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» VISIT US ONLINE @ DSNEWS.COM 57 TREASURY RECEIVES FINAL TARP PAYMENT FROM ONE OF LARGEST REMAINING BANKS Popular, Inc., Puerto Rico's largest bank, began its exit from the Troubled Asset Relief Program (TARP) as the Department of the Treasury an- nounced that it had accepted the final repayment of $946 million. e final payment is actually more than the $935 million that the bank initially received in August of 2009 as part of the Capital Purchase Program (CPP). To date, Popular has paid $1.22 billion in principal and interest. ey repaid the re- mainder of the CPP funds lent by the government with a mixture of financing and internal liquidity. Prior to the payment, TARP was the largest bank with outstanding CPP funds and the second largest in the TARP overall, second only to Ally bank. Ally has paid off all of its CPP funds but the government still maintains a financial stake in the bank. On the spectrum of actions taken by the fed- eral government to stave off a complete financial collapse during the crisis of the late 2000's, TARP is generally seen as one of the more effective rem- edies that the federal government implemented. e so-called "bailout" of the banking system, opposed by many at the time and in subsequent years, is credited by economists for the preservation of the system as we know it. e government has actually received a signifi- cant profit from TARP investments. Including the proceeds from Popular's repayment, the Treasury has now recovered more than $274.5 billion from TARP's bank programs through repayments, dividends, interest, and other income – compared to the $245 billion initially invested. "Popular's repayment is another significant milestone in the Treasury's reduction of the Troubled Asset Relief Program (TARP), a key part of the administration's effort to stabilize the financial system during the financial crisis and avert a second Great Depression," said Acting Assistant Secretary Tim Bowler. "[e] Treasury has now recovered nearly $30 billion more than it disbursed through the bank support programs. We will continue to evaluate strategies to wind down the remaining investments, balancing the speed of exit with maximizing the return to taxpayers." CFPB ISSUES RULING TO KEEP HEIRS FROM FALLING INTO FORECLOSURE When a borrower dies, the passing of property to the remaining family members can be a complicated process. Even if there are no issues with the borrower's estate, there can be issues transferring the mortgage to a party that had no previous relationship with the servicer. e Consumer Financial Protection Bureau (CFPB) issued guidance last month aimed at making it easier for surviving family members who have inherited a property to be added to the mortgage, allowing them to seek modification or refinance and avoid foreclosure. Specifically, the Bureau ruled that the heir may be added to the mortgage without trig- gering the CFPB's ability-to-repay rule. "Losing a loved one should not mean also losing your home. Today's interpretive rule makes it clear that when family members inherit property, they can take over the mort- gage without jumping through unnecessary hoops," CFPB Director, Richard Cordray said. "is gives heirs an opportunity to work with the lender to pay off the loan or seek a loan modification." e ability-to-repay rule took effect in Jan- uary 2014, and requires lenders to make a good- faith effort to ensure that the borrower actually has the ability to make payments on the loan that they are applying for. e rule purportedly wards off predatory lending practices. e change allows the lender to recognize the heir as the borrower without consider- ing their creditworthiness. e rationale the CFPB cites is that the change will allow more heirs to stay in their new homes, because it gives them the legitimacy of being a borrower and gives them the same rights that the now-deceased mortgagor previously held. e more-legitimate status makes it more likely that the mortgage holder will grant a modification, preventing unnecessary foreclosures. e rule does not obligate the lender to add the surviving family member to the mortgage, but gives them the leeway to do so when it would prevent the loan from going into default. CITIGROUP NEARS $7 BILLION DEAL TO RESOLVE MORTGAGE PROBE Citigroup is close to a deal with the Depart- ment of Justice to resolve allegations that the bank sold defective mortgage-backed securities in the lead-up to the financial crisis, according to a report by the Wall Street Journal last month. Citing people familiar with the matter, the report claims that the settlement negotiations are getting close to finalizing a settlement of $7 billion. Officials from Citigroup and the Justice Department both declined comment on the ongoing negotiations. According to people familiar with the matter, the deal will include $4 billion in cash payments to the federal government, with the rest coming in the form of borrower relief. e negotiations had been stalled until Citigroup reportedly increased its cash offer to more than $1 billion. e deal would be the latest in a series of agreements between the government and major banks as the Justice Department seeks to appor- tion blame and repay the taxpayers for the part that the banks played in the events that caused the large-scale economic downturn of the previ- ous decade, a hole that the economy is still trying to escape from. e agreement could also put more pressure on Bank of America to settle its own ongoing negotiations with the Justice Department. Talks between the two stalled in April. Last Novem- ber, J.P. Morgan agreed to pay a record $13 bil- lion. e government is said to be seeking more from Bank of America because the company issued more securities of which the failures had a larger impact on the economy. According to the report, the government was initially seeking $10 billion from Citigroup, an amount close to the deal that it got in the J.P. Morgan settlement, because it argued that, even though Citigroup issued fewer securities, the securities that it did offer performed much worse and had a greater detriment to the economy than securities offered by other banks.

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