Treasury Releases CDFI Plan, Bank Lending Survey Results

Posted by Orb Staff on March 19, 2009 No Comments
Categories : Residential Mortgage

The Treasury Department's Community Development Financial Institutions (CDFI) Fund is releasing its implementation plan to award nearly $100 million in grants and $3 billion in additional tax credit authority to support community-based financial institutions.

These awards, made available through the American Recovery and Reinvestment Act, will support loan funds, credit unions, banks, venture capital firms and other financing entities in serving the nation's most underserved populations and communities, the Treasury says. The CDFI Fund plans to award the entirety of Recovery Act funds made available for the CDFI program in less than 90 days and will begin disbursing awards within 120 days.

‘The Recovery Act is enabling more funds to flow to these community-based lenders that are responsibly providing financing to help small businesses, creating needed jobs and saving homes in low-income areas across the country that have been hit hard by this economic crisis,’ says Treasury Secretary Tim Geithner.

In related news, a monthly bank lending survey released by the Treasury shows the top 21 recipients of government investment through the Capital Purchase Program (CPP) had higher originations across consumer lending categories in January than in December 2008.

Under the CDFI program, the banks participating in the survey will be required to report their levels of small-business lending and include that data in their monthly lending surveys going forward.

Overall, the survey found that residential mortgage origination increased due to lower interest rates and seasonal demand. Mortgage origination volume rose significantly in January, as lower interest rates fueled a strong demand to refinance home mortgages. The median change in mortgage refinancing was an increase of 110% from December to January, according to survey results. This translates into lower mortgage payments for families across the U.S., the Treasury says.

Commercial real estate lending, however, decreased from the previous month due to weakening demand. Both renewals of existing accounts and new loan commitments in commercial real estate lending decreased significantly from December to January. The median percent change in renewals of existing loan accounts during this time period was a decrease of 45%, while the median percent change in new commitments was a decrease of 41%.

The Treasury, with the cooperation of the Department of Housing & Urban Development (HUD), has also launched Web site for consumers seeking information the Making Home Affordable loan modification and refinancing program.

MakingHomeAffordable.gov offers interactive self-assessment tools that borrowers can use to determine if they are eligible to participate and to calculate the monthly mortgage payment reductions they could stand to realize under the program.

‘Education and outreach is central to the success of our Making Home Affordable program,’ says Geithner. ‘Putting resources and tools directly in the hands of homeowners will expedite the process of delivering relief to responsible borrowers, and stabilizing the housing market is central to our overall economic recovery.’

SOURCE: Treasury

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