Four of the biggest mortgage lenders are still in a world of hurt, even as we are hearing word that some banks are re-paying TARP funds.  While it is good news that TARP funds are being repaid, (the tax payers are being repaid), the reasons for the the big banks rushing to pay these funds is to avoid oversight by the pay czar as the year winds down. 

One of the giants, Citigroup, paid off some of their TARP debt, but was unable to raise the funds they just repaid to the Treasury through a stock offering.   It is unclear what happens with Citigroup now.

The big four that are still in major financial trouble include AIG, Fannie Mae, Freddie Mac, and GMAC.  All four have been involved in buying and securitizing mortgage debt which continues to be a problem as the foreclosure issue is anything but over.  The trouble is so severe that they are already going back to the Treasury for more money.  In fact, Fannie Mae is in so much trouble that they apparently have to borrow more government money just to pay the dividends on the money they have already borrowed!

Between the above four entities alone, they are in debt or have been offered assistance totaling $600 billion, and this number could climb to $1 trillion before all is said and done.  Fannie and Freddie can't seem to climb out of the debt spiral as the number for foreclosures continues to rise. 

In a sort of good news effort, Citigroup and Fannie Mae have both announced that they have suspended foreclosures and evictions of those who have lost their homes to foreclosure recently, during the holidays.  Fannie is encouraging any banks that service foreclosed properties owned by Fannie to suspend evictions for the holidays as well.  The number of people who will be affected by this suspension is not huge, approximately 2000 Citigroup home owners and approximately 4000 Fannie Mae home owners.  Hopefully other lenders will follow.  (Citigroup is suspending actions only on loans they actually own, not on loans they service but do not own.)

There are some "green shoots" out there.  There are areas where we are seeing an upswing in home sales.  The housing markets that Zillow predicts are most likely to have hit bottom now include Atlanta, Providence RI, Madison, WI, Los Angeles, Boston, Denver, New Haven, Connecticut, Baltimore, MD, Philadelphia, NY City, NY, San Diego, and Washington DC. 

At the conclusion of the monthly meeting of the FOMC (the Feds), it was announced that the overnight lending rate would be left at 0% - 0.25%.  This is not good news.  When it starts to look like the economy has actually stabilized, the Feds are sure to start increasing the overnight lending rate.

In the meantime, mortgage rates dropped slightly again today.  The roller coaster ride for mortgages continues with Feds continuing to purchase mortgage backed securities to keep rates at and below 5% to bolster the housing market.