WASHINGTON – Loans backed by the Federal Housing Administration will be eligible for payment reductions similar to the Obama administration's loan modification program, the government will announce Thursday.
Effective Aug. 15, financially troubled homeowners who have an FHA-insured loan can apply for a modification under a program parallel to "Making Home Affordable" to help lower their payments and avoid foreclosure.
The program, launched in March, is designed to lower monthly payments for 3 million to 4 million borrowers, although only about 200,000 have been helped so far. Lenders agreed this week to adjust 500,000 loans by Nov. 1.
The FHA, which backs about 5 million loans, is a government-run mortgage insurance program. It became the main source of home loans to borrowers with poor credit and low down payments after the collapse of the subprime lending market.
The agency lets borrowers take out home loans with down payments as low as 3.5 percent, compared with 20 percent for a typical loan that doesn't require mortgage insurance.
By law, FHA cannot offer borrowers interest rates as low as 2 percent, which are available under the Obama plan. Instead, FHA will allow lenders to set aside up to 30 percent of the total principal balance until the house is sold or the property is refinanced. No interest will be charged on that amount.
Government officials did not have an estimate of how many borrowers would qualify.
"We're bringing another important tool to the table to help struggling families who are desperate to keep their homes," Housing and Urban Development Secretary Shaun Donovan said in a statement.
Lenders who participate in the FHA program will receive an incentive fee of up to $1,250 and can be reimbursed for $250 in costs.
NEW YORK (Reuters) –
Cablevision Systems Corp (CVC.N) is preparing to spin off its Madison Square Garden assets, Bloomberg News reported on Wednesday, citing a person familiar with the matter.
Those assets include the New York Knicks basketball team and Radio City Music Hall, it said, and stockholders would receive one share of the new company, to be called Madison Square Garden, for every share of Cablevision they own.
Cablevision was not immediately available for comment.
(Editing by Carol Bishopric)
NEW YORK (Reuters) –
Visa Inc (V.N) reported better-than-expected quarterly earnings on Wednesday, as the world's largest credit card network cut expenses and credit-strapped consumers used their debit cards more.
The company also forecast revenue would grow more than expected in the fourth quarter helped by a recovery in the number of transactions.
Net income rose 73 percent to $729 million, or 97 cents per diluted class A share, for the third quarter ended June 30.
On an adjusted basis, reflecting a normalized tax rate, restructuring and purchase amortizations, quarterly net income rose to $744 million, or 98 cents per diluted class A share.
Excluding the impact from the sale of the company's stake in VisaNet do Brasil, adjusted quarterly net income was $507 million, or 67 cents per share. On that basis, analysts expected earnings of 64 cents, according to Reuters Estimates.
Net operating revenue rose 2 percent to $1.6 billion, but adjusted operating expenses fell 9 percent to $804 million as the company cut advertising and marketing costs by 15 percent, and personnel expenses by 12 percent.
"Revenue was basically in line with what everybody was looking for, but they beat expectations because of better expenses, and a big chunk of that was that advertising costs were lower than expected," said Robert Dodd, an analyst at Morgan, Keegan & Co.
"The fourth-quarter looks pretty good, but that is because of cost cutting initiatives rather than a recovery," he said.
Total processed transactions -- which represent transactions processed by VisaNet -- increased 8 percent to 10.3 billion, but payments volume fell 5 percent for the quarter ended March 31, which translates to revenue in the following quarter.
Visa is partially insulated from the credit crisis because it processes transactions rather than lends funds. However, the company has seen a slowdown in the growth of revenue and transaction volumes as consumers used their credit cards less.
While the payment volume declined 10.4 percent in credit cards, it grew 3.6 percent in debit cards, especially boosted by the United States, where Visa is promoting aggressively the use of debit programs.
"A lot of our transactional increases are being driven by our debit volume. Not our credit volume," Chief Executive Joseph Saunders said in a conference call with analysts. "None of our projections suggest that (credit volume) is going to come back, come roaring back in any way, shape, or form."
SHY SIGNS OF STABILIZATION
Chief Financial Officer Byron Pollitt said cross-border volumes, which declined 8 percent in the fiscal third quarter, showed a contraction of 7 percent in July, while processed transactions accelerated their growth rates to 9 percent from 8 percent.
"While we still see no signs of a true inflection point, these friends are encouraging," Pollitt said in a conference call with analysts. "The velocity of the downturn has slowed, which is encouraging, but it is still too early to call an inflection point."
Following those comments, Visa raised its revenue growth outlook for the fourth quarter to mid-single digits from low single digits.
The firm adjusted its estimate of capital expenses for 2009 to around $300 million from a range of $300 million to $350 million.
Visa reiterated its forecast of annual net revenue growth of high single digits in 2009 and at the lower end of the 11 to 15 percent range in 2010.
The company also affirmed its annual adjusted diluted class A common stock earnings per share will grow over 20 percent.
Visa also announced it created a joint venture with U.S. Bancorp (USB.N) called Syncada to provide network services to corporations and governments to process and track invoices, and make and receive payments.
The credit card network made an unspecified capital investment in Syncada, while U.S. Bancorp contributed with the technology platform and personnel.
Visa's shares were down 1.2 percent at $65.86 in after-hours trade. The stock is up 30 percent in 2009.
(Reporting by Juan Lagorio; Editing by Leslie Gevirtz, Bernard Orr)