Holdings, Inc. 2,313,000 4,060,000 3,154,000 3,000,000 3,000,000 Santa Cruz Community Credit Union 2,828,000 Cooperative Center Federal Credit Union 2,799,000 Tri-State Bank of Memphis Community First Guam Federal Credit Union 2,795,000 2,795,000 2,650,000 Continued on next page SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 CDCI INVESTMENT SUMMARY, AS OF 9/30/2015 Amount from CPP Institution (CONTINUED) Additional Investment Total CDCI Investment Institutions Remaining in CDCI Shreveport Federal Credit Union $2,646,000 Pyramid Federal Credit Union 2,500,000 Alternatives Federal Credit Union 2,234,000 Virginia Community Capital, Inc. 1,915,000 Southern Chautauqua Federal Credit Union 1,709,000 Tongass Federal Credit Union 1,600,000 D.C. Federal Credit Union 1,522,000 Vigo County Federal Credit Union 1,229,000 Lower East Side People’s Federal Credit Union1 1,193,000 Opportunities Credit Union 1,091,000 Independent Employers Group Federal Credit Union 698,000 Bethex Federal Credit Union 502,000 Community Plus Federal Credit Union 450,000 Liberty County Teachers Federal Credit Union* 435,000 Tulane-Loyola Federal Credit Union 424,000 Northeast Community Federal Credit Union 350,000 North Side Community Federal Credit Union 325,000 Genesee Co-op Federal Credit Union 300,000 Brooklyn Cooperative Federal Credit Union 300,000 Neighborhood Trust Federal Credit Union 283,000 Phenix Pride Federal Credit Union 153,000 Buffalo Cooperative Federal Credit Union 145,000 Hill District Federal Credit Union 100,000 Episcopal Community Federal Credit Union 100,000 Thurston Union of Low-Income People (TULIP) Cooperative Credit Union 75,000 Renaissance Community Development Credit Union 31,000 Fidelis Federal Credit Union 14,000 Union Baptist Church Federal Credit Union 10,000 East End Baptist Tabernacle Federal Credit Union Total 7,000 $299,700,000 $90,535,000 $462,031,000 Continued on next page 309 310 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM CDCI INVESTMENT SUMMARY, AS OF 9/30/2015 Amount from CPP Institution (CONTINUED) Additional Investment Total CDCI Investment Institutions Fully Repaid First M&F Corporation $30,000,000 University Financial Corp, Inc. 11,926,000 PSB Financial Corporation $30,000,000 $10,189,000 9,734,000 22,115,000 9,734,000 Freedom First Federal Credit Union 9,278,000 BankAsiana 5,250,000 First Choice Bank 5,146,000 5,146,000 Bainbridge Bancshares, Inc. 3,372,000 Bancorp of Okolona, Inc. 3,297,000 Border Federal Credit Union 3,260,000 Atlantic City Federal Credit Union 2,500,000 Gateway Community Federal Credit Union 1,657,000 Southside Credit Union 1,100,000 Brewery Credit Union 1,096,000 Butte Federal Credit Union 1,000,000 First Legacy Community Credit Union 1,000,000 UNO Federal Credit Union 743,000 Greater Kinston Credit Union 350,000 Prince Kuhio Federal Credit Union 273,000 UNITEHERE Federal Credit Union (Workers United Federal Credit Union) 57,000 Faith Based Federal Credit Union Total 30,000 $56,806,000 $10,189,000 $101,258,000 Bankrupt or with Failed Subsidiary Banks Premier Bancorp, Inc. Total Overall Total $6,784,000 $6,784,000 $363,290,000 $100,724,000 $6,784,000 $6,784,000 $570,073,000 Notes: Numbers may not total due to rounding. * Institution has made a partial payment on Treasury’s investment. 1 ower East Side People’s Federal Credit Union merged with another CDCI credit union, Union Settlement Federal Credit Union. On L October 31, 2014, Treasury exchanged $295,000 of Union Settlement Federal Credit Union investment for a similar investment in Lower East Side People’s Federal Credit Union. Source: Treasury, Transactions Report, 9/29/2015. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Missed Dividends As of September 30, 2015, three institutions still in CDCI had unpaid dividend or interest payments to Treasury totaling $552,000.355 As a result of a bankrupt institution that exited CDCI without remitting its interest payments, the total value of all missed payments equals $868,624. Treasury has the right to appoint two directors to the board of directors of institutions that have missed eight dividends and interest payments, whether consecutive or nonconsecutive.356 As of September 30, 2015, Treasury had not appointed directors to the board of any CDCI institution.357 Treasury has sent an observer to the board meetings of one institution, First Vernon Bancshares, Inc., Vernon, Alabama, however no observer is currently attending board meetings of this institution.358 Treasury made a request to send an observer to the board meetings of First American International Corp., Brooklyn, New York, in February 2013, but the institution, which remains in TARP as of September 30, 2015, rejected Treasury’s request.359 Table 4.53 lists CDCI institutions that are not current on dividend or interest payments. TABLE 4.53 CDCI-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 9/30/2015 Institution Dividend or Payment Type Number of Missed Payments Value of Missed Payments Premier Bancorp, Inc.* Tri-State Bank of Memphis Interest 6 $316,624 Non-Cumulative 5 125,775 First Vernon Bancshares, Inc. Cumulative 2 405,925 Community Bank of the Bay Non-Cumulative 1 Total Notes: Numbers may not total due to rounding. * On 3/23/2012, the subsidiary bank of Premier Bancorp, Inc. failed. Source: Treasury, Dividends and Interest Report, 10/9/2015. 20,300 $868,624 311 312 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Institutions with Enforcement Actions Banks and credit unions participating in CDCI continue to be subject to oversight by Federal regulators. In January 2015, a bank and a credit union that participate in CDCI were each the subject of enforcement actions by their respective Federal regulators. On January 13, 2015, the National Credit Union Administration (“NCUA”) issued an order of assessment of civil money penalty to Santa Cruz Community Credit Union, Santa Cruz, California.360 On January 29, 2015, the Federal Deposit Insurance Corporation (“FDIC”) issued a consent order to TriState Bank of Memphis, Memphis, Tennessee.361 Risk-Weighted Assets: Risk-based measure of total assets held by a financial institution. Assets are assigned broad risk categories. The amount in each risk category is then multiplied by a risk factor associated with that category. The sum of the resulting weighted values from each of the risk categories is the bank’s total risk-weighted assets. Terms for Senior Securities and Dividends An eligible bank, bank holding company, or thrift could apply to receive capital in an amount up to 5% of its risk-weighted assets. A credit union (which is a memberowned, nonprofit financial institution with a capital and governance structure different from that of for-profit banks) could apply for Government funding of up to 3.5% of its total assets — roughly equivalent to the 5% of risk-weighted assets for banks.362 Participating credit unions and S corporations issued subordinated debt to Treasury in lieu of the preferred stock issued by other CDFI participants.363 Many CDFI investments have an initial dividend rate of 2%, which increases to 9% after eight years. Participating S corporations pay an initial rate of 3.1%, which increases to 13.8% after eight years.364 A CDFI participating in CPP had the opportunity to request to convert those shares into CDCI shares, thereby reducing the annual dividend rate it pays the Government from 5% to as low as 2%.365 According to Treasury, CDFIs were not required to issue warrants because of the de minimis exception in EESA, which grants Treasury the authority to waive the warrant requirement for qualifying institutions in which Treasury invested $100 million or less. If during the application process a CDFI’s primary regulator deemed it to be undercapitalized or to have “quality of capital issues,” the CDFI had the opportunity to raise private capital to achieve adequate capital levels. Treasury would match the private capital raised on a dollar-for-dollar basis, up to a total of 5% of the financial institution’s risk-weighted assets. In such cases, private investors had to agree to assume any losses before Treasury.366 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 Systemically Significant Failing Institutions Program According to Treasury, the Systemically Significant Failing Institutions (“SSFI”) program was established to “provide stability and prevent disruptions to financial markets from the failure of a systemically significant institution.”367 Through SSFI, between November 2008 and April 2009, Treasury invested $67.8 billion in TARP funds in American International Group, Inc. (“AIG”), the program’s sole participant.368 AIG also received bailout funding from the Federal Reserve Bank of New York (“FRBNY”). In January 2011, FRBNY and Treasury restructured their agreements with AIG to use additional TARP funds and AIG funds to pay off amounts owed to FRBNY and transfer FRBNY’s common stock and its interests to Treasury.369 AIG has repaid the amounts owed to both Treasury and FRBNY. Treasury’s investment in AIG ended on March 1, 2013.370 According to Treasury, taxpayers have received full payment on FRBNY’s loans, plus interest and fees of $6.8 billion; full repayment of the loans to two special purpose vehicles (“SPVs”), called Maiden Lane II and Maiden Lane III, plus $8.2 billion in gains from securities cash flows and sales and $1.3 billion in interest; and full payment of the insurance-business SPVs, plus interest and fees of $1.4 billion.371 Treasury’s books and records reflect only the shares of AIG that Treasury received in TARP, reflecting that taxpayers have recouped $54.4 billion of the $67.8 billion in TARP funds spent and realized losses on the sale of TARP shares from an accounting standpoint of $13.5 billion.372 However, because TARP funds paid off amounts owed to FRBNY in return for stock, Treasury’s position is that the Government has made $4.1 billion selling AIG common shares and $959 million in dividends, interest, and other income.373 Systemically Significant Institutions (“SSFI”): Term referring to any financial institution whose failure would impose significant losses on creditors and counterparties, call into question the financial strength of similar institutions, disrupt financial markets, raise borrowing costs for households and businesses, and reduce household wealth. Special Purpose Vehicle (“SPV”): A legal entity, often off-balance-sheet, that holds transferred assets presumptively beyond the reach of the entities providing the assets, and that is legally isolated from its sponsor or parent company. For more on SIGTARP’s September 2012 recommendation to Treasury and the Federal Reserve regarding AIG’s designation as a systemically important financial institution, see SIGTARP’s July 2013 Quarterly Report, pages 201-203. For more information on AIG and how the company changed while under TARP, see SIGTARP’s July 2012 Quarterly Report, pages 151-167. For a more detailed description of the AIG Recapitalization Plan, see SIGTARP’s January 2014 Quarterly Report, pages 219-220. For more information on Treasury’s sales of AIG common shares and AIG’s buybacks of shares, see SIGTARP’s July 2013 Quarterly Report, page 131. For more information on Treasury’s Equity Ownership Interest in AIG, see SIGTARP’s January 2014 Quarterly Report, page 220. 313 314 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM Targeted Investment Program Treasury invested $20 billion in Citigroup Inc. (“Citigroup”) and $20 billion in Bank of America Corp. (“Bank of America”), through the Targeted Investment Program (“TIP”) to “strengthen the economy and protect American jobs, savings, and retirement security [where] the loss of confidence in a financial institution could result in significant market disruptions that threaten the financial strength of similarly situated financial institutions.”374 Both banks repaid TIP in December 2009.375 On March 3, 2010, Treasury auctioned the Bank of America warrants it received under TIP for $1.24 billion.376 On January 25, 2011, Treasury auctioned the Citigroup warrants it had received under TIP for $190.4 million.377 Asset Guarantee Program Trust Preferred Securities (“TRUPS”): Securities that have both equity and debt characteristics created by establishing a trust and issuing debt to it. For a discussion of the basis of the decision to provide Federal assistance to Citigroup, see SIGTARP’s audit report, “Extraordinary Financial Assistance Provided to Citigroup, Inc.,” dated January 13, 2011. Under the Asset Guarantee Program (“AGP”), Treasury, the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve, and Citigroup agreed to provide loss protection on a $301 billion pool of Citigroup assets in exchange for warrants and $7 billion in preferred stock, later exchanged for $4 billion in trust preferred securities (“TRUPS”) to Treasury and $3 billion to the FDIC.378 On December 23, 2009, Citigroup and Treasury terminated the AGP agreement. The Government suffered no loss.379 At that time, Treasury agreed to cancel $1.8 billion of the TRUPS issued by Citigroup, reducing the premium it received from $4 billion to $2.2 billion, in exchange for the early termination of the loss protection. FDIC retained all of its $3 billion in securities, $800 million of which it transferred to Treasury.380 Treasury exchanged those transferred securities into Citigroup subordinated notes, which it then sold for $894 million.381 Treasury received an additional $12 million in proceeds from the $2.2 billion sale of the remaining Citigroup TRUPS.382 Treasury auctioned the Citigroup warrants for $67.2 million.383 Bank of America announced a similar asset guarantee agreement, but the final agreement was never executed. Bank of America paid $425 million to the Government as a termination fee ($276 million to Treasury, $92 million to FDIC, and $57 million to the Federal Reserve).384 SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 AUTOMOTIVE INDUSTRY SUPPORT PROGRAMS During the financial crisis, Treasury, through TARP, launched three automotive industry support programs for General Motors (“GM”), Ally Financial (formerly GMAC), Chrysler LLC (“Chrysler”), and Chrysler Financial Services Americas LLC (“Chrysler Financial”): the Automotive Industry Financing Program (“AIFP”), the Auto Supplier Support Program (“ASSP”), and the Auto Warranty Commitment Program (“AWCP”). According to Treasury, these programs were established “to prevent the collapse of the U.S. auto industry, which would have posed a significant risk to financial market stability, threatened the overall economy, and resulted in the loss of one million U.S. jobs.”385 Treasury spent $79.7 billion in TARP funds on the auto bailout, which resulted in a $16.6 billion loss to taxpayers.386 TABLE 4.54 TARP AUTOMOTIVE PROGRAM INVESTMENTS AND PRINCIPAL REPAYMENTS AND RECOVERIES, AS OF 9/30/2015 ($ BILLIONS) General Motorsa Ally Financial Inc.b Chryslerc $49.5 $17.2 $10.5 $1.5 $78.6 38.3 14.7 7.6 1.5 62.1 Chrysler Financial Total Automotive Industry Financing Program Treasury Investment Principal Repaid/ Recovered Auto Supplier Support Program Treasury Investment 0.3 0.1 0.4 Principal Repaid/ Recovered 0.3 0.1 0.4 Treasury Investment 0.4 0.3 0.6 Principal Repaid/ Recovered 0.4 0.3 0.6 Auto Warranty Commitment Program Total Treasury Investment $50.2 $17.2 $10.9 $1.5 $79.7 Total Principal Repaid/ Recovered $38.9 $14.7 $8.0 $1.5 $63.1 Still Owed to Taxpayers $11.2d $2.5 $2.9 $0.0 $16.6 ($11.2d) ($2.5) ($2.9) Realized Loss on Investment ($16.6) Notes: Numbers may not total due to rounding. a Principal repaid includes a series of debt payments totaling $160 million recovered from GM bankruptcy. b Investment includes an $884 million Treasury loan to GM, which GM invested in GMAC in January 2009. c Principal repaid includes $560 million Fiat paid in July 2011 for Treasury’s remaining equity stake in Chrysler and for Treasury’s rights under an agreement with the UAW retirement trust related to Chrysler shares. d Realized loss on investment and amount still owed to taxpayers include the $826 million claim in GM’s bankruptcy, which Treasury wrote off in the first quarter of 2014. Sources: Treasury, Transactions Report, 9/29/2015; Treasury, response to SIGTARP data call, 10/5/2015; Treasury, Monthly TARP Update, 10/1/2015. 315 316 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM For more information on Auto Industry Support Programs, see SIGTARP’s July 29, 2015 Quarterly Report, pages 330-336. Automotive Industry Financing Program For details on Treasury’s actions and transactions to liquidate its investment in GM, see SIGTARP’s July 2015 Quarterly Report, pages 332-333. GM Taxpayers lost $11.2 billion on the $49.5 billion TARP AIFP investment in GM.388 For more details on Treasury’s investments in Ally Financial while in TARP, see SIGTARP’s January 28, 2015 Quarterly Report, pages 289292. Of the $78.6 billion in TARP funding for AIFP, Treasury recovered only approximately $38.3 billion related to its GM investment, $14.7 billion related to its Ally Financial/GMAC investment, $7.6 billion related to its Chrysler investment, and $1.5 billion related to its Chrysler Financial investment, as well as $5.6 billion in dividends and interest, resulting in losses of $16.6 billion as of September 30, 2015.387 Ally Financial, formerly known as GMAC Of the $17.2 billion TARP investment in Ally, taxpayers lost $2.5 billion.389 Chrysler Of the $12 billion TARP AIFP investment in Chrysler (including Chrysler Financial), taxpayers suffered a $2.9 billion loss.390 Auto Supplier Support Program (“ASSP”) and Auto Warranty Commitment Program (“AWCP”) On March 19, 2009, Treasury committed $5 billion to ASSP to “help stabilize the automotive supply base and restore credit flows,” with loans to GM ($290 million) and Chrysler ($123.1 million) fully repaid in April 2010.391 AWCP guaranteed Chrysler and GM vehicle warranties during the companies’ bankruptcy, with Treasury obligating $640.8 million—$360.6 million for GM and $280.1 million for Chrysler, both fully repaid to Treasury.392 Treasury invested a total of $650.6 million in GM and $403.2 million in Chrysler through ASSP and AWCP, which was recovered without loss. SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 ASSET SUPPORT PROGRAMS Three TARP programs have focused on supporting markets for specific asset classes: the Term Asset-Backed Securities Loan Facility (“TALF”), the Unlocking Credit for Small Businesses (“UCSB”) program, and the Public-Private Investment Program (“PPIP”). TALF TALF was designed to support asset-backed securities (“ABS”) transactions by providing eligible borrowers $71.1 billion in loans through the Federal Reserve Bank of New York (“FRBNY”) to purchase non-mortgage-backed ABS and commercial mortgage-backed securities (“CMBS”).393 As of February 6, 2013, all TARP funding for TALF was either deobligated or recovered.394 Of the $71.1 billion in TALF loans, none defaulted and no loans remained outstanding as of September 30, 2015.395 Additionally, Treasury has received $671.1 million in income on the asset disposition facility it set up with the program through September 30, 2015.396 UCSB Through the UCSB loan support initiative to encourage banks to increase small business lending, Treasury purchased $368.1 million in 31 Small Business Administration 7(a) securities, which are securitized small-business loans.397 According to Treasury, on January 24, 2012, Treasury sold its remaining securities and ended the program with a total investment gain of about $9 million for all the securities, including sale proceeds and payments of principal, interest, and debt.398 PPIP According to Treasury, the purpose of the Public-Private Investment Program (“PPIP”) was to purchase legacy securities through Public-Private Investment Funds (“PPIFs”). Treasury selected nine fund management firms to establish PPIFs to invest in mortgage-backed securities using equity capital from privatesector investors combined with TARP equity and debt.399 As of September 30, 2015, the entire PPIP portfolio had been liquidated, and all PPIP funds had been legally dissolved.400 All $18.6 billion in TARP funding that was drawn down was fully repaid by PPIP fund managers.401 Treasury also received approximately $3.5 billion in gross income payments and capital gains and warrants that it sold for $87 million.402 Legacy Securities: Real estate-related securities originally issued before 2009 that remained on the balance sheets of financial institutions because of pricing difficulties that resulted from market disruption. Equity: Investment that represents an ownership interest in a business. Asset-Backed Securities (“ABS”): Bonds backed by a portfolio of consumer or corporate loans (e.g., credit card, auto, or small business loans). Financial companies typically issue ABS backed by existing loans in order to fund new loans for their customers. Commercial Mortgage-Backed Securities (“CMBS”): Bonds backed by one or more mortgages on commercial real estate (e.g., office buildings, rental apartments, hotels). For detailed discussion of TALF, see SIGTARP’s July 2014 Quarterly Report, pages 258-261. For more information on the UCSB, see SIGTARP’s October 2014 Quarterly Report, page 320. For more information on the selection of PPIP managers, see SIGTARP’s October 7, 2010, audit report entitled “Selecting Fund Managers for the Legacy Securities Public-Private Investment Program.” For more information on PPIP, including information on the securities purchased, see SIGTARP’s April 2014 Quarterly Report, pages 231-244. Debt: Investment in a business that is required to be paid back to the investor, usually with interest. 317 318 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SECT ION 5 TARP OPERATIONS AND ADMINISTRATION 320 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 TARP ADMINISTRATIVE AND PROGRAM OPERATING EXPENDITURES According to Treasury, as of September 30, 2015, it had spent $417.7 million on TARP administrative costs and $1.2 billion on programmatic operating expenditures, for a total of $1.6 billion since the beginning of TARP.403 Much of the work on TARP is performed by private vendors rather than Government employees. Treasury reported that as of September 30, 2015, it employs 26 career civil servants, 46 term appointees, and 23 reimbursable detailees, for a total of 95 full-time employees.404 Between TARP’s inception in 2008 and September 30, 2015, Treasury had retained 158 private vendors—21 financial agents and 137 contractors—to help administer TARP.405 According to Treasury, as of September 30, 2015, 47 private vendors were active—5 financial agents and 42 contractors, some with multiple contracts.406 The number of privatesector staffers who provide services under these agreements dwarfs the number of people working for OFS. According to Fannie Mae and Freddie Mac, as of September 30, 2015, together they had about 456 people dedicated to working on their TARP contracts.407 According to Treasury, as of September 30, 2015— the latest numbers available vary due to reporting cycles—at least another 150 people were working on other active OFS contracts, including financial agent and legal services contracts, for a total of approximately 606 private-sector employees working on TARP.408 Table 5.1 provides a summary of the expenditures and obligations for TARP administrative and programmatic operating costs through September 30, 2015. The administrative costs are categorized as “personnel services” and “non-personnel services.” Appendix E provides a summary of OFS service contracts, which include costs to hire financial agents and contractors, and obligations through September 30, 2015, excluding costs and obligations related to personnel services, travel, and transportation. 321 322 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM TABLE 5.1 TARP ADMINISTRATIVE AND PROGRAMMATIC OBLIGATIONS AND EXPENDITURES Budget Object Class Title Obligations for Period Expenditures for Period Ending 9/30/2015 Ending 9/30/2015 Administrative Personnel Services Personnel Compensation & Benefits $146,284,981 $146,284,981 $146,284,981 $146,248,981 $2,688,188 $2,677,569 11,960 11,960 725,893 725,893 459 459 302,990,462 265,584,012 2,385,236 2,142,876 246,699 246,699 Land & Structures — — Investments & Loans — — Grants, Subsidies & Contributions — — Insurance Claims & Indemnities — — Total Personnel Services Non-Personnel Services Travel & Transportation of Persons Transportation of Things Rents, Communications, Utilities & Misc. Charges Printing & Reproduction Other Services Supplies & Materials Equipment Dividends and Interest Total Non-Personnel Services Total Administrative 711 711 $309,049,608 $271,390,179 $455,334,589 $417,675,160 Programmatic $1,243,669,448 $1,202,119,147 Total Administrative and Programmatic $1,699,004,036 $1,619,794,306 Notes: Numbers may not total due to rounding. The cost associated with “Other Services” under TARP Administrative Expenditures and Obligations are composed of administrative services including financial, administrative, IT, and legal (non-programmatic) support. Amounts are cumulative since the beginning of TARP. Source: Treasury, response to SIGTARP data call, 10/9/2015. FINANCIAL AGENTS EESA requires SIGTARP to provide biographical information for each person or entity hired to manage assets acquired through TARP.409 Treasury hired no new financial agents in the quarter ended September 30, 2015.410 ENDNOTES SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. RealtyTrac, “Foreclosure Activity Increases 81 Percent In 2008,” 1/15/2009, www.realtytrac.com/content/press-releases/foreclosure-activityincreases-81-percent-in-2008-4551, accessed 10/20/2015. Emergency Economic Stabilization Act of 2008, P.L. 110-343, 10/3/2008. The White House, “Help for the Hardest Hit Housing Markets,” 2/19/2010, www.whitehouse.gov/the-press-office/help-hardest-hit-housingmarkets, accessed 9/25/2015. 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As such, all expenses are based on actual cash disbursements. Additionally, cash-on-hand may include lien recoveries and borrower remittances. Treasury, Transactions Report-Housing Programs, 6/26/2015, www.treasury.gov/initiatives/financial-stability/reports/Documents/Housing%20 Transactions%20Report%20as%20of%2006.26.2015.pdf, accessed 10/1/2015. Illinois Housing Development Authority, “Illinois Hardest Hit Program, Reporting, Illinois HHF Second Quarter Performance Report 2015,” no date, www.illinoishardesthit.org/spv-7.aspx, accessed 10/1/2015. Treasury, responses to SIGTARP data calls, 10/7/2013, 10/17/2013, 1/17/2014, 4/9/2014, 7/8/2014, 10/6/2014, 1/5/2015, 4/6/2015, 7/6/2015, and 10/5/2015; Illinois Housing Development Authority, “Welcome to the Illinois Hardest Hit Program,” no date, www.illinoishardesthit.org/, accessed 10/1/2015. Treasury, response to SIGTARP data call, 10/5/2015. 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As such, all expenses are based on actual cash disbursements. Additionally, cash-on-hand may include lien recoveries and borrower remittances. Illinois Quarterly Performance Report, no date, accessed 10/14/2015. Treasury, Transactions Report-Housing Programs, 6/26/2015, www.treasury.gov/initiatives/financial-stability/reports/Documents/Housing%20 Transactions%20Report%20as%20of%2006.26.2015.pdf, accessed 10/1/2015. Indiana Housing and Community Development Authority, “Indiana’s Hardest Hit Fund, Quarterly Reports to the U.S. Treasury, Indiana’s Hardest Hit Fund Quarterly Report (Q2) 2015 as submitted to Treasury August 26, 2015,” no date, www.877gethope.org/reports/, accessed 10/1/2015. Treasury, Transactions Report-Housing Programs, 6/26/2015, www.treasury.gov/initiatives/financial-stability/reports/Documents/Housing%20 Transactions%20Report%20as%20of%2006.26.2015.pdf, accessed 10/1/2015; Treasury, responses to SIGTARP data calls, 7/6/2015 and 10/5/2015. 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SIGTARP QUARTERLY REPORT TO CONGRESS I OCTOBER 28, 2015 402. 403. 404. 405. 406. 407. 408. 409. 410. Treasury, response to SIGTARP data call, 10/5/2015. Treasury, response to SIGTARP data calls, 10/5/2015 and 10/9/2015. Treasury, response to SIGTARP data call, 10/9/2015. Treasury, response to SIGTARP data call, 10/9/2015. Treasury, response to SIGTARP data call, 10/9/2015. Fannie Mae, response to SIGTARP data call, 10/5/2015; Freddie Mac, response to SIGTARP data call, 10/5/2015. Treasury, response to SIGTARP data call, 10/9/2015. Emergency Economic Stabilization Act of 2008, P.L. 110-343, 10/3/2008. Treasury, response to SIGTARP data call, 10/9/2015. 337 338 APPENDIX A I GLOSSARY I OCTOBER 28, 2015 GLOSSARY This appendix provides a glossary of terms that are used in the context of this report. Asset-Backed Securities (“ABS”): Bonds backed by a portfolio of consumer or corporate loans (e.g., credit card, auto, or small business loans). Financial companies typically issue ABS backed by existing loans in order to fund new loans for their customers. Commercial Mortgage-Backed Securities (“CMBS”): Bonds backed by one or more mortgages on commercial real estate (e.g., office buildings, rental apartments, hotels). Community Development Financial Institutions (“CDFIs”): Financial institutions eligible for Treasury funding to serve urban and rural low-income communities through the CDFI Fund. CDFIs were created in 1994 by the Riegle Community Development and Regulatory Improvement Act. Cumulative Redefault Rate: The total number of HAMP permanent modifications that have redefaulted (as of a specific date) divided by the total number of HAMP permanent modifications started (as of the same specific date). Debt: Investment in a business that is required to be paid back to the investor, usually with interest. Deed-in-Lieu of Foreclosure: Instead of going through foreclosure, the homeowner voluntarily surrenders the deed to the home to the investor as satisfaction of the unpaid mortgage balance. Deficiency Judgment: Court order authorizing a lender to collect all or part of an unpaid and outstanding debt resulting from the borrower’s default on the mortgage note securing a debt. A deficiency judgment is rendered after the foreclosed or repossessed property is sold when the proceeds are insufficient to repay the full mortgage debt. Deobligations: An agency’s cancellation or downward adjustment of previously incurred obligations. Due Diligence: Appropriate level of attention or care a reasonable person should take before entering into an agreement or a transaction with another party. In finance, it often refers to the process of conducting an audit or review of the institution before initiating a transaction. Equity: Investment that represents an ownership interest in a business. Government-Sponsored Enterprises (“GSEs”): Private corporations created and chartered by the Government to reduce borrowing costs and provide liquidity in the market, the liabilities of which are not officially considered direct taxpayer obligations. On September 7, 2008, the two largest GSEs, the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), were placed into Federal conservatorship. They are currently being financially supported by the Government. HAMP Tier 1 Modification “Waterfall”: Steps HAMP servicers apply to reduce homeowners principal and interest payments. The HAMP Tier 1 waterfall uses a series of incremental steps to obtain a targeted post modification payment. HAMP Tier 2 Waterfall: The HAMP Tier 2 waterfall is a consistent set of actions that are applied to the loan to get it within a targeted post modification payment range.Investors: Owners of mortgage loans or bonds backed by mortgage loans who receive interest and principal payments from monthly mortgage payments. Servicers manage the cash flow from homeowners’ monthly payments and distribute them to investors according to Pooling and Servicing Agreements (“PSAs”). Legacy Securities: Real estate-related securities originally issued before 2009 that remained on the balance sheets of financial institutions because of pricing difficulties that resulted from market disruption. Mortgage Recast: Re-amortization of the loan using the existing interest rates and remaining term, but reduced unpaid principal balance. This results in excess principal payments made prior to or concurrent with the recast being used to reduce the minimum monthly payment rather than to pay the loan off early. Mortgage Servicers: Companies that perform administrative tasks on monthly mortgage payments until the loan is repaid. These tasks include billing, tracking, and collecting monthly payments; maintaining records of payments and balances; allocating and distributing payment collections to investors in accordance with each mortgage loan’s governing documentation; following up on delinquencies; and initiating foreclosures. GLOSSARY I APPENDIX A I OCTOBER 28, 2015 Net Present Value (“NPV”) Test: Compares the money generated by modifying the terms of the mortgage with the amount an investor can reasonably expect to recover in a foreclosure sale. Obligations: Definite commitments that create a legal liability for the Government to pay funds. Risk-Weighted Assets: Risk-based measure of total assets held by a financial institution. Assets are assigned broad risk categories. The amount in each risk category is then multiplied by a risk factor associated with that category. The sum of the resulting weighted values from each of the risk categories is the bank’s total risk-weighted assets. Senior Preferred Stock: Shares that give the stockholder priority dividend and liquidation claims over junior preferred and common stockholders. Short Sale: Sale of a home for less than the unpaid mortgage balance. A homeowner sells the home and the investor accepts the proceeds as full or partial satisfaction of the unpaid mortgage balance, thus avoiding the foreclosure process. Special Purpose Vehicle (“SPV”): A legal entity, often offbalance-sheet, that holds transferred assets presumptively beyond the reach of the entities providing the assets, and that is legally isolated from its sponsor or parent company. Subchapter S Corporations (“S corporations”): Corporate form that passes corporate income, losses, deductions, and credit through to shareholders for Federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are taxed at their individual income tax rates. Subordinated Debentures: Form of debt security that ranks below other loans or securities with regard to claims on assets or earnings. Systemically Significant Institutions: Term referring to any financial institution whose failure would impose significant losses on creditors and counterparties, call into question the financial strength of similar institutions, disrupt financial markets, raise borrowing costs for households and businesses, and reduce household wealth. Trial Modification: Under HAMP, a period of at least three months in which a borrower is given a chance to establish that he or she can make lower monthly mortgage payments and qualify for a permanent modification. Trust Preferred Securities (“TRUPS”): Securities that have both equity and debt characteristics created by establishing a trust and issuing debt to it. Undercapitalized: Condition in which a financial institution does not meet its regulator’s requirements for sufficient capital to operate under a defined level of adverse conditions. Underwater Mortgage: Mortgage loan on which a homeowner owes more than the home is worth, typically as a result of a decline in the home’s value. Underwater mortgages also are referred to as having negative equity. Sources: Board of Governors of the Federal Reserve System, “Bank Holding Companies,” no date, www. fedpartnership.gov/bank-life-cycle/manage-transition/bank-holding-companies.cfm, accessed 10/1/2015. Federal Reserve Board, Federal Reserve Banks Operating Circular No. 9: Treasury Investments and Collateral Securing Public Funds and Financial Interests of the Government, www.frbservices.org/ files/regulations/pdf/operating_circular_9_072513.pdf, accessed 10/1/2015. FCIC, glossary, no date, www.fcic.gov/resource/glossary, accessed 10/1/2015. FDIC, “Credit Card Securitization Manual,” no date, www.fdic.gov/regulations/examinations/credit_ card_securitization/glossary.html, accessed 10/1/2015. FDIC, “FDIC Law, Regulations, Related Acts,” no date, www.fdic.gov/regulations/laws/ rules/2000-4600.html, accessed 10/1/2015. FRBNY, “TALF FAQ’s,” 7/21/2010, www.newyorkfed.org/markets/talf_faq.html, accessed 10/1/2015. SIGTARP, “Factors Affecting Implementation of the Home Affordable Modification Program,” 3/25/2010, www.sigtarp.gov/Audit%20Reports/Factors_Affecting_Implementation_of_the_Home_ Affordable_Modification_Program.pdf, accessed 10/1/2015. GAO, “Principles of Federal Appropriations Law, Third Edition, Volume II,” 1/2004, www.gao.gov/ special.pubs/d06382sp.pdf, p. 7-3, accessed 10/1/2015. GAO, “Troubled Asset Relief Program Treasury Needs to Strengthen Its Decision-Making Process on the Term Asset-Backed Securities Loan Facility,” 2/2010, www.gao.gov/new.items/d1025. pdf, accessed 10/1/2015; GAO, “Troubled Asset Relief Program: Third Quarter 2010 Update of Government Assistance Provided to AIG and Description of Recent Execution of Recapitalization Plan,” 1/20/2011, www.gao.gov/new.items/d1146.pdf, accessed 10/1/2015. IRS, “Glossary of Offshore Terms,” no date, www.irs.gov/Businesses/Small-Businesses-&-SelfEmployed/Abusive-Offshore-Tax-Avoidance-Schemes-Glossary-of-Offshore-Terms, accessed 10/1/2015. Making Home Affordable base NPV model documentation v5.01, updated 10/1/2012, www. hmpadmin.com/portal/programs/docs/hamp_servicer/npvmodeldocumentationv501.pdf, pp. 23-24, accessed 10/1/2015. SBA, “Notice of Changes to SBA Secondary Market Program,” 9/21/2004, www.federalregister. gov/articles/2004/09/21/04-21126/notice-of-changes-to-sba-secondary-market-program, accessed 10/1/2015. SEC, “NRSRO,” no date, www.sec.gov/answers/nrsro.htm, accessed 10/1/2015. Treasury, “Decoder,” www.treasury.gov/initiatives/financial-stability/Pages/Glossary.aspx, accessed 10/1/2015. Treasury, “Fact Sheet: Unlocking Credit for Small Businesses,” 3/16/2009, www.treasury.gov/presscenter/press-releases/Pages/tg58.aspx, accessed 10/1/2015. Treasury, “Special Master Feinberg Testimony before the House Committee on Oversight and Government Reform,” 10/28/2009, www.treasury.gov/press-center/press-releases/Pages/tg334. aspx, accessed 10/1/2015. Treasury, “Supplemental Directive 10-14: Making Home Affordable Program - Principal Reduction Alternative Update,” 10/15/2010, www.hmpadmin.com/portal/programs/docs/hamp_servicer/ sd1014.pdf, accessed 10/1/2015. Treasury, “TARP Standards for Compensation and Corporate Governance,” 6/10/2009, www. treasury.gov/press-center/press-releases/Pages/tg165.aspx, accessed 10/1/2015. U.S. Census Bureau, “Residential Finance Survey, Glossary of RFS Terms And Definitions,” no date, www.census.gov/hhes/www/rfs/glossary.html#l, accessed 10/1/2015. U.S. Department of Housing and Urban Development, “Glossary,” no date, www.huduser.org/portal/ glossary/glossary_all.html, accessed 10/1/2015. 339 340 APPENDIX B I ACRONYMS AND ABBREVIATIONS I OCTOBER 28, 2015 ACRONYMS AND ABBREVIATIONS 2MP Second Lien Modification Program 21st Century 21st Century Legal Services, Inc. ABS asset-backed securities AEF American Equity Foundation AGP Asset Guarantee Program AIFP AIG Automotive Industry Financing Program American International Group, Inc. Ally Financial Ally Financial Inc. Appalachian Appalachian Community Bank ASSP Auto Supplier Support Program AWCP Auto Warranty Commitment Program Bank of America Bank of America Corporation Bayview Bayview Loan Servicing, LLC BOC Broadway Federal Bank of the Commonwealth Broadway Federal Bank CBO Congressional Budget Office CDCI Community Development Capital Initiative CDFI Community Development Financial Institution CEO Chief Executive Officer CFPB Chrysler Chrysler Financial Citi Citigroup CMBS Consumer Financial Protection Bureau Chrysler Holding LLC Chrysler Financial Services Americas LLC CitiMortgage, Inc. Citigroup Inc. commercial mortgage-backed securities CPP Capital Purchase Program Dodd-Frank Act EESA Dodd-Frank Wall Street Reform and Consumer Protection Act Emergency Economic Stabilization Act of 2008 Fannie Mae Federal National Mortgage Association FDIC FHA2LP Fiat FINRA First Horizon Federal Deposit Insurance Corporation Treasury/FHA Second-Lien Program Fiat North America LLC Financial Industry Regulatory Authority First Horizon National Corporation FRBNY Federal Reserve Bank of New York Freddie Mac Federal Home Loan Mortgage Corporation Front Range Front Range Bank FTC Federal Trade Commission GM General Motors Company GSE Government-sponsored enterprise GMAC Inc. General Motors Acceptance Corp. HAFA HAMP HAMP Tier 2 Home Affordable Foreclosure Alternatives program Home Affordable Modification Program; HAMP Tier 1 Home Affordable Modification Program Tier 2 HFA Housing Finance Agency HHF Housing Finance Agency Hardest Hit Fund HPDP Home Price Decline Protection HPO Home Preservation Office HUD U.S. Department of Housing and Urban Development IRS Internal Revenue Service JPMorgan Chase JPMorgan Chase Bank, NA LMA Loss Mitigation Application M&T M&T Bank Corporation MCP mandatorily convertible preferred shares MHA Making Home Affordable program NCUA NHTSA NeighborWorks Newmon Properties NMHC Nomura NPV National Credit Union Administration National Highway Traffic Safety Administration Neighborhood Reinvestment Corporation and NeighborWorks America Newmon Properties, LLC National Mortgage Help Center, LLC Nomura Securities International net present value Ocwen Ocwen Loan Servicing, LLC OFS OFS Compliance OMB Office of Financial Stability the Compliance department of the Office of the Financial Stability Office of Management and Budget Omega Omega Capital Corporation Onebanc One Bank & Trust, N.A. OneFinancial One Financial Corporation PII personally identifiable information PPIF Public-Private Investment Fund ACRONYMS AND ABBREVIATIONS I APPENDIX B I OCTOBER 28, 2015 PPIP Public-Private Investment Program UP Home Affordable Unemployment Program PRA Principal Reduction Alternative VA Department of Veterans Affairs Premium Premium Finance Group PSA Pooling and Servicing Agreements RD Department of Agriculture Office of Rural Development RD-HAMP Department of Agriculture Office of Rural Development HAMP RMA request for mortgage assistance RMBS residential mortgage-backed securities S corporations subchapter S corporations SBLF Small Business Lending Fund SEC SIGTARP SIGTARP Act SPA Securities and Exchange Commission Office of the Special Inspector General for the Troubled Asset Relief Program Special Inspector General for the Troubled Asset Relief Program Act of 2009 Servicer Participation Agreements SPS Select Portfolio Servicing, Inc. SPV special purpose vehicle SSFI Systemically Significant Failing Institutions program Stearns Bank Stearns Bank, N.A. TALF Term Asset-Backed Securities Loan Facility TARP Troubled Asset Relief Program TBW Taylor, Bean and Whitaker Mortgage Corporation TCW The TCW Group, Inc. TIP Targeted Investment Program TPP Trial Period Plan Treasury Department of the Treasury Treasury Secretary of the Treasury Secretary Treasury/FHA- HAMP Loan Modification Option for FHA-insured HAMP Mortgages TRUPS trust preferred securities UAW United Auto Workers UCB United Commercial Bank UCBH United Commercial Bank Holdings, Inc. UCSB Unlocking Credit for Small Businesses UNMPC United National Mortgage Protection Center VA HAMP Wilmington Trust Department of Veterans Affairs Home Affordable Modification Program Wilmington Trust Company 341 6/17/2009 5/13/2009 12/19/2008 4/9/2013 3/28/2013 3/27/2013 6/26/2009 4/1/2014 3/26/2013 1/11/2013 11/29/2012 11/28/2012 2/6/2009 9/12/2013 7/22/2013 7/19/2013 1/23/2009 7/21/2011 1/30/2009 3/19/2014 2/10/2014 1/6/2014 11/19/2013 1/23/2009 11/18/2009 3/13/2009 3/9/2011 12/29/2010 1/23/2009 12/31/2013 11/14/2008 9/1/2011 12/11/2009 2/13/2009 11/22/2011 10/27/2010 12/23/2008 Alliance Financial Corporation, Syracuse, NY11 Alliance Bancshares, Inc., Dalton, GA Alaska Pacific Bancshares, Inc., Juneau, AK104 Alarion Financial Services, Inc., Ocala, FL8,14 Adbanc, Inc, Ogallala, NE8,14,44 AB&T Financial Corporation, Gastonia, NC 1st United Bancorp, Inc., Boca Raton, FL8,11,14 1st Source Corporation, South Bend, IN11 1st Financial Services Corporation, Hendersonville, NC102 1st Enterprise Bank, Los Angeles, CA8,14,18,44 1st Constitution Bancorp, Cranbury, NJ11 $26,918,000.00 $2,986,000.00 $4,781,000.00 $6,514,000.00 $12,720,000.00 $3,500,000.00 $10,000,000.00 $111,000,000.00 $16,369,000.00 $6,000,000.00 $4,400,000.00 $12,000,000.00 Investment Amount $28,356,360.00 $3,581,397.27 $7,501,881.70 $7,674,004.73 $15,071,769.00 $1,274,909.59 $10,870,902.67 $125,480,000.00 $9,229,948.97 $11,748,156.44 $13,433,242.67 Total Cash Back2 $26,918,000.00 $2,856,437.46 $4,058,697.67 $208,870.74 $5,524,880.90 $877,729.70 $12,720,000.00 $150,621.36 $815,100.00 $10,000,000.00 $111,000,000.00 $8,000,000.00 $10,400,000.00 $12,000,000.00 Capital Repayment / Disposition / Auction3,5 ($25,000.00) ($7,324.33) ($42,675.67) ($64,026.11) ($1,506.21) ($50,000.00) Auction Fee4 26,918 2,986 4,547 234 5,621 893 12,720 536 2,964 10,000 111,000 16,369 10,400 12,000 Number of Shares Disposed $1,000.00 $956.61 $892.61 $892.61 $982.90 $982.90 $1,000.00 $281.01 $275.00 $1,000.00 $1,000.00 $488.73 $1,000.00 $1,000.00 Average Price of Shares Disposed ($129,562.54) ($488,302.33) ($25,129.26) ($96,119.10) ($15,270.30) ($385,378.64) ($2,148,900.00) ($8,369,000.00) (Realized Loss) / (Write-off) Gain5 $900,000.00 $44,746.31 $94,153.69 $2,370,908.26 $337,363.35 $636,000.00 $500,000.00 $3,750,000.00 $220,000.00 $326,576.00 Warrant Sales $26.94 $11.57 $28.93 $32.85 $0.35 $9.84 $30.80 $226.00 $22.46 $11.63 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $538,360.00 $611,059.81 $913,405.03 $998,056.89 $1,715,769.00 $360,694.44 $370,902.67 $10,730,000.00 $1,229,948.97 $1,128,156.44 $1,106,666.67 Dividend/Interest Paid to Treasury 342 Transactions Date Institution CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 TABLE C.1 TRANSACTIONS DETAIL APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 5/28/2015 3/6/2013 4/18/2012 1/30/2009 9/27/2013 1/30/2009 4/9/2013 3/28/2013 3/27/2013 3/26/2013 8/21/2009 11/2/2011 8/11/2011 12/19/2008 8/22/2012 6/19/2012 11/21/2008 11/2/2011 Annapolis Bancorp, Inc./F.N.B. Corporation, Annapolis,MD11,90 Anchor BanCorp Wisconsin Inc., Madison, WI94 AmFirst Financial Services, Inc., McCook, NE14,15 AmeriServ Financial, Inc, Johnstown, PA45 $8,152,000.00 $110,000,000.00 $5,000,000.00 $21,000,000.00 $52,000,000.00 $6,000,000.00 American State Bancshares, Inc., Great Bend, KS8,11,14 1/9/2009 Ameris Bancorp, Moultrie, GA $1,800,000.00 1/26/2011 American Premier Bancorp, Arcadia, CA8,11,14 $3,388,890,000.00 $2,492,000.00 AmeriBank Holding Company/American Bank of Oklahoma, Collinsville, OK8,14,44 American Express Company, New York, NY11 $3,674,000.00 $70,000,000.00 $3,652,000.00 $12,000,000.00 AMB Financial Corp., Munster, IN8,14,45 Alpine Banks of Colorado, Glenwood Springs, CO8,14 Allied First Bancorp, Inc., Oswego, IL8 Alliance Financial Services Inc., Saint Paul, MN14,15 Investment Amount 5/29/2009 7/29/2009 6/17/2009 1/9/2009 9/15/2011 3/6/2009 9/22/2011 1/30/2009 11/16/2012 9/20/2012 9/19/2012 9/18/2012 3/27/2009 4/24/2009 3/26/2013 2/7/2013 2/6/2013 6/26/2009 Transactions Date Institution $13,378,714.00 $6,000,000.00 $6,523,255.00 $24,601,666.66 $59,637,438.67 $7,220,141.67 $2,052,682.49 $3,803,257,308.33 $2,960,021.33 $4,387,576.45 $73,129,160.69 $409,753.00 $9,806,136.60 Total Cash Back2 (CONTINUED) $4,076,000.00 $4,076,000.00 $6,000,000.00 $2,328,960.00 $2,112,000.00 $359,040.00 $21,000,000.00 $48,391,200.00 $6,000,000.00 $1,800,000.00 $3,388,890,000.00 $2,492,000.00 $3,674,000.00 $50,160,264.00 $6,559,920.24 $280,115.76 $5,626,575.00 $3,375,945.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($48,000.00) ($725,868.00) ($570,003.00) ($90,025.20) Auction Fee4 4,076 4,076 60,000,000 2,426,000 2,200,000 374,000 21,000 52,000 6,000 1,800 3,388,890 2,492 3,674 61,600 8,056 344 7,500,000 4,500,000 Number of Shares Disposed $1,000.00 $1,000.00 $0.10 $0.96 $0.96 $0.96 $1,000.00 $930.60 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $814.29 $814.29 $814.29 $0.75 $0.75 Average Price of Shares Disposed ($104,000,000.00) ($97,040.00) ($88,000.00) ($14,960.00) ($3,608,800.00) ($11,439,736.00) ($1,496,079.76) ($63,884.24) ($1,873,425.00) ($1,124,055.00) (Realized Loss) / (Write-off) Gain5 $3,735,577.67 $259,875.00 $825,000.00 $2,670,000.00 $300,000.00 $90,000.00 $340,000,000.00 $125,000.00 $184,000.00 $3,291,750.00 $504,900.00 Warrant Sales $12.95 $22.03 $3.24 $28.75 $74.13 $11.00 $0.20 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $1,511,380.00 $2,776,666.66 $9,302,106.67 $920,141.67 $162,682.49 $74,367,308.33 $343,021.33 $529,576.45 $13,407,113.69 $409,753.00 $388,741.80 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 343 1/11/2013 11/30/2012 1/16/2009 3/9/2010 12/9/2009 1/9/2009 10/28/2008 3/26/2013 1/11/2013 12/20/2012 12/19/2012 8/14/2009 2/15/2013 12/19/2008 5/31/2013 4/29/2013 4/26/2013 4/3/2009 9/29/2010 2/20/2009 9/30/2009 8/5/2009 12/19/2008 8/18/2011 7/10/2009 7/14/2011 3/13/2009 8/28/2013 7/31/2013 1/30/2009 9/15/2011 2/27/2009 3/19/2014 2/10/2014 2/7/2014 12/29/2009 12/6/2011 9/14/2011 4/6/2011 11/21/2008 Bank of Commerce, Charlotte, NC8,14 Bank of America Corporation, Charlotte, NC6,7,11 Bank Financial Services, Inc., Eden Prairie, MN8,14 BancTrust Financial Group, Inc., Mobile, AL83 BancStar, Inc., Festus, MO8,14 BancPlus Corporation, Ridgeland, MS8,11,14 Bancorp Rhode Island, Inc., Providence, RI11 Bancorp Financial, Inc., Oak Brook, IL8,17,44 BancIndependent, Inc., Sheffield, AL8,44 Avidbank Holdings, Inc./Peninsula Bank Holding Co., Palo Alto, CA11 Avenue Financial Holdings, Inc., Nashville, TN8,14,44 Atlantic Bancshares, Inc., Bluffton, SC8,17 Associated BancCorp, Green Bay, WI11 Transactions Date Institution $3,000,000.00 $10,000,000,000.00 $15,000,000,000.00 $1,004,000.00 $50,000,000.00 $8,600,000.00 $48,000,000.00 $30,000,000.00 $13,669,000.00 $21,100,000.00 $6,000,000.00 $7,400,000.00 $2,000,000.00 $525,000,000.00 Investment Amount $3,087,573.33 $26,599,663,040.28 $1,114,680.76 $60,451,155.74 $10,701,460.58 $54,607,399.33 $32,341,666.66 $15,595,736.93 $24,841,411.03 $7,563,057.15 $8,798,415.33 $2,503,554.78 $596,539,172.32 Total Cash Back2 (CONTINUED) $2,502,000.00 $25,000,000,000.00 $481,335.96 $451,600.92 $50,000,000.00 $8,352,695.00 $98,267.00 $48,000,000.00 $30,000,000.00 $13,669,000.00 $21,100,000.00 $6,000,000.00 $7,400,000.00 $50,000.00 $1,950,000.00 $262,500,000.00 $262,500,000.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($25,000.00) ($15,670.63) ($9,329.37) ($84,509.62) ($25,000.00) Auction Fee4 3,000 1,000,000 518 486 50,000 8,500 100 48,000 30,000 13,669 21,100 6,000 7,400 50 1,950 262,500 262,500 Number of Shares Disposed $834.00 $25,000.00 $929.22 $929.22 $1,000.00 $982.67 $982.67 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,150.00 $1,150.00 $1,000.00 $1,000.00 Average Price of Shares Disposed ($498,000.00) ($36,664.04) ($34,399.08) ($147,305.00) ($1,733.00) (Realized Loss) / (Write-off) $7,500.00 $292,500.00 Gain5 $100,100.00 $305,913,040.28 $23,500.00 $15,000.00 $426,338.55 $2,400,000.00 $1,400,000.00 $410,000.00 $1,055,000.00 $190,781.12 $370,000.00 $10,798.98 $95,031.02 $3,435,005.65 Warrant Sales $15.58 $23.17 $12.35 $13.20 $1.55 $17.97 Stock Price as of 9/30/2015 730,994 Current Outstanding Warrants Continued on next page $510,473.33 $1,293,750,000.00 $183,243.88 $10,436,155.74 $1,908,669.65 $4,207,399.33 $941,666.66 $1,516,736.93 $2,686,411.03 $1,372,276.03 $1,028,415.33 $122,724.78 $68,104,166.67 Dividend/Interest Paid to Treasury 344 APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 4/19/2013 1/26/2011 12/23/2008 7/1/2014 4/3/2009 7/22/2009 6/17/2009 11/14/2008 7/28/2010 2/24/2010 1/16/2009 7/28/2011 2/6/2009 6/12/2013 4/3/2012 11/21/2008 3/26/2013 1/11/2013 11/9/2012 2/13/2009 9/8/2011 1/23/2009 4/24/2014 1/30/2009 11/24/2009 11/4/2009 12/12/2008 7/16/2014 4/17/2009 8/5/2009 6/17/2009 10/28/2008 11/23/2011 3/31/2009 12/5/2008 1/6/2014 10/21/2013 3/13/2009 10/26/2011 9/27/2011 11/14/2008 BCSB Bancorp, Inc., Baltimore, MD11 BCB Holding Company, Inc., Theodore, AL8,112 BB&T Corp., Winston-Salem, NC11 Bar Harbor Bankshares, Bar Harbor, ME12,16 Banner County Ban Corporation, Harrisburg, NE8,14,44 Banner Corporation/ Banner Bank, Walla Walla, WA $10,800,000.00 $1,706,000.00 $3,133,640,000.00 $18,751,000.00 $795,000.00 $124,000,000.00 $1,000,000.00 $15,500,000.00 BankFirst Capital Corporation, Macon, MS8,14,44 BankGreenville Financial Corporation, Greenville, SC8,14 $12,639,000.00 $75,000,000.00 $13,179,000.00 $3,000,000,000.00 $28,000,000.00 $2,672,000.00 $17,000,000.00 Investment Amount Bankers’ Bank of the West Bancorp, Inc., Denver, CO8,106 Bank of the Ozarks, Inc., Little Rock, AR11 Bank of the Carolinas Corporation, Mocksville, NC105 Bank of New York Mellon, New York, NY11 Bank of Marin Bancorp, Novato, CA11 Bank of George, Las Vegas, NV8 Bank of Commerce Holdings, Redding, CA44 Transactions Date Institution $13,371,500.00 $2,315,853.14 $3,293,353,918.53 $20,037,514.11 $942,411.42 $129,079,862.47 $1,100,653.50 $18,492,469.25 $17,097,990.60 $81,004,166.67 $4,334,427.00 $3,231,416,666.67 $30,155,095.11 $1,233,940.00 $19,564,027.78 Total Cash Back2 (CONTINUED) $10,800,000.00 $1,706,000.00 $3,133,640,000.00 $18,751,000.00 $795,000.00 $109,717,680.00 $900,000.00 $15,500,000.00 $12,639,000.00 $75,000,000.00 $3,294,750.00 $3,000,000,000.00 $28,000,000.00 $955,240.00 $17,000,000.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($1,645,765.20) ($16,000.00) ($9,000.00) ($25,000.00) Auction Fee4 10,800 1,706 3,134 18,751 795 124,000 1,000 15,500 12,639 75,000 13,179 3,000,000 28,000 2,672 17,000 Number of Shares Disposed $1,000.00 $1,000.00 $1,000,000.00 $1,000.00 $1,000.00 $884.82 $900.00 $1,000.00 $1,000.00 $1,000.00 $250.00 $1,000.00 $1,000.00 $357.50 $1,000.00 Average Price of Shares Disposed ($14,282,320.00) ($100,000.00) ($9,884,250.00) ($1,716,760.00) (Realized Loss) / (Write-off) Gain5 $1,442,000.00 $85,000.00 $67,010,401.86 $250,000.00 $40,000.00 $134,201.00 $21,880.50 $775,000.00 $632,000.00 $2,650,000.00 $136,000,000.00 $1,703,984.00 $23,709.00 $125,000.00 Warrant Sales $12.95 $35.60 $31.99 $47.77 $43.76 $43.76 $39.15 $47.99 $5.78 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $1,129,500.00 $524,853.14 $92,703,516.67 $1,036,514.11 $107,411.42 $20,873,746.67 $203,773.00 $2,217,469.25 $3,826,990.60 $3,354,166.67 $1,039,677.00 $95,416,666.67 $451,111.11 $279,991.00 $2,439,027.78 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 345 8/30/2013 4/17/2009 1/7/2015 1/6/2014 10/21/2013 10/18/2013 12/5/2008 2/10/2012 3/6/2009 1/11/2013 10/31/2012 10/29/2012 3/6/2009 9/12/2012 6/27/2012 5/22/2009 1/11/2013 10/31/2012 10/29/2012 3/13/2009 3/26/2013 2/8/2013 2/7/2013 6/19/2009 7/28/2011 12/18/2009 4/24/2009 9/1/2011 2/13/2009 6/24/2009 5/27/2009 12/19/2008 12/28/2011 6/12/2009 BNB Financial Services Corporation, New York, NY8 Blue Valley Ban Corp, Overland Park, KS Blue River Bancshares, Inc., Shelbyville, IN8,64,97 Blue Ridge Bancshares, Inc., Independence, MO8,14 Blackridge Financial, Inc., Fargo, ND8,14 Blackhawk Bancorp, Inc., Beloit, WI8,14 Biscayne Bancshares, Inc., Coconut Grove, FL15,17 Birmingham Bloomfield Bancshares, Inc, Birmingham, MI8,14,18,44 Bern Bancshares, Inc., Bern, KS8,14,44 Berkshire Hills Bancorp, Inc., Pittsfield, MA11 Berkshire Bancorp, Inc./Customers Bancorp, Inc., Phoenixville, PA8,11,14 $7,500,000.00 $21,750,000.00 $5,000,000.00 $12,000,000.00 $5,000,000.00 $10,000,000.00 $6,400,000.00 $1,744,000.00 $1,635,000.00 $985,000.00 $40,000,000.00 $2,892,000.00 $9,776,051.62 $21,264,901.65 $529,105.00 $11,938,437.34 $6,127,326.35 $11,459,461.11 $8,271,975.28 $3,803,022.67 $1,172,062.50 $41,917,777.78 $3,444,478.21 $1,500,000.00 $7,500,000.00 $18,085,785.00 $3,177,232.50 $9,040,370.00 $19,630.00 $2,750,000.00 $2,250,000.00 $8,913,450.00 $186,550.00 $3,700,820.00 $2,532,140.00 $3,379,000.00 $985,000.00 $40,000,000.00 $2,892,000.00 $300,000.00 $7,263,316.66 $1,500,000.00 $1,500,000.00 Capital Repayment / Disposition / Auction3,5 $1,200,000.00 $6,000,000.00 Total Cash Back2 6/27/2012 Beach Business Bank, Manhattan Beach, CA8,11,14 Investment Amount (CONTINUED) 6/6/2012 3/7/2012 10/19/2011 7/6/2011 1/30/2009 Transactions Date Institution CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($212,630.18) ($90,600.00) ($91,000.00) ($62,329.60) Auction Fee4 7,500 18,500 3,250 11,974 26 2,750 2,250 9,795 205 3,800,000 2,600,000 3,379 985 40,000 2,892 300 1,200 1,500 1,500 1,500 Number of Shares Disposed $1,000.00 $977.61 $977.61 $755.00 $755.00 $1,000.00 $1,000.00 $910.00 $910.00 $0.97 $0.97 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 Average Price of Shares Disposed ($414,215.00) ($72,767.50) ($5,000,000.00) ($2,933,630.00) ($6,370.00) ($881,550.00) ($18,450.00) ($99,180.00) ($67,860.00) (Realized Loss) / (Write-off) Gain5 $375,000.00 $3,056.00 $541,793.34 $250,000.00 $470,250.00 $140,347.75 $64,158.97 $82,000.00 $50,000.00 $1,040,000.00 $145,000.00 $300,000.00 Warrant Sales $10.00 $0.06 $16.11 $16.40 $8.50 $27.54 $12.27 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $1,901,051.62 $211,458.33 $529,105.00 $2,427,244.00 $877,326.35 $1,980,211.11 $1,896,838.16 $342,022.67 $137,062.50 $877,777.78 $407,478.21 $963,316.66 Dividend/Interest Paid to Treasury 346 APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 11/2/2011 3/13/2009 4/24/2013 1/9/2013 5/23/2012 4/24/2009 9/15/2011 7/17/2009 5/31/2013 4/29/2013 4/26/2013 5/15/2009 12/4/2009 11/14/2008 1/6/2014 11/19/2013 12/19/2008 4/20/2011 3/16/2011 2/23/2011 12/23/2008 2/7/2011 6/16/2010 1/13/2010 11/21/2008 4/9/2013 3/11/2013 3/8/2013 5/15/2009 7/14/2011 3/6/2009 4/25/2014 3/17/2014 3/14/2014 1/16/2009 8/4/2011 2/27/2009 9/19/2012 8/29/2012 12/5/2008 Butler Point, Inc., Catlin, IL8,11,14 Business Bancshares, Inc., Clayton, MO8,11,14 Brotherhood Bancshares, Inc., Kansas City, KS8,14,44 Brogan Bankshares, Inc., Kaukauna, WI14,15 Broadway Financial Corporation, Los Angeles, CA9,10,18,65,96,99 Bridgeview Bancorp, Inc., Bridgeview, IL8 Bridge Capital Holdings, San Jose, CA11 Boston Private Financial Holdings, Inc., Boston, MA11 Boscobel Bancorp, Inc, Boscobel, WI14,15 BOH Holdings, Inc., Houston, TX8,14,44 BNCCORP, Inc., Bismarck, ND8 BNC Financial Group, Inc., New Canaan, CT8,14,44 BNC Bancorp, Thomasville, NC Transactions Date Institution $607,000.00 $15,000,000.00 $11,000,000.00 $2,400,000.00 $6,000,000.00 $9,000,000.00 $38,000,000.00 $23,864,000.00 $154,000,000.00 $5,586,000.00 $10,000,000.00 $20,093,000.00 $4,797,000.00 $31,260,000.00 Investment Amount $724,123.53 $18,707,708.84 $12,845,586.01 $3,022,879.60 $810,416.67 $13,447,811.37 $27,872,582.22 $171,224,745.48 $6,947,457.50 $11,783,777.44 $26,941,865.35 $5,673,920.75 $35,140,666.12 Total Cash Back2 (CONTINUED) $607,000.00 $6,500,000.00 $2,500,000.00 $6,000,000.00 $11,000,000.00 $2,340,000.00 $60,000.00 $10,450,000.00 $8,864,000.00 $15,000,000.00 $104,000,000.00 $50,000,000.00 $5,586,000.00 $10,000,000.00 $19,950,000.00 $143,000.00 $4,797,000.00 $28,797,649.80 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($25,000.00) ($104,500.00) ($61,787.30) ($201,147.00) ($431,964.75) Auction Fee4 607 6,500 2,500 6,000 11,000 2,340,000 60,000 38,000 8,864 15,000 104,000 50,000 5,586,000 10,000 19,950 143 4,797 31,260 Number of Shares Disposed $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1.05 $1.05 $275.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1.11 $1,000.00 $1,001.08 $1,001.08 $1,000.00 $921.23 Average Price of Shares Disposed ($27,550,000.00) ($2,462,350.20) (Realized Loss) / (Write-off) $117,023.40 $3,000.60 $592,730.46 $21,546.00 $154.44 Gain5 $30,000.00 $750,000.00 $550,000.00 $125,135.60 $709,155.81 $1,395,000.00 $6,202,523.25 $129,709.80 $232,180.54 $500,000.00 $966,456.56 $29,737.13 $240,000.00 $939,920.00 Warrant Sales $1.21 $30.71 $11.70 $16.00 $22.23 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $87,123.53 $2,957,708.84 $1,295,586.01 $402,720.00 $810,416.67 $2,393,155.56 $2,613,582.22 $11,022,222.23 $468,624.00 $1,283,777.44 $6,032,118.22 $636,920.75 $5,835,061.07 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 347 $1,037,000.00 $4,656,000.00 $4,700,000.00 $41,279,000.00 Calvert Financial Corporation, Ashland, MO8 CalWest Bancorp, Rancho Santa Margarita, CA8 Capital Bancorp, Inc., Rockville, MD8,11,14 Capital Bank Corporation, Raleigh, NC39 1/23/2009 1/23/2009 4/19/2013 3/26/2013 2/21/2013 2/20/2013 1/9/2009 9/8/2011 10/23/2009 1/11/2013 11/9/2012 11/8/2012 12/23/2008 12/9/2009 6/17/2009 11/14/2008 4/10/2009 1/28/2011 12/12/2008 12/30/2010 12/23/2008 12/8/2010 Carolina Bank Holdings, Inc., Greensboro, NC Cardinal Bancorp II, Inc., Washington, MO14,15,45 Capital Pacific Bancorp, Portland, OR8,14 Capital One Financial Corporation, McLean, VA11 $16,000,000.00 $6,251,000.00 $4,000,000.00 $3,555,199,000.00 $5,100,000.00 $3,300,000.00 California Oaks State Bank, Thousand Oaks, CA8,11,14 1/23/2009 Capital Commerce Bancorp, Inc., Milwaukee, WI8 $4,000,000.00 California Bank of Commerce, Lafayette, CA8,14,44 9/15/2011 3/4/2011 1/9/2009 2/27/2009 $4,640,000.00 $4,767,000.00 $20,000,000.00 $44,000,000.00 Cache Valley Banking Company, Logan, UT8,14,18,44 C&F Financial Corporation, West Point, VA11 Investment Amount Cadence Financial Corporation, Starkville, MS125 7/14/2011 12/18/2009 12/23/2008 5/14/2014 4/11/2012 7/27/2011 1/9/2009 Transactions Date Institution $19,941,788.94 $7,547,479.56 $4,742,850.89 $3,806,873,702.13 $304,973.00 $45,252,104.25 $5,452,281.19 $396,163.67 $215,442.61 $3,802,219.25 $4,755,899.67 $41,984,062.50 $10,674,333.80 $25,205,957.78 Total Cash Back2 (CONTINUED) $435,756.60 $14,525,843.40 $6,251,000.00 $3,505,712.96 $247,727.04 $3,555,199,000.00 $41,279,000.00 $4,700,000.00 $3,300,000.00 $4,000,000.00 $38,000,000.00 $9,407,000.00 $10,000,000.00 $10,000,000.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($149,616.00) ($25,000.00) Auction Fee4 466 15,534 6,251,000 3,736 264 3,555,199 41,279 4,700 3,300 4,000 44,000 9,407 10,000 10,000 Number of Shares Disposed $935.10 $935.10 $1.00 $938.36 $938.36 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $863.64 $1,000.00 $1,000.00 $1,000.00 Average Price of Shares Disposed ($30,243.40) ($1,008,156.60) ($230,287.04) ($16,272.96) ($6,000,000.00) (Realized Loss) / (Write-off) Gain5 $1,800,000.00 $313,000.00 $169,042.00 $146,500,064.55 $235,000.00 $165,000.00 $200,000.00 $238,000.00 $2,303,180.00 Warrant Sales $12.99 $72.52 $30.23 $0.97 $36.48 Stock Price as of 9/30/2015 749,619 167,504 Current Outstanding Warrants Continued on next page $3,329,804.94 $983,479.56 $845,368.89 $105,174,637.58 $304,973.00 $3,973,104.25 $517,281.19 $396,163.67 $215,442.61 $337,219.25 $555,899.67 $3,984,062.50 $1,029,333.80 $2,902,777.78 Dividend/Interest Paid to Treasury 348 APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 5/27/2015 6/27/2012 12/12/2008 12/7/2011 9/15/2011 1/9/2009 11/20/2013 2/6/2009 12/23/2008 9/11/2012 8/10/2012 8/9/2012 8/7/2012 3/27/2009 Center Financial Corporation/BBCN Bancorp, Inc., Los Angeles, CA11,59 Center Bancorp, Inc., Union, NJ44 CedarStone Bank, Lebanon, TN8 Cecil Bancorp, Inc., Elkton, MD CBS Banc-Corp., Russellville, AL8,14 $24,300,000.00 $55,000,000.00 $10,000,000.00 $3,564,000.00 $11,560,000.00 $65,855,083.33 $11,586,666.67 $4,672,098.50 $516,988.89 $27,432,357.95 $55,000,000.00 $10,000,000.00 $3,564,000.00 $21,073,056.00 $923,304.00 ($219,963.60) ($363.42) $2,831,259.86 $1,268,825.60 ($15,880.00) ($34,120.00) Auction Fee4 ($32,969.92) $4,982,141.86 $6,500,000.00 $129,000,000.00 $129,000,000.00 $16,250,000.00 $18,980,000.00 $9,201,000.00 $3,412,000.00 Capital Repayment / Disposition / Auction3,5 3/26/2013 CBB Bancorp, Cartersville, GA8,18 $271,579.53 $7,448,071.47 $329,874,444.96 $17,678,900.00 $20,511,580.55 $11,388,958.51 $3,994,452.00 Total Cash Back2 (CONTINUED) 1/11/2013 11/29/2012 11/28/2012 $2,644,000.00 $1,753,000.00 $4,114,000.00 $3,500,000.00 12/29/2009 CB Holding Corp., Aledo, IL8,57,97 Catskill Hudson Bancorp, Inc, Rock Hill, NY8,14,18,44 $3,000,000.00 $258,000,000.00 $38,970,000.00 Cascade Financial Corporation, Everett, WA Cathay General Bancorp, Los Angeles, CA11 $18,980,000.00 $9,201,000.00 $4,000,000.00 Carver Bancorp, Inc, New York, NY9,11,36 Carrollton Bancorp, Baltimore, MD11 Carolina Trust Bank, Lincolnton, NC Investment Amount 2/20/2009 10/14/2011 5/29/2009 7/21/2011 12/22/2009 2/27/2009 12/9/2013 9/30/2013 3/20/2013 12/5/2008 6/30/2011 11/21/2008 8/27/2010 1/16/2009 4/19/2013 2/13/2009 6/11/2013 3/26/2013 1/11/2013 11/30/2012 2/6/2009 Transactions Date Institution CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 55,000 10,000 3,564 23,280 1,020 3,037 1,360 6,500 129,000 129,000 38,970 18,980 9,201 4,000 Number of Shares Disposed $1,000.00 $1,000.00 $1,000.00 $905.20 $905.20 $932.26 $932.96 $1,000.00 $1,000.00 $1,000.00 $416.99 $1,000.00 $1,000.00 $853.00 Average Price of Shares Disposed ($2,206,944.00) ($96,696.00) ($205,740.14) ($91,174.40) ($4,114,000.00) ($22,720,000.00) ($588,000.00) (Realized Loss) / (Write-off) Gain5 $1,115,500.00 $245,000.00 $178,000.00 $131,297.76 $689,313.24 $287,213.85 $115,861.34 $263,000.00 $13,107,778.30 $213,594.16 $19,132.00 Warrant Sales $15.02 19.30 $0.05 $16.00 $29.96 $6.65 $5.10 $5.60 Stock Price as of 9/30/2015 261,538 523,076 Current Outstanding Warrants Continued on next page $1,341,666.67 $930,098.50 $516,988.89 $4,548,136.70 $799,528.40 $271,579.53 $685,071.47 $58,766,666.66 $1,428,900.00 $1,531,580.55 $1,974,364.35 $613,320.00 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 349 7/28/2011 2/6/2009 7/14/2011 12/18/2009 10/1/2013 1/30/2009 9/28/2011 8/18/2011 1/30/2009 6/11/2013 4/4/2012 6/22/2011 1/9/2009 12/1/2010 11/24/2010 12/23/2008 9/26/2012 12/5/2008 1/11/2013 12/11/2012 12/10/2012 2/20/2009 7/6/2011 1/30/2009 8/29/2014 2/27/2009 10/19/2011 8/25/2011 12/5/2008 4/15/2009 3/31/2009 1/16/2009 10/28/2009 9/30/2009 11/21/2008 $7,500,000.00 $6,056,000.00 Centric Financial Corporation, Harrisburg, PA8,17,44 Centrix Bank & Trust, Bedford, NH8,14,44 $11,385,000.00 $7,000,000.00 $135,000,000.00 $11,300,000.00 $7,225,000.00 $22,000,000.00 $5,800,000.00 $22,500,000.00 $10,000,000.00 $15,000,000.00 $27,875,000.00 Central Virginia Bankshares, Inc., Powhatan, VA93 Central Valley Community Bancorp, Fresno, CA45 Central Pacific Financial Corp., Honolulu, HI40 Central Jersey Bancorp, Oakhurst, NJ11 Central Federal Corporation, Fairlawn, OH Central Community Corporation, Temple, TX8,14 Central Bancshares, Inc., Houston, TX8,11,14 Central Bancorp, Inc., Garland, TX8,113 Central Bancorp, Inc., Somerville, MA45 Centra Financial Holdings, Inc., Morgantown, WV8,11,14 Centerstate Banks of Florida Inc., Davenport, FL12,16 $8,887,791.42 $6,739,821.89 $3,800,656.00 $8,077,516.47 $75,036,891.42 $12,704,145.10 $3,612,118.06 $25,797,528.80 $6,859,176.83 $31,086,221.13 $13,886,111.11 $15,922,937.50 $29,283,302.58 $24,750.00 $7,500,000.00 $6,056,000.00 $3,350,000.00 $7,000,000.00 $36,427,038.55 $36,337,500.00 $11,300,000.00 $3,000,000.00 $15,043,340.40 $5,333,059.60 $5,800,000.00 $22,500,000.00 $10,000,000.00 $15,000,000.00 $27,875,000.00 $1,831,500.00 Auction Fee4 ($387,816.38) ($454,218.75) ($203,764.00) ($6,437.50) $2,344,662.43 Capital Repayment / Disposition / Auction3,5 3/26/2013 $2,250,000.00 Total Cash Back2 ($18,562.50) CenterBank, Milford, OH8,14 Investment Amount (CONTINUED) 1/11/2013 11/1/2012 10/29/2012 5/1/2009 Transactions Date Institution CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 7,500 6,056 11,385 7,000 2,770,117 2,850,000 11,300 7,225 16,242 5,758 5,800 22,500 10,000 15,000 27,875 2,220 30 Number of Shares Disposed $1,000.00 $1,000.00 $294.25 $1,000.00 $13.15 $12.75 $1,000.00 $415.22 $926.20 $926.20 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $825.00 $825.00 Average Price of Shares Disposed ($8,035,000.00) ($30,113,532.58) ($32,121,928.87) ($4,225,000.00) ($1,198,659.60) ($424,940.40) ($388,500.00) ($5,250.00) (Realized Loss) / (Write-off) Gain5 $375,000.00 $182,000.00 $185,016.80 $751,888.00 $319,658.99 $1,058,725.80 $290,000.00 $1,125,000.00 $2,525,000.00 $750,000.00 $212,000.00 $84,057.43 Warrant Sales $36.48 $12.10 $20.97 $11.47 $25.20 $46.10 $37.99 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $1,012,791.42 $501,821.89 $450,656.00 $892,499.67 $2,362,500.00 $1,084,486.11 $612,118.06 $4,566,167.00 $769,176.83 $7,461,221.13 $1,361,111.11 $172,937.50 $1,196,302.58 $429,355.00 Dividend/Interest Paid to Treasury 350 APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 $6,300,000.00 $3,000,000.00 Citizens Commerce Bancshares, Inc., Versailles, KY8 Citizens Community Bank, South Hill, VA8,14,44 7/28/2011 12/23/2008 8/6/2015 2/6/2009 $2,400,000.00 $7,462,000.00 $24,990,000.00 $10,400,000.00 $26,440,000.00 $25,000,000,000.00 $2,330,000,000.00 $7,000,000.00 $19,817,000.00 $10,000,000.00 Citizens Bank & Trust Company, Covington, LA8 Citizens Bancshares Corporation, Atlanta, GA9,11,36 Citizens Bancshares Co., Chillicothe, MO8,14 Citizens Bancorp, Nevada City, CA8,55,97 Citizens & Northern Corporation, Wellsboro, PA11 Citigroup Inc., New York, NY19,30 CIT Group Inc., New York, NY23 Chicago Shore Corporation, Chicago, IL8 Chambers Bancshares, Inc., Danville, AR15 Century Financial Services Corporation, Santa Fe, NM14,15 6/29/2015 3/20/2009 8/13/2010 3/6/2009 3/26/2013 2/8/2013 2/7/2013 5/29/2009 9/23/2011 12/23/2008 9/1/2010 8/4/2010 1/16/2009 1/31/2011 12/10/2010 10/28/2008 12/10/2009 12/31/2008 4/25/2014 3/17/2014 3/14/2014 7/31/2009 4/1/2015 5/29/2009 1/11/2013 12/20/2012 12/19/2012 6/19/2009 10/15/2014 3/19/2014 2/10/2014 1/6/2014 10/29/2013 $11,205,387.14 $3,574,645.84 $180,258.50 $2,353,330.60 $7,997,813.22 $13,952,381.45 $223,571.11 $28,889,100.00 $32,839,267,986.46 $43,687,500.00 $8,981,348.81 $32,098,302.62 $13,186,960.25 $3,000,000.00 $1,560,312.00 $7,462,000.00 $6,150,000.00 $6,657,375.00 $26,440,000.00 $25,000,000,000.00 $6,679,340.00 $257,660.00 $19,817,000.00 $9,810,600.00 $39,400.00 $577,638.02 $1,950,000.00 Capital Repayment / Disposition / Auction3,5 $8,211,450.00 $32,668,000.00 Total Cash Back2 10/18/2013 Centrue Financial Corporation, Ottawa, IL Investment Amount (CONTINUED) 9/25/2013 1/9/2009 Transactions Date Institution CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($25,000.00) ($128,073.75) ($69,370.00) ($98,500.00) ($5,776.38) ($19,500.00) ($82,114.50) Auction Fee4 3,000 2,400 7,462 12,000 12,990 26,440 7,692,307,692 6,740 260 19,817,000 9,960,000 40,000 1,402 6,000 25,266 Number of Shares Disposed $1,000.00 $650.13 $1,000.00 $512.50 $512.50 $1,000.00 $4.14 $991.00 $991.00 $1.00 $0.99 $0.99 $412.01 $325.00 $325.00 Average Price of Shares Disposed ($839,688.00) ($5,850,000.00) ($6,332,625.00) ($10,400,000.00) ($2,330,000,000.00) ($60,660.00) ($2,340.00) ($149,400.00) ($600.00) ($824,361.98) ($4,050,000.00) ($17,054,550.00) (Realized Loss) / (Write-off) $6,852,354,470.95 Gain5 $150,000.00 $53,015.60 $387,028.12 $258,018.75 $400,000.00 $54,621,848.84 $347,193.00 $991,000.00 $297,953.37 $198,635.58 $2,000.00 Warrant Sales $8.40 $9.10 $0.01 $19.52 $49.61 $40.03 $17.00 Stock Price as of 9/30/2015 508,320 Current Outstanding Warrants Continued on next page $424,645.84 $180,258.50 $765,003.00 $535,813.22 $628,033.33 $223,571.11 $2,049,100.00 $932,291,666.67 $43,687,500.00 $1,766,525.81 $11,290,302.62 $2,938,871.30 $571,690.00 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 351 9/28/2011 8/18/2011 1/9/2009 11/23/2011 9/8/2011 12/19/2008 4/9/2013 3/11/2013 3/8/2013 8/28/2009 Codorus Valley Bancorp, Inc., York, PA44 CoBiz Financial Inc., Denver, CO45 CoastalSouth Bancshares, Inc., Hilton Head Island, SC8,17 $16,500,000.00 $64,450,000.00 $16,015,000.00 $19,178,479.00 $73,357,086.72 $14,257,487.71 $397,550.00 $5,730,600.00 $3,772,645.00 $1,662,874.50 $955,825.50 $200,000,000.00 $200,000,000.00 $2,226,750.00 $20,500,000.00 $300,000,000.00 $3,265,788.00 $3,300,904.00 $2,212,308.00 $16,500,000.00 $64,450,000.00 $12,335,976.50 ($127,335.27) ($95,032.45) ($25,000.00) Auction Fee4 500 6,000 3,950 1,905 1,095 200,000 200,000 9,439 20,500 300,000 93 94 63 Number of Shares Disposed $795.10 $955.10 $955.10 $872.90 $872.90 $1,000.00 $1,000.00 $235.91 $1,000.00 $1,000.00 $35,116.00 $35,116.00 $35,116.00 Average Price of Shares Disposed ($102,450.00) ($269,400.00) ($177,355.00) ($242,125.50) ($139,174.50) ($7,212,250.00) (Realized Loss) / (Write-off) Gain5 $114,021.50 $18,500,000.00 $225,157.00 $12,150,120.44 $1,705,802.78 Warrant Sales 16,500 64,450 15,515 $1,000.00 $1,000.00 $795.10 ($3,179,023.50) $526,604.00 $143,677.00 $25,990.47 $389,857.05 $99,000.00 $11,166,897.79 $3,318,585.05 $442,416,666.67 $2,508,609.00 $23,572,379.22 $381,395,557.08 $12,236,725.89 Capital Repayment / Disposition / Auction3,5 $225,647.45 $9,950,000.00 $3,000,000.00 $400,000,000.00 $9,439,000.00 $20,500,000.00 $300,000,000.00 $8,779,000.00 Total Cash Back2 6/12/2013 Coastal Banking Company, Inc., Fernandina Beach, FL82 Clover Community Bankshares, Inc., Clover, SC8,14 City National Corporation, Beverly Hills, CA11 City National Bancshares Corporation, Newark, NJ8,9,124 Citizens South Banking Corporation, Gastonia, NC45 Citizens Republic Bancorp, Inc./ FirstMerit Corporation, Flint, MI86 Citizens First Corporation, Bowling Green, KY11 Investment Amount (CONTINUED) 4/10/2013 4/9/2013 3/11/2013 3/8/2013 12/5/2008 1/11/2013 11/29/2012 11/28/2012 3/27/2009 4/7/2010 3/3/2010 12/30/2009 11/21/2008 8/7/2015 4/10/2009 11/9/2011 9/22/2011 12/12/2008 5/13/2015 4/12/2013 12/12/2008 4/15/2015 1/15/2014 2/13/2013 2/16/2011 12/19/2008 Transactions Date Institution CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 $20.31 $13.01 $88.06 $6.80 $12.66 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $2,151,875.00 $8,763,409.72 $1,235,448.96 $1,434,037.79 $610,863.55 $23,916,666.67 $281,859.00 $2,847,222.22 $1,751,923.11 Dividend/Interest Paid to Treasury 352 APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 2/11/2015 7/24/2009 9/29/2010 9/11/2009 7/18/2012 3/6/2009 12/19/2012 1/16/2009 9/12/2013 7/17/2013 1/23/2009 9/11/2012 8/10/2012 8/9/2012 8/8/2012 8/7/2012 5/22/2009 10/1/2013 10/7/2009 1/9/2009 5/12/2010 3/17/2010 11/14/2008 9/22/2011 2/27/2009 9/1/2010 8/11/2010 11/21/2008 6/12/2013 3/26/2013 2/8/2013 2/7/2013 1/9/2009 10/26/2011 3/27/2009 9/12/2013 7/22/2013 7/19/2013 2/13/2009 Community Bancshares, Inc., Kingman, AZ8,17 Community Bancshares of Mississippi, Inc./ Community Bank of Mississippi, Brandon, MS8,11,14 Community Bancshares of Kansas, Inc., Goff, KS8,11,14 Community 1st Bank, Roseville, CA8,11,14 Commonwealth Business Bank, Los Angeles, CA8,14 Commonwealth Bancshares, Inc., Louisville, KY14,15 Commerce National Bank, Newport Beach, CA11 Comerica Inc., Dallas, TX11 Columbine Capital Corp., Buena Vista, CO8,14,44 Columbia Banking System, Inc., Tacoma, WA11,16 Colony Bankcorp, Inc., Fitzgerald, GA Colonial American Bank, West Conshohocken, PA8,11,14 ColoEast Bankshares, Inc., Lamar, CO8,14 Transactions Date Institution $3,872,000.00 $52,000,000.00 $500,000.00 $2,550,000.00 $7,701,000.00 $20,400,000.00 $5,000,000.00 $2,250,000,000.00 $2,260,000.00 $76,898,000.00 $28,000,000.00 $574,000.00 $10,000,000.00 Investment Amount $5,197,157.57 $57,575,699.54 $616,741.75 $2,899,659.67 $8,451,110.79 $21,575,016.54 $5,602,969.61 $2,582,039,543.40 $2,689,478.64 $86,821,419.22 $26,480,089.20 $668,142.53 $10,670,784.03 Total Cash Back2 (CONTINUED) $3,872,000.00 $52,000,000.00 $500,000.00 $2,550,000.00 $7,323,651.00 $600,000.00 $13,100,250.00 $1,469,250.00 $130,500.00 $5,000,000.00 $2,250,000,000.00 $2,260,000.00 $76,898,000.00 $265,135.29 $21,633,944.71 $574,000.00 $8,990,505.00 $46,995.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($73,236.51) ($153,000.00) ($218,990.80) ($90,375.00) Auction Fee4 3,872 52,000 500 2,550 7,701 800,000 17,467,000 1,959,000 174,000 5,000 2,250,000 2,260 76,898 339 27,661 574 9,948 52 Number of Shares Disposed $1,000.00 $1,000.00 $1,000.00 $1,000.00 $951.00 $0.75 $0.75 $0.75 $0.75 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $782.11 $782.11 $1,000.00 $903.75 $903.75 Average Price of Shares Disposed ($377,349.00) ($200,000.00) ($4,366,750.00) ($489,750.00) ($43,500.00) ($73,864.71) ($6,027,055.29) ($957,495.00) ($5,005.00) (Realized Loss) / (Write-off) Gain5 $116,000.00 $2,600,000.00 $25,000.00 $128,000.00 $362,427.91 $105,732.00 $792,990.00 $566,858.50 $181,102,043.40 $113,000.00 $3,301,647.00 $810,000.00 $29,000.00 $494,381.25 Warrant Sales $11.55 $41.10 $31.21 $8.90 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $1,209,157.57 $3,193,250.19 $91,741.75 $221,659.67 $838,268.39 $5,529,294.54 $36,111.11 $150,937,500.00 $316,478.64 $6,621,772.22 $3,990,000.00 $65,142.53 $1,229,277.78 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 353 10/26/2011 8/11/2011 1/30/2009 3/26/2013 1/11/2013 12/20/2012 12/19/2012 12/23/2008 3/26/2013 1/11/2013 11/30/2012 2/6/2009 7/18/2014 4/14/2014 4/11/2014 2/27/2009 8/18/2011 3/20/2009 3/19/2014 2/10/2014 2/7/2014 4/3/2009 12/21/2012 5/15/2009 5/28/2015 1/9/2013 12/19/2008 1/11/2013 11/30/2012 2/27/2009 6/4/2014 4/23/2014 11/20/2013 7/24/2013 12/19/2008 10/19/2011 9/15/2011 5/29/2009 9/29/2010 1/16/2009 Community Partners Bancorp, Middletown, NJ44 Community Investors Bancorp, Inc., Bucyrus, OH8,14 Community Holding Company of Florida, Inc./Community Bancshares of Mississippi, Inc., Brandon, MS8,67 Community First Inc., Columbia, TN8 Community First Bancshares Inc., Union City, TN8,14,44 Community First Bancshares, Inc., Harrison, AR8 Community Financial Shares, Inc., Glen Ellyn, IL8,14,76 Community Financial Corporation/City Holding Company, Staunton, VA81 Community Business Bank, West Sacramento, CA8,14 Community Bankers Trust Corporation, Glen Allen, VA11,101 Community Bank Shares of Indiana, Inc., New Albany, IN44 Community Bank of the Bay, Oakland, CA9,11,36 Transactions Date Institution $9,000,000.00 $2,600,000.00 $1,050,000.00 $17,806,000.00 $20,000,000.00 $12,725,000.00 $6,970,000.00 $12,643,000.00 $3,976,000.00 $17,680,000.00 $19,468,000.00 $1,747,000.00 Investment Amount $10,598,750.00 $3,115,616.28 $1,220,300.65 $7,665,362.89 $23,628,111.33 $16,441,884.63 $4,240,743.82 $16,080,204.94 $4,674,050.16 $23,135,879.12 $22,802,281.62 $1,823,188.61 Total Cash Back2 (CONTINUED) $9,000,000.00 $1,517,150.00 $952,850.00 $1,002,750.00 $4,028,202.50 $1,322,500.50 $20,000,000.00 $8,867,389.75 $3,705,037.50 $3,136,500.00 $12,643,000.00 $3,717,560.00 $10,680,000.00 $2,500,000.00 $4,500,000.00 $19,468,000.00 $1,747,000.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($300.00) ($24,700.00) ($14,972.50) ($10,027.50) ($53,507.03) ($125,724.27) ($25,000.00) Auction Fee4 9,000 1,597 1,003 105 13,405 4,401 20,000 8,975 3,750 6,970 12,643 3,976 10,680 2,500 4,500 19,468 1,747 Number of Shares Disposed $1,000.00 $950.00 $950.00 $9,550.00 $300.50 $300.50 $1,000.00 $988.01 $988.01 $450.00 $1,000.00 $935.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 Average Price of Shares Disposed ($79,850.00) ($50,150.00) ($47,250.00) ($9,376,797.50) ($3,078,499.50) ($107,610.25) ($44,962.50) ($3,833,500.00) ($258,440.00) (Realized Loss) / (Write-off) Gain5 $460,000.00 $105,000.00 $25,000.00 $387,399.37 $72,314.55 $1,000,000.00 $544,614.34 $85,157.88 $157,050.00 $873,485.00 $167,035.00 $780,000.00 $1,100,869.50 Warrant Sales $9.00 $1.41 $53.43 $11.50 $5.01 $29.05 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $1,138,750.00 $565,616.28 $1,908,453.00 $2,628,111.33 $3,365,409.43 $947,193.82 $2,563,719.94 $814,455.16 $4,675,879.12 $2,233,412.12 $76,188.61 Dividend/Interest Paid to Treasury 354 APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 8/6/2015 6/29/2015 3/27/2009 9/12/2013 7/22/2013 7/19/2013 1/23/2009 6/11/2014 2/19/2014 1/9/2009 11/19/2014 1/8/2014 2/20/2009 4/30/2014 6/5/2009 1/11/2013 11/29/2012 11/28/2012 1/30/2009 3/26/2013 1/11/2013 11/30/2012 2/13/2009 1/11/2013 10/31/2012 10/29/2012 1/9/2009 5/27/2015 5/23/2014 2/13/2009 6/12/2013 1/11/2013 12/11/2012 12/10/2012 12/19/2008 7/6/2011 1/9/2009 9/12/2013 8/12/2013 11/13/2009 CSRA Bank Corp., Wrens, GA8 Crosstown Holding Company, Blaine, MN8,14 Crescent Financial Bancshares, Inc. (Crescent Financial Corporation)/ VantageSouth Bancshares, Inc., Raleigh, NC58 Crazy Woman Creek Bancorp, Inc., Buffalo, WY8 Covenant Financial Corporation, Clarksdale, MS8 Country Bank Shares, Inc., Milford, NE8,14 Corning Savings and Loan Association, Corning, AR8,14 Congaree Bancshares, Inc., Cayce, SC8,14 CommunityOne Bancorp/FNB United Corp., Asheboro, NC53,110 Community West Bancshares, Goleta, CA Community Trust Financial Corporation, Ruston, LA8,14,44 Community Pride Bank Corporation, Ham Lake, MN15,17 Transactions Date Institution $2,400,000.00 $10,650,000.00 $24,900,000.00 $3,100,000.00 $5,000,000.00 $7,525,000.00 $638,000.00 $3,285,000.00 $51,500,000.00 $15,600,000.00 $24,000,000.00 $4,400,000.00 Investment Amount $3,210,755.60 $13,498,324.83 $33,014,741.20 $4,225,732.08 $6,594,635.27 $8,781,205.02 $659,705.04 $3,483,629.20 $12,749,591.59 $14,341,140.33 $28,459,100.00 $5,462,045.14 Total Cash Back2 (CONTINUED) $2,400,000.00 $10,117,381.00 $343,794.50 $24,900,000.00 $2,100,000.00 $1,000,000.00 $5,000,000.00 $6,193,989.20 $713,208.30 $548,680.00 $2,687,046.56 $23,932.54 $10,149,929.90 $9,122,400.00 $2,172,000.00 $24,000,000.00 $4,400,000.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($25,000.00) ($104,611.76) ($69,071.98) ($19,513.20) ($5,486.80) ($25,000.00) ($112,944.00) ($48,849.24) Auction Fee4 2,400 10,300 350 24,900 2,100 1,000 5,000 6,748 777 638 3,256 29 1,085,554 12,600 3,000 24,000 4,400,000 Number of Shares Disposed $1,213.75 $982.27 $982.27 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $917.90 $917.90 $860.00 $825.26 $825.26 $9.35 $724.00 $724.00 $1,000.00 $1.11 Average Price of Shares Disposed ($182,619.00) ($6,205.50) ($554,010.80) ($63,791.70) ($89,320.00) ($568,953.44) ($5,067.46) ($41,350,070.10) ($3,477,600.00) ($828,000.00) (Realized Loss) / (Write-off) $513,000.00 $484,924.00 Gain5 $141,815.60 $531,210.67 $1,681,000.00 $155,000.00 $250,000.00 $372,240.00 $3,960.00 $106,364.00 $10,356.69 $698,351.00 $1,200,000.00 $177,716.96 Warrant Sales $21.49 $11.25 $5.51 $12.95 $6.95 Stock Price as of 9/30/2015 514,693 Current Outstanding Warrants Continued on next page $180,940.00 $2,610,550.42 $11,011,235.28 $970,732.08 $1,344,635.27 $1,570,839.50 $132,065.04 $691,286.10 $2,589,305.00 $2,461,333.33 $3,259,100.00 $448,253.42 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 355 4/2/2014 3/5/2014 11/27/2013 6/19/2009 9/21/2011 8/4/2011 1/30/2009 7/7/2010 4/21/2010 3/13/2009 3/26/2013 2/8/2013 2/7/2013 1/16/2009 9/11/2012 8/10/2012 8/9/2012 8/8/2012 5/22/2009 10/29/2013 9/25/2013 Duke Financial Group, Inc., Minneapolis, MN15 DNB Financial Corporation, Downingtown, PA44 Discover Financial Services, Riverwoods, IL11 Dickinson Financial Corporation II, Kansas City, MO8,14 Diamond Bancorp, Inc., Washington, MO14,15 $12,000,000.00 $11,750,000.00 $1,224,558,000.00 $146,053,000.00 $20,445,000.00 $1,508,000.00 DeSoto County Bank, Horn Lake, MS8,18 12/29/2009 9/24/2013 $1,173,000.00 $9,000,000.00 $2,639,000.00 Deerfield Financial Corporation, Deerfield, WI14,15,44 Delmar Bancorp, Delmar, MD8,14 $19,891,000.00 $130,000,000.00 D.L. Evans Bancorp, Burley, ID8,14,44 CVB Financial Corp, Ontario, CA11,16 Investment Amount 2/13/2009 3/26/2013 2/8/2013 2/7/2013 12/4/2009 9/8/2011 5/15/2009 9/27/2011 2/27/2009 10/28/2009 9/2/2009 8/26/2009 12/5/2008 Transactions Date Institution $17,424,285.82 $13,683,277.61 $1,464,248,844.00 $87,459,858.69 $21,101,618.19 $2,781,331.97 $6,598,331.15 $3,283,338.96 $23,686,592.33 $136,046,583.33 Total Cash Back2 (CONTINUED) $5,000,000.00 $2,000,000.00 $5,000,000.00 $11,750,000.00 $1,224,558,000.00 $72,684,793.30 $8,025,555.03 $350,520.00 $10,197,941.25 $4,381,500.00 $1,895,467.59 $301,428.58 $215,462.72 $5,293,527.28 $2,639,000.00 $19,891,000.00 $32,500,000.00 $97,500,000.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($807,103.48) ($149,299.61) ($33,333.34) ($55,089.90) Auction Fee4 5,000,000 2,000,000 5,000,000 11,750 1,224,558 131,530 14,523 480,000 13,965,000 6,000,000 2,315 366 352 8,648 2,639,000 19,891 32,500 97,500 Number of Shares Disposed $1.00 $1.00 $1.00 $1,000.00 $1,000.00 $552.61 $552.61 $0.73 $0.73 $0.73 $818.78 $823.58 $612.11 $612.11 $1.00 $1,000.00 $1,000.00 $1,000.00 Average Price of Shares Disposed ($58,845,206.70) ($6,497,444.97) ($129,480.00) ($3,767,058.75) ($1,618,500.00) ($419,532.41) ($64,571.42) ($136,537.28) ($3,354,472.72) (Realized Loss) / (Write-off) Gain5 $600,000.00 $458,000.00 $172,000,000.00 $4,922,044.87 $3,372.19 $91,535.40 $688,041.09 $40,563.34 $311,943.55 $132,000.00 $995,000.00 $1,307,000.00 Warrant Sales $26.33 $51.99 $16.70 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $4,824,285.82 $1,475,277.61 $67,690,844.00 $2,631,196.78 $5,541,380.06 $577,205.80 $832,487.50 $512,338.96 $2,800,592.33 $4,739,583.33 Dividend/Interest Paid to Treasury 356 APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 $8,750,000.00 $4,000,000.00 $35,000,000.00 $34,000,000.00 $7,500,000.00 $17,949,000.00 $20,100,000.00 $3,900,000.00 $306,546,000.00 $23,235,000.00 $15,000,000.00 11/6/2009 3/26/2013 2/8/2013 2/7/2013 2/6/2013 $4,609,000.00 $3,535,000.00 1/30/2009 F & M Bancshares, Inc., Trezevant, TN8,14,18 $9,405,391.28 $144,202.50 $2,734,192.50 $4,797,325.00 $10,503,000.00 8/13/2012 9/11/2012 $420,995.25 $8,725,367.25 8/10/2012 8/9/2012 $481,387.50 $47,294,527.29 $10,394,872.56 $4,680,205.56 $42,801,933.33 $39,415,959.89 $8,545,904.67 $23,397,494.08 $28,568,653.60 $352,722,420.00 $44,847,153.76 Capital Repayment / Disposition / Auction3,5 $17,505,000.00 $43,000,000.00 $8,750,000.00 $4,000,000.00 $35,000,000.00 $34,000,000.00 $7,500,000.00 $17,949,000.00 $24,000,000.00 $306,546,000.00 $38,235,000.00 Total Cash Back2 8/8/2012 Exchange Bank, Santa Rosa, CA8,14 Equity Bancshares, Inc., Wichita, KS8,44,73 Enterprise Financial Services Group, Inc., Allison Park, PA8,14,44 Enterprise Financial Services Corp., St. Louis, MO11 Encore Bancshares Inc., Houston, TX45 Emclaire Financial Corp., Emlenton, PA44 ECB Bancorp, Inc/ Crescent Financial Bancshares, Inc. VantageSouth Bancshares, Inc., Engelhard, NC89 Eastern Virginia Bankshares, Inc., Tappahannock, VA East West Bancorp, Pasadena, CA11,16 Eagle Bancorp, Inc., Bethesda, MD12,44 Investment Amount (CONTINUED) 8/3/2012 12/19/2008 8/11/2011 1/30/2009 8/25/2011 6/12/2009 1/9/2013 11/7/2012 12/19/2008 11/23/2011 9/27/2011 12/5/2008 12/7/2011 8/18/2011 12/23/2008 6/11/2014 2/19/2014 1/16/2009 5/13/2015 1/6/2014 10/21/2013 10/18/2013 1/9/2009 1/26/2011 12/29/2010 12/5/2008 11/23/2011 7/14/2011 12/23/2009 12/5/2008 Transactions Date Institution CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($76,757.21) ($376,357.50) ($264,986.40) Auction Fee4 153 2,901 5,090 12,000 481 9,969 20,000 550 8,750 4,000 35,000 34,000 7,500 17,949 20,100 3,900 306,546 23,235 15,000 Number of Shares Disposed $942.50 $942.50 $942.50 $875.25 $875.25 $875.25 $875.25 $875.25 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,104.11 $1,104.11 $1,000.00 $1,000.00 $1,000.00 Average Price of Shares Disposed ($8,797.50) ($166,807.50) ($292,675.00) ($1,497,000.00) ($60,004.75) ($1,243,632.75) ($2,495,000.00) ($68,612.50) (Realized Loss) / (Write-off) $2,092,611.00 $406,029.00 Gain5 $222,007.50 $22,930.78 $120,386.57 $1,910,898.00 $438,000.00 $200,000.00 $1,006,100.00 $637,071.00 $51,113.00 $871,000.00 $115,000.00 $14,500,000.00 $2,794,422.00 Warrant Sales $7.45 $25.17 $22.90 $6.75 $38.42 $45.50 Stock Price as of 9/30/2015 324,074 Current Outstanding Warrants Continued on next page $1,584,420.99 $7,980,919.44 $5,624,635.86 $480,205.56 $6,795,833.33 $4,778,888.89 $994,791.67 $2,220,000.00 $31,676,420.00 $3,817,731.76 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 357 $3,035,000.00 $21,042,000.00 FBHC Holding Company, Boulder, CO15,17 FC Holdings, Inc., Houston, TX8,14 12/29/2009 3/26/2013 2/20/2013 6/26/2009 3/9/2011 7/21/2011 $700,000.00 $12,000,000.00 $30,000,000.00 $8,752,000.00 $442,000.00 $11,000,000.00 $100,000,000.00 $17,243,000.00 $2,993,000.00 $17,000,000.00 Farmers State Bankshares, Inc., Holton, KS8,14,45 Farmers Enterprises, Inc., Great Bend, KS14,15 Farmers Capital Bank Corporation, Frankfort, KY Farmers Bank, Windsor, VA8,11 Farmers & Merchants Financial Corporation, Argonia, KS8,14 Farmers & Merchants Bancshares, Inc., Houston, TX8,120 F.N.B. Corporation, Hermitage, PA11 F&M Financial Corporation, Clarksville, TN8,14 F&C Bancorp Inc., Holden, MO14,15 F & M Financial Corporation, Salisbury, NC8,14 Investment Amount 3/20/2009 1/11/2013 11/13/2012 11/9/2012 11/8/2012 6/19/2009 7/18/2012 6/19/2012 1/9/2009 12/31/2013 1/9/2013 1/23/2009 7/26/2013 6/24/2013 3/20/2009 7/15/2015 3/6/2009 11/23/2011 9/9/2009 1/9/2009 11/16/2012 9/21/2012 9/20/2012 9/19/2012 2/13/2009 1/11/2013 11/13/2012 11/8/2012 5/22/2009 11/16/2012 9/20/2012 9/19/2012 9/18/2012 2/6/2009 Transactions Date Institution $19,836,630.66 $804,592.16 $830,173.67 $15,452,669.34 $27,105,349.50 $11,396,202.11 $500,199.14 $15,971,339.07 $104,023,433.33 $17,573,762.97 $3,842,376.65 $20,119,744.45 Total Cash Back2 (CONTINUED) $18,874,674.00 $650,000.00 $700,000.00 $11,458,510.00 $96,290.00 $22,196,700.00 $5,689,000.00 $3,063,000.00 $425,425.00 $11,000,000.00 $100,000,000.00 $13,421,362.50 $157,500.00 $1,278,999.18 $1,590,599.43 $13,485,250.00 $2,664,750.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($188,746.74) ($115,548.00) ($332,950.50) ($25,000.00) ($135,788.63) ($25,000.00) ($161,500.00) Auction Fee4 21,042 3,035,000 700 11,900,000 100,000 30,000 5,689 3,063 442 11,000 100,000 17,043 200 1,334,000 1,659,000 14,195 2,805 Number of Shares Disposed $897.00 $0.21 $1,000.00 $0.96 $0.96 $739.89 $1,000.00 $1,000.00 $962.50 $1,000.00 $1,000.00 $787.50 $787.50 $0.96 $0.96 $950.00 $950.00 Average Price of Shares Disposed ($2,167,326.00) ($2,385,000.00) ($441,490.00) ($3,710.00) ($7,803,300.00) ($16,575.00) ($3,621,637.50) ($42,500.00) ($55,000.82) ($68,400.57) ($709,750.00) ($140,250.00) (Realized Loss) / (Write-off) Gain5 $994,613.40 $40,000.00 $552,936.00 $37,387.14 $75,000.00 $438,000.00 ($2,835.00) $550,000.00 $690,100.00 $645,975.00 $96,465.60 $125,000.00 $638,460.90 $136,813.05 Warrant Sales $24.85 $12.95 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $156,090.00 $154,592.16 $90,173.67 $3,423,094.20 $5,166,600.00 $2,206,202.11 $102,609.14 $4,421,339.07 $9,632,883.55 $3,388,248.50 $872,778.04 $3,355,970.50 Dividend/Interest Paid to Treasury 358 APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 $5,000,000.00 $3,742,000.00 Financial Security Corporation, Basin, WY8,14,45 Financial Services of Winger, Inc., Winger, MN15,17,44 7/31/2009 9/1/2011 7/21/2011 5/11/2011 3/30/2011 2/13/2009 $3,408,000,000.00 $48,200,000.00 $37,515,000.00 Fifth Third Bancorp, Cincinnati, OH11 Fidelity Southern Corporation, Atlanta, GA Financial Institutions, Inc., Warsaw, NY11 2/23/2011 12/23/2008 3/16/2011 2/2/2011 12/31/2008 5/28/2015 7/3/2012 12/19/2008 9/11/2012 8/10/2012 8/9/2012 8/8/2012 8/7/2012 $4,487,322.46 $5,914,597.33 $43,787,611.61 $4,043,972,602.67 $82,715,982.47 $3,742,000.00 $5,000,000.00 $25,010,000.00 $12,505,000.00 $3,408,000,000.00 $43,408,920.00 ($651,133.80) 3,742,000 5,000 5,002 2,501 136,320 48,200 320 29,236 $285,203.20 $26,056,877.36 3,591 335 30 135 6,218 439 7,000 3,942,000 6,315 974 9,294 Number of Shares Disposed 2,635 ($323,366.95) ($70,490.97) ($65,812.38) Auction Fee4 $2,348,470.10 $3,200,514.66 $298,572.10 8/3/2012 $6,218,000.00 $439,000.00 $7,000,000.00 $3,942,000.00 $5,701,813.50 $879,424.60 $9,294,000.00 $26,737.80 $40,966,780.82 $7,220,908.83 $10,634,864.33 $5,404,924.35 $8,441,836.26 $11,156,234.25 Capital Repayment / Disposition / Auction3,5 $120,320.10 $36,282,000.00 $6,657,000.00 $7,000,000.00 $3,942,000.00 $7,289,000.00 $9,294,000.00 Total Cash Back2 8/2/2012 Fidelity Financial Corporation, Wichita, KS8,14 Fidelity Federal Bancorp, Evansville, IN8,17 Fidelity Bancorp, Inc./WesBanco, Inc., Pittsburgh, PA77 Fidelity Bancorp, Inc, Baton Rouge, LA11,15,44 FFW Corporation, Wabash, IN8,14 FCB Bancorp, Inc., Louisville, KY8,14,45 Investment Amount (CONTINUED) 8/1/2012 12/19/2008 9/12/2013 7/22/2013 7/19/2013 11/13/2009 5/6/2015 11/30/2012 12/12/2008 3/27/2013 5/29/2009 1/11/2013 11/30/2012 11/28/2012 12/19/2008 9/22/2011 12/19/2008 Transactions Date Institution CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 $1.00 $1,000.00 $5,000.00 $5,000.00 $25,000.00 $900.60 $891.26 $891.26 $891.26 $891.26 $891.26 $891.26 $891.26 $1,058.90 $1,058.90 $1,000.00 $1.00 $902.90 $902.90 $1,000.00 Average Price of Shares Disposed ($4,791,080.00) ($34,796.80) ($3,179,122.64) ($286,529.90) ($390,485.34) ($36,427.90) ($3,262.20) ($14,679.90) ($613,186.50) ($94,575.40) (Realized Loss) / (Write-off) $366,240.20 $25,857.10 Gain5 $112,000.00 $250,000.00 $2,079,962.50 $280,025,936.00 $31,429,313.38 $176,884.89 $1,210,615.36 $167,374.94 $170,227.93 $242,302.50 $2,246,531.00 $197,000.00 $358,558.20 $465,000.00 Warrant Sales $24.78 $18.91 $21.14 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $633,322.46 $664,597.33 $4,192,649.11 $355,946,666.67 $8,528,882.89 $7,228,349.33 $1,265,924.35 $1,567,852.34 $1,397,234.25 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 359 11/23/2011 8/25/2011 3/6/2009 First Busey Corporation, Urbana, IL45 $100,000,000.00 $112,410,898.89 $100,000,000.00 $3,226,801.50 9/25/2013 10/29/2013 $3,209,702.21 9/24/2013 9/12/2013 $87,028,900.00 8/12/2013 $10,000,000.00 $3,345,000.00 $105,000.00 $119,071,500.97 $11,941,222.22 $3,960,105.00 $3,675,000.00 $3,675,000.00 $12,171,950.00 $295,400,000.00 $10,000,000.00 $3,345,000.00 $9,050,516.50 8/9/2013 First Banks, Inc., Clayton, MO8 First Bankers Trustshares, Inc., Quincy, IL8,14,45 First Bank of Charleston, Inc., Charleston, WV8,14,45 $7,350,000.00 $8,514,153.00 $81,000,000.00 $65,000,000.00 $17,000,000.00 $35,000,000.00 $15,000,000.00 $2,395,742.20 8/8/2013 12/31/2008 9/8/2011 1/16/2009 7/21/2011 2/6/2009 10/24/2012 1/18/2012 2/20/2009 First BancTrust Corporation, Paris, IL8,11,14 $690,723.49 $366,469.68 $29,708,351.90 $174,125,772.24 $74,518,906.44 $18,204,166.78 $65,558,530.56 $3,003,674.75 $1,289,436.37 Capital Repayment / Disposition / Auction3,5 3/6/2015 $400,000,000.00 $65,000,000.00 $17,000,000.00 $50,000,000.00 $3,422,000.00 $1,177,000.00 Total Cash Back2 $22,063,492.11 First BanCorp, San Juan, PR34,118,121 First Bancorp, Troy, NC45 First American International Corp., Brooklyn, NY9,11,36 First American Bank Corporation, Elk Grove Village, IL11,14,15 First Alliance Bancshares, Inc., Cordova, TN8,14 First Advantage Bancshares Inc., Coon Rapids, MN8,14 Investment Amount (CONTINUED) 12/5/2014 9/13/2013 8/16/2013 1/16/2009 11/23/2011 9/1/2011 1/9/2009 8/13/2010 3/13/2009 12/11/2012 12/21/2011 7/24/2009 3/26/2013 1/11/2013 12/20/2012 6/26/2009 3/26/2013 1/11/2013 12/11/2012 12/10/2012 5/22/2009 Transactions Date Institution CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($64,365.04) ($993,058.50) ($85,000.00) ($74,611.09) ($1,042.58) ($23,957.42) ($14,428.07) ($10,571.93) Auction Fee4 100,000 5,850 5,819 248,654 34,777 300 10,000 3,345 3,675 3,675 5,000,000 4,388,888 1,261,356 12,000,000 65,000 17,000 35,000,000 15,000,000 3,422 408 769 Number of Shares Disposed $1,000.00 $551.59 $551.59 $350.00 $350.00 $350.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $5.94 $5.03 $6.75 $6.75 $1,000.00 $1,000.00 $1.00 $1.00 $700.10 $898.21 $898.21 Average Price of Shares Disposed ($2,623,198.50) ($2,609,297.79) ($161,625,100.00) ($22,605,050.00) ($195,000.00) ($31,004,790.15) ($31,229,144.01) ($6,802,024.20) ($64,711,540.92) ($1,026,257.80) ($41,530.32) ($78,276.51) (Realized Loss) / (Write-off) Gain5 $63,677.00 $5,919,151.59 $2,430,181.71 $500,000.00 $167,000.00 $368,000.00 $924,462.00 $2,500,000.00 $94,701.71 $26,318.80 $2,979.49 Warrant Sales $19.87 $24.50 $15.80 $3.56 $17.00 Stock Price as of 9/30/2015 389,484 616,308 Current Outstanding Warrants Continued on next page $12,347,221.89 $6,037,237.50 $1,441,222.22 $448,105.00 $1,332,516.50 $32,999,386.32 $8,594,444.44 $1,204,166.78 $13,058,530.56 $538,230.84 $227,944.91 Dividend/Interest Paid to Treasury 360 APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 $2,211,000.00 $326,250.00 ($143,550.00) ($167,326.81) 500 11,350 10,685 14,800 41,500 4,500 23,184 5,036 10,958 25,000 2,743 1,500 Number of Shares Disposed $652.50 $982.83 $725.72 $1,000.00 $1,000.00 $1,000.00 $906.00 $1,000.00 $920.11 $1,000.00 $915.20 $915.39 Average Price of Shares Disposed ($173,750.00) ($194,879.50) ($2,930,732.52) ($2,179,296.00) ($875,434.62) ($232,600.16) ($126,916.00) (Realized Loss) / (Write-off) Gain5 $297,500.00 $740,000.00 $30,600.00 $225,000.00 $563,174.00 $110,000.00 $266,041.78 $599,042.00 $90,461.65 Warrant Sales 3/11/2015 6/19/2012 12/5/2008 First Defiance Financial Corp., Defiance, OH $37,000,000.00 $53,610,300.92 $35,618,420.00 9/21/2012 11/16/2012 $3,051,090.00 $10,977,660.00 9/20/2012 9/19/2012 8/10/2012 ($534,276.30) 4,676 37,000 16,824 $962.66 $652.50 $652.50 ($1,381,580.00) ($5,846,340.00) ($1,624,910.00) $11,979,295.00 $209,563.20 $70,727.58 $18,252,479.06 $11,155,120.50 ($315,070.56) ($151,238.48) ($33,333.33) Auction Fee4 $440,082.72 $22,000,000.00 $13,425,979.36 $7,754,267.48 $14,800,000.00 $41,500,000.00 $4,500,000.00 $21,004,704.00 $5,036,000.00 $10,082,565.38 $25,000,000.00 $2,510,399.84 $1,373,084.00 Capital Repayment / Disposition / Auction3,5 8/9/2012 First Community Financial Partners, Inc., Joliet, IL8 $11,350,000.00 $8,499,249.92 $19,957,763.30 $42,839,002.78 $5,339,487.75 $25,245,684.71 $5,446,642.94 $11,956,712.44 $28,810,847.55 $4,693,275.61 Total Cash Back2 (CONTINUED) 8/8/2012 12/11/2009 11/1/2012 8/29/2012 11/21/2008 5/31/2011 First Community Corporation, Lexington, SC $10,685,000.00 First Community Bank Corporation of America, Pinellas Park, FL 12/23/2008 7/16/2014 $14,800,000.00 $41,500,000.00 $4,500,000.00 $23,184,000.00 $2,836,000.00 $2,200,000.00 $10,958,000.00 $25,000,000.00 $2,032,000.00 First Commuity Bancshares, Inc./ Equity Bancshares, Inc., Wichita, KS8,72 First Community Bancshares Inc., Bluefield, VA12 First Colebrook Bancorp, Inc., Colebrook, NH8,14,44 First Citizens Banc Corp, Sandusky, OH First Choice Bank, Cerritos, CA8,11,14,18,36 First Capital Bancorp, Inc., Glen Allen, VA First California Financial Group, Inc, Westlake Village, CA45 First Business Bank, National Association/ Bank of Southern California, N.A. San Diego, CA8,14,18 Investment Amount 5/15/2009 11/22/2011 7/8/2009 11/21/2008 9/22/2011 3/20/2009 9/5/2012 7/3/2012 1/23/2009 9/24/2010 12/22/2009 2/13/2009 2/6/2013 6/19/2012 4/3/2009 8/24/2011 7/14/2011 12/19/2008 1/11/2013 12/20/2012 12/19/2012 12/11/2009 4/10/2009 Transactions Date Institution CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 $36.56 $12.38 $17.90 $10.13 $4.78 $42.81 Stock Price as of 9/30/2015 469,312 250,947 Current Outstanding Warrants Continued on next page $6,546,862.22 $3,320,655.56 $2,140,685.67 $744,982.44 $1,308,402.78 $614,487.75 $3,992,877.27 $300,642.94 $1,759,343.76 $3,211,805.55 $752,663.45 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 361 4/7/2010 12/12/2008 9/12/2013 8/12/2013 3/13/2009 3/26/2013 1/11/2013 12/20/2012 8/28/2009 3/9/2011 12/22/2010 11/14/2008 9/22/2011 8/28/2009 1/11/2013 10/31/2012 10/29/2012 2/27/2009 1/11/2013 11/9/2012 12/22/2009 7/1/2015 5/31/2013 4/29/2013 1/9/2009 5/22/2013 4/3/2012 12/5/2008 9/22/2011 6/12/2009 6/8/2010 2/24/2010 12/23/2008 5/3/2011 3/6/2009 2/15/2012 2/6/2009 9/17/2010 9/11/2009 $16,500,000.00 First Federal Bancshares of Arkansas, Inc., Harrison, AR First Litchfield Financial Corporation, Litchfield, CT11 First Intercontinental Bank, Doraville, GA8 First Independence Corporation, Detroit, MI8,9 First Horizon National Corporation, Memphis, TN11 First Guaranty Bancshares, Inc., Hammond, LA8,14,44 First Gothenburg Bancshares, Inc., Gothenburg, NE8,14 First Freedom Bancshares, Inc., Lebanon, TN9,17 First Financial Service Corporation, Elizabethtown, KY First Financial Holdings Inc., Charleston, SC First Financial Bancshares, Inc., Lawrence, KS15,17,44 $10,000,000.00 $6,398,000.00 $3,223,000.00 $866,540,000.00 $20,699,000.00 $7,570,000.00 $8,700,000.00 $20,000,000.00 $65,000,000.00 $3,756,000.00 $80,000,000.00 $5,000,000.00 First Express of Nebraska, Inc., Gering, NE8,11,14 First Financial Bancorp, Cincinnati, OH12,16 $7,500,000.00 Investment Amount First Eagle Bancshares, Inc., Hanover Park, IL11,15,36 Transactions Date Institution $12,147,768.63 $4,118,886.85 $2,820,256.96 $1,037,467,405.56 $24,059,476.66 $8,702,021.25 $9,522,346.17 $12,336,278.00 $68,141,972.19 $4,563,280.34 $87,644,066.10 $6,570,625.00 $6,074,313.00 $8,514,738.21 Total Cash Back2 (CONTINUED) $10,000,000.00 $3,247,112.96 $2,336,675.00 $866,540,000.00 $20,699,000.00 $6,864,647.71 $26,398.99 $8,025,750.00 $10,842,200.00 $56,778,150.00 $3,756,000.00 $80,000,000.00 $6,000,000.00 $5,000,000.00 $7,500,000.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($25,000.00) ($26,633.25) ($23,366.75) ($68,910.46) ($80,257.50) ($108,422.00) ($851,672.25) Auction Fee4 10,000 6,398 3,223 866,540 2,070 7,541 29 8,700 20,000 65,000 3,756,000 80,000 16,500 5,000 7,500,000 Number of Shares Disposed $1,000.00 $507.52 $725.00 $1,000.00 $10,000.00 $910.31 $910.31 $922.50 $542.11 $873.51 $1.00 $1,000.00 $363.64 $1,000.00 $1.00 Average Price of Shares Disposed ($3,150,887.04) ($886,325.00) ($676,352.29) ($2,601.01) ($674,250.00) ($9,157,800.00) ($8,221,850.00) ($10,500,000.00) (Realized Loss) / (Write-off) Gain5 $1,488,046.41 $139,320.00 $79,700,000.00 $1,030,000.00 $362,118.92 $256,118.75 $2,500.00 $1,400,000.00 $113,000.00 $2,966,288.32 $250,000.00 $375,000.00 Warrant Sales $14.18 $29.05 $19.08 $8.90 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $659,722.22 $757,453.89 $533,581.96 $91,227,405.56 $2,330,476.66 $1,517,766.09 $1,320,734.92 $1,600,000.00 $10,815,494.44 $694,280.34 $4,677,777.78 $570,625.00 $824,313.00 $639,738.21 Dividend/Interest Paid to Treasury 362 APPENDIX C I TRANSACTION DETAIL I OCTOBER 28, 2015 9/15/2011 12/11/2009 1/30/2009 4/9/2013 3/11/2013 3/6/2009 3/26/2013 2/8/2013 2/7/2013 First Resource Bank, Exton, PA8,14,18,44,45 First Reliance Bancshares, Inc., Florence, SC8,14 First Priority Financial Corp., Malvern, PA8,14,18 $2,417,000.00 $2,600,000.00 $15,349,000.00 $4,579,000.00 $4,596,000.00 $72,927,000.00 $19,300,000.00 $17,390,000.00 12/18/2009 First Place Financial Corp., Warren, OH73,97 First PacTrust Bancorp, Inc., Chula Vista, CA11 First Northern Community Bancorp, Dixon, CA44 $184,011,000.00 2/20/2009 10/29/2012 3/13/2009 1/5/2011 12/15/2010 11/21/2008 11/16/2011 9/15/2011 3/13/2009 6/24/2009 5/27/2009 11/21/2008 First Niagara Financial Group, Lockport, NY12,16 $17,836,000.00 First NBC Bank Holding Company, New Orleans, LA8,14,44 3/20/2009 8/4/2011 8/29/2012 $13,900,000.00 $193,000,000.00 $116,000,000.00 First National Corporation, Strasburg, VA8,14 First Midwest Bancorp, Inc., Itasca, IL11 First Merchants Corporation, Muncie, IN33,44,45 $4,797,000.00 $33,900,000.00 First Market Bank, FSB/Union First Market Bankshares Corporation, Richmond, VA11,25 First Menasha Bancshares, Inc., Neenah, WI8,14,44 $12,000,000.00 $30,000,000.00 First Manitowoc Bancorp, Inc., Manitowoc, WI8,11,14 First M&F Corporation, Kosciusko, MS11,36 Investment Amount 3/13/2009 12/21/2011 11/23/2011 12/5/2008 11/23/2011 9/22/2011 2/20/2009 9/15/2011 2/13/2009 12/7/2011 2/6/2009 5/27/2009 1/16/2009 8/30/2013 9/29/2010 2/27/2009 Transactions Date Institution $5,731,793.60 $12,994,059.00 $9,948,069.58 $7,009,094.50 $22,297,560.34 $19,943,580.33 $191,464,618.00 $21,033,989.56 $15,329,326.44 $222,528,333.33 $131,383,055.11 $5,713,865.00 $40,834,859.35 $12,837,983.33 $36,472,843.94 Total Cash Back2 (CONTINUED) $5,017,000.00 $10,431,333.89 $1,410,831.60 $6,682,192.50 $19,300,000.00 $17,390,000.00 $184,011,000.00 $17,836,000.00 $12,266,750.00 $193,000,000.00 $116,000,000.00 $4,797,000.00 $33,900,000.00 $12,000,000.00 $30,000,000.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($104,313.34) ($80,930.24) ($184,001.25) Auction Fee4 5,017 15,349 1,600 7,575 19,300 17,390 184,011 17,836 13,900 193,000 116,000 4,797 35,595 12,000 30,000 Number of Shares Disposed $1,000.00 $679.61 $881.77 $882.14 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $882.50 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 Average Price of Shares Disposed ($4,917,666.11) ($189,168.40) ($892,807.50) ($72,927,000.00) ($1,633,250.00) (Realized Loss) / (Write-off) $1,695,000.00 Gain5 $130,000.00 $624,632.45 $176,633.62 $48,083.60 $1,003,227.00 $375,000.00 $2,700,000.00 $892,000.00 $624,674.69 $900,000.00 $367,500.00 $240,000.00 $600,000.00 $4,089,510.61 Warrant Sales $5.19 $12.27 $7.95 $10.21 $8.30 $17.54 $26.22 $32.85 Stock Price as of 9/30/2015 Current Outstanding Warrants Continued on next page $584,793.60 $2,042,406.00 $1,711,258.50 $7,009,094.50 $1,994,333.34 $2,178,580.33 $4,753,618.00 $2,305,989.56 $2,621,903.00 $28,628,333.33 $15,015,555.11 $676,865.00 $237,983.33 $2,383,333.33 Dividend/Interest Paid to Treasury TRANSACTION DETAIL I APPENDIX C I OCTOBER 28, 2015 363 5/27/2009 4/22/2009 1/9/2009 7/18/2012 7/3/2012 1/30/2009 7/26/2013 6/24/2013 9/11/2012 8/10/2012 8/9/2012 12/11/2009 2/6/2009 9/29/2010 6/12/2009 5/27/2015 1/9/2015 12/4/2014 12/3/2014 1/30/2009 4/22/2009 1/23/2009 3/26/2013 2/20/2013 6/5/2009 9/15/2011 3/6/2009 4/9/2013 3/28/2013 3/27/2013 3/26/2013 3/6/2009 6/16/2010 1/30/2009 11/28/2012 9/28/2011 7/17/2009 2/20/2013 12/23/2008 4/11/2013 1/9/2009 FirstMerit Corporation, Akron, OH11 Firstbank Corporation, Alma, MI First Western Financial, Inc., Denver, CO8,14,18 First Vernon Bancshares, Inc., Vernon, AL8,11,14,36 First United Corporation, Oakland, MD First ULB Corp., Oakland, CA8,11,14 First Trust Corporation, New Orleans, LA14,15 First Texas BHC, Inc., Fort Worth, TX8,14,44 First Southwest Bancorporation, Inc., Alamosa, CO8,14 First Southern Bancorp, Inc., Boca Raton, FL8,11,14 First South Bancorp, Inc., Lexington, TN11,14,15 First Sound Bank, Seattle, WA79 First Security Group, Inc., Chattanooga, TN87 Transactions Date Institution $125,000,000.00 $33,000,000.00 $11,881,000.00 $8,559,000.00 $6,000,000.00 $30,000,000.00 $4,900,000.00 $17,969,000.00 $13,533,000.00 $5,500,000.00 $10,900,000.00 $50,000,000.00 $7,400,000.00 $33,000,000.00 Investment Amount $131,813,194.44 $38,185,560.05 $21,142,314.80 $6,662,770.42 $40,183,721.33 $5,211,020.69 $15,304,180.50 $16,072,389.00 $5,359,772.59 $12,263,468.31 $65,432,450.94 $4,030,944.44 $16,315,362.00 Total Cash Back2 (CONTINUED) $125,000,000.00 $31,053,330.00 $10,994,240.00 $62,000.00 $6,138,000.00 $6,000,000.00 $22,200,000.00 $7,800,000.00 $4,900,000.00 $13,750,058.49 $13,533,000.00 $1,800,040.00 $2,835,063.00 $315,007.00 $10,900,000.00 $36,875,000.00 $13,125,000.00 $3,700,000.00 $14,912,862.00 Capital Repayment / Disposition / Auction3,5 CPP TRANSACTIONS DETAIL, AS OF 9/30/2015 ($465,799.95) ($109,942.41) ($62,000.00) ($300,603.00) ($137,500.58) ($49,501.10) Auction Fee4 125,000 33,000 12,440 80 7,920 6,000 22,200 7,800 4,900 17,969,000 13,533 2,000 3,150 350 10,900 36,875,000 13,125,000 7,400 9,941,908 Number of Shares Disposed $1,000.00 $941.01 $883.78 $775.00 $775.00 $1,000.00 $1,002.01 $1,002.01 $1,000.00 $0.77 $1,000.00 $900.0
@FedFRASER