TARP Recipients' Requirement: Modify Home LoansU.S. banks receiving federal aid through the Troubled Asset Relief Program (TARP) are going to be required to modify mortgages for borrowers under the Obama administration's Making Home Affordable initiative, says Housing and Urban Development's Secretary Shaun Donovan.
As a condition going forward, banks taking TARP money will have to participate in the plan, Donovan says. In February, President Barack Obama unveiled plans to help refinance or modify loans for up to 9 million mortgage holders, and refinancing numbers have shot up 88 percent while mortgage rates have dropped to record lows. Mortgage applications recently hit the highest levels in the last three months, says the Mortgage Bankers Association.
The Treasury Department has handed out $328.4 billion from its $700 billion TARP fund to recapitalize banks.
The average interest rate on 30-year mortgages hit a record low of 4.78 percent in the week ending April 2. This data comes from Freddie Mac's mortgage numbers. The rate increased to 4.87 percent last week.