%1

After an eight-year run, a troubled government effort to prevent foreclosures and keep struggling borrowers in their homes came to an end last month, the New York Times DealBook blog reported yesterday. What happens next will be a Trump-era laboratory experiment in how financial services companies conduct themselves when the regulatory fetters are loosened. The expired Obama-era program — known as HAMP, the Home Affordable Modification Program — was widely criticized for its poor execution. Participation was voluntary for banks, and many that opted in did so unenthusiastically. Consumer advocates were also not thrilled; many felt that the program did not go far enough to help troubled homeowners or hold accountable the banks that contributed to their predicaments. But Republican-led Washington has no intention of replacing it. So now it will be entirely up to the private sector to address a lingering social ill that was brought on by the financial crisis. Banks and mortgage lenders say they are ready to step in with their own foreclosure-prevention programs, modeled on what they learned from the Obama administration’s effort. Armed with years of new data, financial companies say that they now know how to make loan-modification programs successful, for both borrowers — who want to protect their homes — and lenders, who want to limit their losses on delinquent loans headed for default.

Fannie Mae has agreed to backstop up to $1 billion in debt from the country’s largest owner of single-family rental homes, the first time the government-sponsored entity has agreed to guarantee the debt of an institutional owner of single-family houses, the Wall Street Journal reported today. Blackstone Group LP’s Invitation Homes Inc. disclosed its agreement with Fannie on Monday in a filing detailing the company’s finances ahead of its planned initial public offering. After the foreclosure crisis, the New York investment firm spent roughly $10 billion buying and fixing up houses to rent through Invitation Homes. Fannie Mae’s involvement is a sign that it believes homeownership will remain out of reach for many Americans and that Wall Street’s housing wager will be become a long-term business, not just an opportunistic trade made after the foreclosure crisis. The support represents a shift from about four years ago, when Fannie’s regulator blocked another government-sponsored entity from backing bulk buyers of foreclosed homes. Fannie’s support will likely make it cheaper for buyers like Blackstone to add homes in the future.

The U.S. consumer financial watchdog said yesterday that it had fined subsidiaries of Citigroup Inc. $28.8 million for giving "the runaround to borrowers" on mortgage servicing by keeping them in the dark about options to avoid foreclosure or making it difficult for them to apply for relief, Reuters reported. CitiMortgage will pay an estimated $17 million to compensate wronged consumers, as well as a civil penalty of $3 million, the Consumer Financial Protection Bureau said. CitiFinancial Services will refund approximately $4.4 million to consumers, and pay a civil penalty of $4.4 million. The CFPB said that the subsidiaries neither admitted nor denied the findings in the consent orders.

Societe Generale agreed to pay a $50 million civil fine and admit to misconduct to settle U.S. claims that it fraudulently concealed from investors the poor quality of residential mortgage-backed securities it marketed and sold, Reuters reported on Friday. The U.S. Department of Justice said on Friday that the French bank concealed problems in a $780 million debt issue it arranged in 2006, and which has since left investors with "significant losses" that may grow further. The debt issue, SG Mortgage Securities Trust 2006-OPT2, was backed by subprime loans from Option One Mortgage Corp, then a unit of tax preparer H&R Block Inc. Societe Generale admitted to concealing how many of the loans were not underwritten properly and should not have been securitized, and that no borrowers owed more on their loans than their homes were worth.

Online retailing has been chipping away at mall revenue for years, but now it is starting to make a contribution as well, the Wall Street Journal reported today. Retailers are converting empty mall space into makeshift distribution centers used for package pickup and returns of goods bought online. At the same time, online merchants are opening physical stores to reach more customers, either via short-term leases in pop-up stores or long-term tenancies like Amazon.com’s upcoming move into Manhattan’s Time Warner Center. More retail centers, including those at town-center locations in smaller cities, are housing Amazon Lockers, which allow Amazon’s online customers to pick up and return packages at their convenience. Other online retailers without any physical stores are looking to provide options for their customers to drop off unwanted purchases in person in shopping centers where they can get immediate refunds.

Once called the king of downtown Orlando, developer Cameron Kuhn filed for personal chapter 7 bankruptcy yesterday, the Orlando Sentinel reported today. He declared $22.8 million in liabilities to various corporations. Kuhn bought up more than 20 properties in Orlando by 2007, when real estate markets crashed and the Great Recession began. Over the years, Kuhn was best known as one of the developers who renovated the Church Street Station entertainment district, and cleared several blocks of land to build the massive Plaza office and condo complex on South Orange Ave. He previously filed bankruptcy for one of his companies related to the Plaza in 2010, declaring $10 million in debts and in assets.