Surveyed TARP Participants Say Over Half of Assets Are Residential Related

In a survey examining more than 400 firms’ views of participation in the Troubled Asset Relief Program (TARP), firms disclosed that 50-60% of their assets are residential related, and those assets comprise both whole loans and securities. The survey also found that:

• Large firms are more likely to participate in TARP.
• Institutions would prioritise the purchase of sub-prime and Alt-A residential real estate, followed by commercial real estate, particularly for smaller institutions.
• Institutions would sell approximately 50% of their assets targeted for TARP at a slight discount to model-based valuations (or current book value if marked to market) but small institutions would require prices closer to cost.

The survey was sent to members of Securities Industry and Financial Markets Association (SIFMA), American Securitization Forum (ASF), American Bankers Association (ABA), Mortgage Bankers Association (MBA) and Commercial Mortgage Securities Association (CMSA).

“This survey illustrates the wide array of activities that ought to be undertaken through TARP,” said John Courson, chief operating officer of MBA. “We hope the information contained in the report helps regulators best direct their efforts to provide stability and liquidity to the financial markets.”

“The industry needed more granular, tangible information on how TARP implementation could be most effective, and this survey provides that guidance to our industry and to policymakers. Given the breadth of the markets, this survey provides some meaningful direction on where regulators’ tools might be targeted to be most effective, particularly as it relates to providing price transparency,” said Tim Ryan, president and CEO of SIFMA.

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