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56 SIGTARP CALLS FOR CHANGES TO HAMP e office of the Special Investigator General for TARP (SIGTARP) released its quarterly report on the progress and status of the Troubled Asset Relief Program. Among the report's findings was the asser- tion that TARP's signature housing program, e Home Affordable Modification Program (HAMP), has not provided enough sustainable foreclosure relief given the unspent TARP funds that Treasury has set aside. Treasury had allocated $45.6 billion in funds to be provided for housing relief. To date they have spent $12.8 billion. HAMP's foreclosure relief is only sustainable if the homeowner does not fall out of the perma- nent mortgage modification during the five-year period, increasing the risk of foreclosure. HAMP has seen its share of problems. As of June 30, 2014, only 958,549 homeowners were active in a HAMP permanent modification. In an effort to attract more people, Treasury continues to extend the application period for Making Home Affordable (MHA) programs such as HAMP, and did so again on June 26, 2014, further extending the programs through December 31, 2016. Twenty nine percent of the individuals that had taken advantage of the program and obtained a modification on their home loan have since fallen out of the program because of an inability to pay their new, lower mortgage payment. SIGTARP implored the Treasury Depart- ment to implement the changes to HAMP that the office had previously suggested. First, the report says that Treasury should promulgate 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 and the length of time it takes to resolve escalated homeowner complaints. Next, the report argues that Treasury should complete a public assessment of the program per- formance of the top 10 MHA servicers' against acceptable performance benchmarks. Criteria would include the length of time it takes for trial modifications to be converted 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. Further, SIGTARP calls for more strin- gent enforcement. Specifically, they want the Treasury to ensure that all servicers participating in MHA comply with program requirements by strenuously enforcing the terms of the servicer participation agreements. e Treasury should be transparent and make public all remedial actions taken against any servicer. JPMORGAN EARNINGS REPORT MIXED Second-quarter profits at JPMorgan Chase dipped nearly 8 percent year-over-year as the bank continued to work with a diminished mortgage market. JPMorgan's latest earnings report showed the megabank earned $6 billion in profits over the latest three months, putting its performance somewhere between the $5.3 billion reported in the first quarter and $6.5 billion a year ago. Revenues were down 2 percent compared to the year-ago period, coming in at $25.3 billion. Despite the year's setbacks so far—particularly in the bank's mortgage segment—chairman and CEO Jamie Dimon said that "the firm has con- tinued to deliver strong underlying performance." JPMorgan's mortgage originations in the sec- ond quarter were $16.8 billion, down two-thirds from last year and 1 percent from the first quarter. Meanwhile, application volumes were $30.1 billion, down more than half from a year-ago but up 15 percent from Q1. While housing activity in the first quarter was lackluster, analysts had expected the market to pick back up for a busier spring season. Sales and construction have indeed recovered to a livelier pace, but origination levels remain anemic. In a recent analysis, investment firm FBR Capital Markets maintained its prediction that year-end originations will total below $1 trillion. Overall, JPMorgan reported mortgage bank- ing net income of $709 million, a decline of $433 million compared to a year before as the bank experienced lower net revenue and a lower benefit from its credit loss provision. Still, Dimon remained optimistic in his com- ments. "Toward the end of the second quarter, we saw encouraging signs across our businesses, including an uptick in wholesale utilization, strengthening pipelines in our commercial and business banking segments, and some improve- ments in markets activity," he said. "While it is too early to assume that this momentum will continue, we have confidence in the long-term growth of the economy." HOME PRICES ON THE RISE While home purchases have slowed in the past few months, it appears that prices continue to rise. Black Knight Financial Services released a report showing that the national Home Price Index (HPI) improved in general throughout the month of May across 18,500 examined zip codes in the United States. Home prices are now just 11 percent off of their 2006 peak. e HPI represents the price of non-distressed sales by taking into account price discounts for REO and short sales. e HPI rose a total of 0.9 percent in May to $239, which is a $14 increase year-over-year. However, indicative of the slowdown that analysts have also been tracking since the beginning of the year, the HPI has only risen by $3 since the beginning of 2014. At the state level, prices in Colorado and Texas hit record highs while Rhode Island, Michigan, Colorado, Connecticut, and Idaho made up the top five states in terms of percentage growth month-over-month. Maryland, Arizona, Hawaii, Louisiana, and California rounded out the bottom five. e 10 metros with the largest increases showed a slight regional tendency toward Connecticut, which had four of the top ten. No other state claimed more than one top-perform- ing metro. Among the 10 worst-performing metros there appeared to be great regional concentrations, with four metros in California and three in Florida. Among the lowest metros, only Lakeland, Florida and Tucson, Arizona saw negative or zero-percent growth. e rising housing prices are a catch 22 proposition. On one hand the rise in prices allow sellers to regain some of the equity lost in the wake of the financial crisis, but on the other hand, the beginning of 2014 has seen a considerable slowdown in the home sales and rising prices do little to reverse that trend. Lakeland, Florida properties that were seriously underwater in July 2014 Source: RealtyTrac STAT INSIGHT 37%

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