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Bloomberg: House Republicans Move to End Foreclosure Aid Programs

February 24, 2011
In The News

By Phil Mattingly

U.S. House Republicans plan to move forward with bills that would end anti-foreclosure programs put in place by President Barack Obama's administration, saying they are doing more harm than good.
The House Financial Services Committee will consider bills next week to terminate four mortgage assistance programs, including the Treasury Department's Home Affordable Modification Program, or HAMP.

"In an era of record-breaking deficits, it's time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners," Representative Spencer Bachus of Alabama, the chairman of the panel, said today. "These programs may have been well-intentioned but they're not working and, in reality, are making things worse."
While the Treasury Department reported that more than 30,000 homeowners permanently lowered mortgage payments in December as HAMP participation accelerated, the program has failed to reach Obama's goal of helping 3 million to 4 million homeowners. Borrowers continue to fall out of the program at a faster rate than they join. A total of 58,020 loan modifications had been canceled through December, according to the Treasury.

"While we cannot prevent every foreclosure, it is important to remember that these programs have helped to create more options for affordable and sustainable assistance than have ever been available before," Tim Massad, the acting assistant Treasury secretary for financial stability, said in a Jan. 31 statement on the program.

The results have been criticized by housing advocates, lawmakers and watchdogs including Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, who in a January report called the results "anemic" and "remarkably discouraging."

Republican Representatives Jim Jordan of Ohio and Patrick McHenry of North Carolina last month introduced their version of a bill to terminate HAMP.

The committee also will mark up bills that would terminate the Federal Housing Authority Refinance Program, funding for the Emergency Homeowners Relief Program and the Neighborhood Stabilization Program.

Democrats' Fight

Democrats on the House panel are preparing to fight the program cuts and push for more aid for troubled homeowners, lawmakers said today.

Representative Barney Frank of Massachusetts, the Financial Services panel's top Democrat, said he was "disappointed" that Republicans are attempting "to eliminate programs which help the victims of the financial crisis."

"As we continue to respond to the victims of the foreclosure crisis in a responsible way, we will make the case that there are better ways for the federal government to cut spending than by attacking these programs," he said in a statement.

Maxine Waters of California, the senior Democrat on the panel's Subcommittee on Capital Markets and Government-Sponsored Enterprises, said the Republicans were "turning their backs on their constituents and their communities."

"I have consistently said for months now that the HAMP program has failed to help some homeowners," Waters said in a statement. "Unlike my colleagues on the other side of the aisle, who would replace it with nothing, I have consistently pushed for stronger solutions like mandatory loss-mitigation and principal reductions, and have demanded that our regulators hold servicers accountable."

Lawmakers in the Democrat-controlled Senate haven't introduced companion legislation.