WASHINGTON - (06/01/06) -- Department of Housing and UrbanDevelopment Secretary Alphonso Jackson traveled to New Orleans'French Quarter this week to announce a bailout plan that will allowthe state of Louisiana to use Community Development Block Grantfunds to provide up to $150,000 to uninsured homeowners to repairhomes badly damaged or destroyed by hurricanes Katrina and Rita.The 'Road Home Program' will be as much of a bailout for creditunions, banks and other mortgage lenders, which hold the mortgageson all of the damaged properties. So far, Congress has appropriated$4.2 billion of the estimated $8.8 billion required to fund theprogram, meaning lawmakers will be asked as part of an emergencyfunding bill to provide the remaining $4.6 billion needed. Underthe program, the funds, minus insurance settlements and othergrants, will go to homeowners whose primary residences weredestroyed or severally damaged, or to relocate out of state. Theborrower can sell the home to the state for 60% of its pre-stormvalue, minus insurance proceeds and other federal disaster repairfunds. If the borrower decides to sell, the lender may be asked towrite-off a portion of the debt. To participate in the program,homeowners must have at least $5,300 of uninsured damages fromhurricanes Katrina or Rita.
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The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
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The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
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The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
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The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
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Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
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Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
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