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Nearly $14 Billion in TARP Funds Used for Housing

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While the government has earned more than $16 billion from its investments in banks during the financial crisis, housing programs have so far cost it nearly $14 billion.

Under the
Emergency Economic Stabilization Act of 2008, $700 billion was made available through the Troubled Asset Relief Program.

The funds were intended to restore confidence in the financial system by providing assistance to financial institutions and markets, businesses, homeowners and consumers.

As the crisis subsided, the amount authorized was cut by Congress to $475 billion through the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The activity was discussed in a report from the Government Accountability Office,
TROUBLED ASSET RELIEF PROGRAM: Treasury Continues to Wind down Most Programs, but Housing Programs Remain Active.

The Capital Purchase Program, which extended $205 billion to 707 financial institutions, has earned $16 billion in income for the government as of Sept. 30, 2014.

Automobile companies received $80 billion in TARP funds through the Automotive Industry Financing Program, and lifetime income stands at a $12 billion loss.

On the $68
billion in TARP funds used for the American International Group Inc. Investment Program, losses exceed $15 billion.

Another $40 billion used for the Targeted Investment Program has yielded $4 billion in lifetime income, while $19 billion used for the Public-Private Investment Program has generated nearly $3 billion in income.

In all, the Department of the Treasury has exited four of the nine non-housing TARP programs including the AIG program and the Targeted Investment Program.

Of the $38.5 billion in TARP funds designated for housing programs, nearly $14 billion has been disbursed — including more than $9 billion for Making Home Affordable programs, almost $5 billion for the Hardest Hit Fund and less than $1 billion for the FHA Short Refinance program.

TARP-funded housing programs are ongoing. They focus on preventing avoidable foreclosures.

But the report indicated that following an increase in permanent modifications completed through Home Affordable Modification Program in early 2013, the number fell last year to the lowest level since the inception of the program.

The Treasury attributes the drop in HAMP activity to a decline in the number of loans past due at least 60 days.

“Treasury has taken steps to help more borrowers, including by extending the deadline for program applications for a third time until at least 2016,” the report stated. “Also, Treasury launched a new series of public service advertisements that were distributed through a donated media campaign.”

In all, 1.4 million first liens had been permanently modified as of Sept. 30.

Second liens extinguished through the Second Lien Modification Program number 38,480.

Through the Home Affordable Foreclosure Alternatives, there have been 162,498 short sales and 6,975 deeds-in-lieu completed.

The Principal Reduction Alternative program has provided an estimated $14.8 billion in principal reduction to borrowers.

TARP disbursements for housing programs are expected to continue for several more years.

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