Advantage Title Blog

WEDNESDAY SEP 29, 2010

BY JANNA HERRON AND ALAN ZIBEL, ASSOCIATED PRESS

JPMorgan Chase has temporarily stopped foreclosing on more than 50,000 homes so it can review documents that might contain errors.

JPMorgan’s move Wednesday makes it the second major company to take such action this month, underscoring a growing legal problem. The issue could stall an already overloaded foreclosure process.

Still, analysts don’t expect the delays to reduce the number of foreclosures over the long run.

“It will probably slow things down for a couple months while these documents are reviewed,” said Rick Sharga, a senior vice president at foreclosure listing service RealtyTrac Inc. “It won’t stop things.”

But if the problems turn up at more of the largest mortgage companies, a foreclosure crisis that’s already likely to drag on for several more years could persist even longer.

GMAC Mortgage LLC last week halted certain evictions and sales of foreclosed homes in 23 states to review those cases. The company said it found procedural errors in some foreclosure affidavits.

After GMAC’s announcement, attorneys general in California and Connecticut told the company to stop foreclosures in their states until it proves it’s complying with state law. The Ohio attorney general this week asked judges to review GMAC foreclosure cases. And in Florida, the state attorney general is investigating four law firms, two with ties to GMAC, for allegedly providing fraudulent documents in foreclosure cases.

The issue is also gaining attention on Capitol Hill. Last week, Rep. Barney Frank, D-Mass. and two other lawmakers wrote to Fannie Mae, urging the government-controlled mortgage giant to stop working with so-called “foreclosure mill” law firms under investigation for document fraud.

“Why is Fannie Mae using lawyers that are accused of regularly engaging in fraud to kick people out of their homes?” the lawmakers wrote.

A Fannie Mae spokesman said the company is reviewing the issue.

JPMorgan acknowledged Wednesday that its employees signed some affidavits about loan documents without personally verifying the files. These affidavits verifies the accuracy of the loan information, including who owns the mortgage.

JPMorgan spokesman Kelly said the bank believes the information in the affidavits is accurate, and that the affidavits were prepared by “appropriate personnel.”

The bank asked judges not to enter judgments against homeowners facing foreclosure until it completes its review of the problem. JPMorgan expects the process to take a few weeks.

The way mortgages are packaged and sold to many investors as securities can make it hard to determine who has the right to foreclose on a homeowner.

In some states, lenders can foreclose quickly on delinquent mortgage borrowers. But 20 states use a lengthy court process for foreclosures. They require documents to verify information on the mortgage, including who owns it. Florida, New York, New Jersey and Illinois are the biggest states with this process.

Christopher Immel, a Florida lawyer who represents homeowners, said people who already have lost homes could sue their lender, alleging errors in documents.

In August, a judge in Duval County, Fla., ruled that JPMorgan could not foreclose on two homeowners. The reasoning was that Fannie Mae carried the mortgage on its books and JPMorgan Chase only collected payments on the loan. JPMorgan Chase had identified itself as the owner of the loan.

More lawsuits could come soon.

In May, JPMorgan employee Beth Ann Cottrell said in a deposition that she and her staff of eight signed about 18,000 legal documents a month without reviewing every file. In a similar testimony, GMAC employee Jeffrey Stephan said he signed 10,000 documents a month without personally verifying the mortgage information.

“It’s very realistic to believe that this is a standard practice in how they go about foreclosures in certain states,” said Immel, whose law firm took Cottrell’s and Stephan’s depositions.

by Jon Lansner, Lansner on Real Estate Blog

Orange County home prices will rise 2.2% in the year ended September 2011, according to the latest forecast from housing tracker Veros from Santa Ana.

Eric Fox, Veros’ economic modeling VP, says “affordability is the driver” that will keep local housing prices up. Previously, Veros’ forecast that home price will be up 1.8% in the year ending June 2011.

To Fox, local home affordability – a mix of depressed values and cheap mortgage rates — will largely offset the area’s weak job market. Fox also think rent-seeking investors will play a big role in supporting local home prices, as these cash-rich buyers won’t have the tall hurdles — overall angst or loan qualification challenges — that currently chill some buyers seeking their own shelter.

Nationwide, the strongest major markets by Veros’ forecasting math in the year ending September 2101 will be …

1. Houston, +3.8%
2. Dallas-Fort Worth, +2.7%
3. Amarillo, Texas,, +2.7%
4. Anchorage, +2.7%
5. Davenport, Iowa, +2.7%

Fox says in the report: “Texas is looking strong, with four of the top ten markets in the appreciation forecast … California markets are less robust than in previous quarterly updates, but remain steady.”

The weakest in Veros’ forecast for the 12 months anding Sptember 2011?

1. Port St. Lucie, Fla., -7.2%
2. Reno, -7.0%
3. Orlando, -6.3%
4. Las Vegas, -6.1%
5. Deltona, Fla.  -6.0%

Fox offer a glimmer of hope for these markets, saying “Reduced depreciation rates are better news for Florida and Nevada.”

Overall, Fox concludes: “There are tangible indications that things are getting better as time moves on.”

http://lansner.ocregister.com/2010/09/29/forecast-o-c-home-prices-up-2-2-in-year/83088/

By Ariana Eunjung Cha
Washington Post, Wednesday, September 22, 2010

Some of the nation’s largest mortgage companies used a single document processor who said he signed off on foreclosures without having read the paperwork – an admission that may open the door for homeowners across the country to challenge foreclosure proceedings.

The legal predicament compelled Ally Financial, the nation’s fourth-largest home lender, to halt evictions of homeowners in 23 states this week. Now it appears hundreds of other companies, including mortgage giants Fannie Mae and Freddie Mac, may also be affected because they use Ally to service their loans.

As head of Ally’s foreclosure document processing team, 41-year-old Jeffrey Stephan was required to review cases to make sure the proceedings were legally justified and the information was accurate. He was also required to sign the documents in the presence of a notary.

In a sworn deposition, he testified that he did neither.

The reason may be the sheer volume of the documents he had to hand-sign: 10,000 a month. Stephan had been at that job for five years.

How the nation’s foreclosure system became reliant on the tedious work of a few corporate bureaucrats is still a matter that mortgage lenders are trying to answer. While the lenders may have had legitimate cause to foreclose, the mishandling of the paperwork has given homeowners ammunition in their fight against foreclosure and has drawn the attention of state law enforcement officials.

Ally spokesman James Olecki called the problem with the documents “an important but technical defect.” He said the papers were “factually accurate” but conceded that “corrective action” may have to be taken in some cases and that others may “require court intervention.”

Olecki said the company services loans “from hundreds of different lenders,” but he declined to provide names.

Spokesmen for Fannie and Freddie confirmed Tuesday after inquiries from The Washington Post that they use Ally, formerly called GMAC, to oversee some mortgages. The companies have launched internal reviews to assess the scope of any potential issues.

Ally, Fannie and Freddie – all troubled mortgage companies that received extraordinary bailouts by the federal government during the financial crisis – declined to say how many loans might be affected. The Treasury Department, which owns a majority stake in Ally and seized Fannie and Freddie in 2008, also declined to comment.

Fannie and Freddie, created by Congress to finance mortgages and encourage homeownership, have in recent years been repossessing houses at record numbers. Fannie alone reported recently that 450,000 of its single-family loans were seriously delinquent or in the foreclosure process as of June 30. That’s nearly 5 percent of the loans it guarantees.

Lawyers defending homeowners have accused some of the nation’s largest lenders of foreclosing on families without verifying all of the information in a case, but it has been hard for them to stop foreclosure proceedings.

Ally’s moratorium comprises only the 23 states – none in the Washington area – that mandate a court judgment before a lender can take possession of a property. But if Stephan signed documents related to foreclosures in states without this requirement (it’s unclear whether he did), it could help a much broader range of borrowers.

Iowa Assistant Attorney General Patrick Madigan, chair of a national foreclosure prevention group composed of state attorneys general and lenders, said the fallout from the Ally review could be enormous because Stephan’s actions could be considered an unfair and deceptive practice.

“If servicers are submitting court documents that aren’t true or that have not been verified, that is of great concern,” Madigan said.

Stephan’s job at Ally was arguably one of the least enviable in the mortgage business: formally signing off on foreclosure papers that his company would submit to the courts to get approval to evict delinquent homeowners and resell their homes.

From his office in suburban Philadelphia, Stephan oversaw a team of 13 employees that brought documents to him for his signature at a rapid clip. Stephan did not respond to messages left at his work and home.

His official title was team leader of the document execution unit of Ally’s foreclosure department, but consumer advocates call him the company’s “super robot signor” or “affidavit slave.”

In sworn depositions taken in December and June for two separate court cases involving families trying to keep their homes, Stephan revealed his shortcuts when reviewing the files. He said he would glance at the borrower’s names, the debt owed and a few other numbers but would not read through all the documents as legally required. He would then sign them. The files were packed up in bulk and sent off for notarization several days later.

Stephan testified he did not know how the “summary judgment” affidavits he signed were used in judicial foreclosure cases.

At the rate Stephan was reviewing files, if he worked an eight-hour day he would have had an average of only 1.5 minutes for each document.

“A ridiculous amount of time for something so critically important,” said Thomas Cox, an attorney in Maine who was one of those who deposed Stephan. He added that Maine and Florida law enforcement officials are investigating the matter.

Stephan was the only employee signing papers for foreclosures that were to be submitted to courts that did not involve bankruptcies. The latter cases, which were more complex, were handled by a separate department.

Olecki said Stephan still works for Ally but added, “We cannot comment further about his position.”

While several large lenders contacted by The Post declined to talk about the document review process for foreclosures, attorneys working on behalf of homeowners said the setup at Ally was not unusual.

Christopher Immel, an attorney in Florida who deposed Stephan for a case in Palm Beach County, said he thinks Stephan was not a rogue employee but one that was performing his job responsibilities as the company told him to do.

“GMAC has a business model to do this, and Stephan was just one small part of it,” Immel said. “He was under the impression it was okay to do this.”

Realtor.org  September 17, 2010

For the last year, the real estate industry has been talking about shadow inventory and the coming flood of distressed properties. Where are they?

Here’s what’s happening, according to a recent paper by Alan Mallach, a senior fellow the Brookings Institution:

· Some delinquencies have been resolved through loan modifications or people working out the problems on their own.
· Banks are getting better at managing short sales.
· Investors are aggressively buying up properties, sometimes in bulk, directly from the banks or at courthouse auctions so they don’t hit the market.

The likeliest outcome, Mallach predicts, is a steady flow of foreclosures over a long timeframe that will prevent another crash in home prices, but will probably lead to low or no appreciation in home prices.

Source: The Wall Street Journal, Nick Timiaros (09/16/2010)

Fortune, September 17, 2010

Nin-Hai Tseng

Despite continued discouraging data from the real estate sector, a few bullish arguments are beginning to emerge. One MIT economist even believes that demand for new homes exceeds residential construction.

At a time of slumping home sales and a glut of unsold inventory, it’s hard to imagine how anyone could form a bullish take on the troubled U.S. housing market. Even though home prices have risen slightly in recent months, experts in charge of Standard & Poor’s Case-Shiller index, a crucial indicator of the health of the housing market, warned as recently as last month that the market remains weak. And some analysts think home prices could fall further by 15% to 20%.

But talk about real estate has shifted somewhat lately. It looks as if the contrarian view of the housing market is beginning to gain traction, if ever so slightly.

Credit Suisse says the worst is behind us and that fear of another hit on the housing market is just overreaction. The bank offers a few factors that could help home prices from here on out, including government support of about 70% of home mortgages that will likely keep prices from revisiting the nerve-wracking plunges seen in 2007 and 2008. Also, The Wall Street Journal’s Brett Arends earlier this week listed 10 reasons to buy a home, countering a recent Time Magazine cover story earlier this month that questioned the pros of homeownership. Arends lists everything from record low mortgage rates to savings on taxes to guarding against inflation.

All are worth noting, but one of the more striking bullish arguments come from an economist at Massachusetts Institute of Technology’s Center for Real Estate. Bill Wheaton, who thinks the housing market is poised to make a strong comeback, calls home construction “a sleeping giant that is about to wake up.”

Wheaton thinks much of the excess home inventory would either be sold, occupied or other otherwise absorbed by 2013. But from 2011 onward, demand should return to pre-recession levels. What’s more, he says, the recovery of home construction could boost overall GDP at levels unseen during recoveries after previous recessions, with the exception of the massive building that happened right after World War II.

Not just a comeback, but a strong one

“Housing construction will not only rise, but it will stay high for a while, which didn’t happen in previous recoveries,” Wheaton says, commenting on a paper he wrote for the center in 2009. “It won’t just be a one or two year blip.”

So is Wheaton really onto something, especially at a time when so many people are jobless and housing units sit empty — an unknown number of which could eventually fall to foreclosure?

The crux of Wheaton’s argument lies in the rate of residential construction today. It’s been historically low – so low that he believes demand is actually exceeding the level of building going on. This helps set the grooves for a relatively large comeback in residential investment.

Here’s how Wheaton backs the imbalance of demand for housing units and residential construction.

He estimates that housing demand in 2009 was at about 1.1 million units – more than twice construction at the time. At this rate, the excess inventory will eventually be absorbed. “It’s going to be a long time before construction picks up with demand,” Wheaton says, adding that this should help housing prices. Foreclosures won’t stop anytime soon, he says, but demand will return to a more normal level, clearing out the inventory and eventually sparking more new construction.

Housing construction could hugely drive America’s economic growth over the next few years, Wheaton says. Residential investment as a share of GDP is relatively small, averaging about 3% to 4%. But given that there’s so little building going on today, it’s plausible housing construction could add an average of 0.7% to GDP growth per year over five years – a level far greater than what has been seen during recoveries of previous downturns.

Some might think Wheaton sounds way too bullish given what most experts are saying about America’s housing rut. He could be wrong. He might only be half-right. But the bull’s side is worth hearing as much as the bear’s.

CNNMoney

By Les Christie, September 16, 2010  CNNMoney.com

NEW YORK (CNNMoney.com) — The foreclosure crisis has entered a new phase: The number of properties entering the foreclosure process has dropped, and now nearly matches the number of repossessions.

The number of homeowners falling enough behind on their loans to attract initial notices of default was down 30% in August, RealtyTrac said Thursday. Eventually, that should translate into fewer people losing their homes.

But lenders repossessed more than 95,000 homes — a record — and that was up from 76,000 a year ago.

RealtyTrac spokesman, Rick Sharga, said the initial default rate should be higher, given the numbers of borrowers who have missed one or two payments. Normally, when a third payment is missed, lenders take immediate action.

“It appears that lenders are allowing delinquencies to go on longer before they issue notices of default,” he said.

Lenders may delay filing for a couple of reasons. In some cases, a notice of default puts lenders on the clock; regulations force them to foreclose within a certain time frame, sometimes before they want to.

Second, borrowers might vacate their homes when they receive default notices, leaving the houses empty, subject to vandalism, and forcing lenders to take over the expense of maintaining them.

However, once lenders have begun the initial foreclosure process, they are moving quickly to repossession.

That’s in part because as housing markets have improved, as it has in California, lenders are able to resell foreclosed homes more quickly and avoid further losses.

In other markets, according to Sharga, they may take homes back but not necessarily put them on the market again right away. That may represent a deliberate effort to manage the flow of foreclosures to prevent further erosion of home prices.

Not only would a flood of properties and lower prices hurt lenders’ profits, it would leave more mortgage borrowers owing more than their homes are worth. As more homeowners plunge underwater, more would default, causing a new round of home price drops and still more foreclosures.

For the 44th straight month, Nevada led all states in the rate of foreclosure filings. One in every 84 households there received some kind of filing during the month, more than four times the national average.

The other “sand states,” Florida (one in 155 households), Arizona (one in 165) and California (one in 194) followed in a familiar foreclosure pecking order.

All of the top 10 metro area hot spots recorded drops in foreclosure activity during August. In the worst hit city, Las Vegas, filings dropped 25% year-over-year but still came to one for every 73 households.

Modesto and Stockton, both medium-sized cities in California’s Central Valley, closely trailed Las Vegas in filing rate. Rounding out the first five metro areas were Cape Coral and Miami.

By Les Christie, CNN Money

September 15, 2010

NEW YORK (CNNMoney.com) — The national housing market is shrouded in uncertainty. But in California, there are glimmers of stability.

Home prices are rising in virtually every corner of the state. They’ve climbed for nine consecutive months, and in July posted a 10.4% gain year-over-year. That puts the state’s median price at $315,000 — nearly twice the national median of $183,000.

And the news is even better in coastal cities.

San Francisco posted the biggest gain of any U.S. metro over the past year, rising 14.3%. The median price there is now more than $607,000. Meanwhile, San Diego has climbed 11.2% (median price: $389,000) and Los Angeles jumped 9.2% (median price: $345,000).

Meanwhile, Florida, Arizona and Nevada — California’s erstwhile bubble-state partners — continue to struggle. So where is the Golden State’s strength coming from?

“I think it comes from the fact that prices went down so far and so quick,” said Lesley Appleton-Young, California Association of Realtors’ chief economist. “That left a lot of people here saying, ‘Wow, affordable California housing.’”

However, a quick home price rebound was delayed by the crush of foreclosures that accompanied the subprime mortgage meltdown. California real estate had become so expensive that a basic single-family home required many buyers to overextend themselves with exotic loans.

That is no longer the case. Most of the subprime-related distressed properties have been flushed from the system. And when a foreclosure does hit the market, it’s snapped up. The median days it took to sell a home in July was just 44 — lightening fast.

“It’s the dearth of supply for distressed properties that has put pressure on home prices,” said Appleton-Young. “More than half the homes on the market last year drew multiple offers.”

Plus, the California economy is picking up. Even in a recession, it has remained one of the world’s 10 largest economies, mainly because it is driven by every major industry — aerospace, tech, software, finance, agriculture, tourism. So as more of those industries recover and employment picks up, demand for housing will jump.

“California is a much larger, stronger and more diversified economy than the other [bubble] states,” according to Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA.

Another factor that has helped lift prices is a trend toward more short sales. Fewer of the distressed properties are going all the way through the foreclosure process. “The shift to short sales in itself would increase home prices,” said Mark Goldman, who teaches real estate at San Diego State University.

That’s because short sellers usually occupy and take care of the homes until they’re sold, leaving the properties in better condition and worth more than similar foreclosed homes.

Goldman added that California markets are, generally, more constrained than any of the other bubble states. Florida and Nevada, for example, still have room to develop and grow in most areas. But the lack of developable land is especially acute in California, pushing home prices up.

Finally, the California state government has not sat idle. “California provided markets with more significant price support,” he said, “That played a role in elevating prices.”

The state support came in the form of tax credits of up to $10,000 for first-time homebuyers and buyers of new homes. Some purchasers were able to combine the state credit with one from the federal government to reduce their costs by $18,000.

For home sellers in other states, what’s happening in California is encouraging. Trends often begin on the coast, so they’re hoping the recovery will roll eastward.

By NICK TIMIRAOS, The Wall Street Journal Sept 13^th 2010

The speed at which house prices fall over the next few months could depend less on mortgage rates and Americans’ appetite for home buying than on how banks decide to manage the huge number of foreclosed homes they own or may take from delinquent borrowers in the near future.

Unlike home owners, banks often are much quicker to slash prices to unload properties quickly.

The upshot is that, the more homes being sold by lenders, the faster prices tend to fall. That pattern was clear over the past two years: Price declines that began four years ago accelerated rapidly in 2008 as banks dumped foreclosed properties at fire-sale prices. By January 2009, the share of distressed sales had soared to 45% of all sales nationally; it was even higher in hard-hit markets such as Phoenix, according to analysts at Barclays Capital.

Even though mortgage defaults kept mounting, housing markets began to stabilize early last year as low prices and government interventions broke the downward spiral. Policy makers spurred demand for homes by holding down mortgage rates, offering tax credits for buyers, and extending low-down-payment loans through the Federal Housing Administration.

The government also attacked the supply problem. Regulators relaxed mark-to-market accounting rules, giving banks more flexibility in valuing certain real-estate assets and removing some of the impetus for banks to quickly foreclose. Meanwhile, the Obama administration put in place an ambitious program to modify mortgages.

The Home Affordable Modification Program has fallen short of its goals. So far, fewer than 500,000 loans have been modified, below the target of three million to four million. Yet the program served as a “closet moratorium” on foreclosures that stanched the flow of bank-owned homes to the market, said Ronald Temple, portfolio manager at Lazard Asset Management.

The result: The share of distressed sales fell by November to 25% of home sales, and prices stabilized. After rising in the winter, the distressed share fell to 22% in June, before bouncing to 30% in July.

The problem is that these measures are wearing off. Demand plunged this summer after tax credits expired, and unsold homes are piling up. More foreclosures could move onto the market as borrowers fall out of the loan-modification program.

“We see the perfect storm brewing with rising supply and falling demand,” said Ivy Zelman, chief executive of research firm Zelman & Associates and one of the first to warn of trouble five years ago. She estimated that distressed sales could account for half of the market by year-end if traditional sales didn’t rebound.

The market does have some tailwinds: Housing starts are at all-time lows. Banks have hired more staff to manage problem loans and government entities such as Fannie Mae and Freddie Mac that own a growing share of foreclosures are less likely to deluge the market.

The next leg down in prices “isn’t going to be the foreclosure-induced freefall where you just had inventory coming out the wazoo, and it was going to be sold one way or the other,” said Glenn Kelman, chief executive of Redfin Corp., a real-estate brokerage.

Prices also have come down so much already they have less distance to fall. During the housing boom, prices inflated much faster than incomes rose, thanks to speculation and lax lending. The ratio of home prices to annual incomes reached 1.6 at the end of June, which is below the ratio of 1.88 from 1989 to 2003, according to Moody’s Analytics.

By those metrics, prices are actually undervalued in markets that have already seen huge declines, such as Las Vegas, Phoenix and Los Angeles. But Moody’s data show that prices remain “significantly overvalued” elsewhere, including Boston; New York; Seattle; Orange County, Calif., and Charlotte, N.C. Markets in both camps face supply imbalances that will pressure prices for years.

The fastest cure for housing would be job creation because it would boost demand for homes while putting delinquent borrowers back on solid footing.

But if that doesn’t materialize, policy makers face a thorny question: whether to intervene if price declines accelerate beyond the 5% to 10% that most economists expect. In recent weeks, the White House has been surveying industry analysts on how to manage the inventory overhang.

Analysts at Barclays Capital estimate that some four million loans are in some stage of foreclosure or are at least 90 days past due, down slightly from a January peak.

While more tax credits aren’t likely, policy makers could still attack the supply problem by, for example, taking foreclosed homes off the market and renting them out.

Ultimately, market fundamentals will prevail “and any attempt to get around that will only be short-term,” said Susan Wachter, a professor of real estate at the University of Pennsylvania’s Wharton School. But officials should be prepared to intervene anyway, she said, if psychology spurs a downward spiral “where price declines are feeding further price declines.”

That leaves few attractive options. Prolonged intervention could backfire by creating uncertainty that keeps buyers on the sidelines. Extending foreclosure timelines also risks inducing more borrowers to default and live rent-free.

Letting the market take its medicine sounds more appealing than it did 18 months ago. But it risks saddling taxpayers and the banking system with billions more in losses and trapping more borrowers in homes on which they owe more than the house is worth.

DSNews.com 09/07/2010 By: Carrie Bay

Tuesday marked the start of a new, targeted government housing program designed to help the millions of Americans who, in the wake of plummeting property values, owe more on the mortgage than their home is worth.

 The government’s mortgage insurer, the Federal Housing Administration, is at the center of the new program for underwater homeowners. FHA is now offering certain non-FHA borrowers with negative equity, who are current on their existing mortgage, the opportunity to refinance into a new FHA-insured loan, as long as their existing lien holders agree to write off at least 10 percent of the unpaid principal balance on the first mortgage.

Officials have suggested that between 500,000 and 1.5 million underwater borrowers could receive a new, more sustainable mortgage through the FHA Short Refinance option.

But analysts say because participation in the program is voluntary and requires the consent of all lien holders, they expect significantly smaller results. Barclays Capital estimates that the new FHA refinancing program will only reach 200,000 to 300,000 homeowners.

The latest data from CoreLogic shows that some 11 million borrowers were in a negative equity position as of the end of June. That equates to 23 percent of all U.S. residential properties with a mortgage.

The FHA Short Refinance option, originally announced in March, is aimed at providing some mortgage relief to homeowners whose biggest investment – their home – has left them with a huge equity gap because their local markets saw declines in home values.

Homeowner advocates and even government watchdog groups have been imploring the administration to tackle the underwater mortgage issue for some time now. Studies have shown that severe negative equity can be a strong default trigger. By getting in front of the problem early with a solution, while these homeowners are still current, the administration is hoping to fend off a new round of foreclosures.

To facilitate the refinancing of new FHA-insured loans under the program, the U.S. Department of Treasury says it will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens.

The government has earmarked $14 billion in Troubled Asset Relief Program (TARP) funds to support the program.