March 30, 2011 (Chris Moore)
The House of Representatives voted to terminate the Obama Administration’s flagship anti-foreclosure program, the Home Affordable Modification Program (HAMP), by a vote of 252-170. HR 839 had been pushed through by House Republicans who have criticized the program as wasteful and under-performing.
Under HAMP, more loan modifications have failed than have been successful. Out of 1,466,500 temporary modifications, more than 792,500 have failed, a failing rate of 54 percent. The program was originally intended to help 7 to 8 million homeowners (although later downsized to 3 to 4 million). The program has reached just over 600,000 permanent loan modifications.
HAMP was the last of four anti-foreclosure programs that were recently terminated in the House. However, the Senate is unlikely to even take up the bills and they would meet a certain veto if any of them made it to the President’s desk.
Rep. Patrick McHenry, R-N.C., the sponsor of the bill, criticized the program because of reports that those who enter the program end up being harmed more because they use up savings and damage credit ratings during months of waiting, and then are rejected for permanent reduced loans, at which time they are required to pay all back payments and fees which subsequently leads to foreclosure.
Democrats chastised Republicans for ending the program without offering an alternative with Rep. Keith Ellison, D-Minn. stating, “Rather than try to get the program right we abandon all those people who are underwater.”
Fifty Democrats wrote a letter to Treasury Secretary Tim Geithner on Monday urging him to act as quickly as possible to overhaul the program.
Republicans noted that the program had used less than $1 billion out of $30 billion that had been made available through TARP.
As the bill now moves to the Senate, Sen. Jim DeMint (R-SC) who is one of four Republican Senators that have introduced a similar bill in the Senate, has previously stated, “My office has heard from numerous South Carolina families who went to HAMP for help, but after months of false promises and mountains of paperwork they were left in worse financial shape. HAMP is just the latest failure of President Obama’s big government experiments. HAMP has not even reached ten percent of its intended goal of helping seven million American homeowners modify their loans, but it has succeeded in pushing hundreds of thousands of other Americans closer to foreclosure and personal bankruptcy.”
Tags: Republicans, Democrats, HAMP, mortgage programs, failures, loan modifications, government assistance programs, HR 839