MarketWatch: GOP wants to axe taxpayer funds for troubled homeowners.
A top House Republican has announced plans Thursday to begin efforts to dismantle a package of Obama administration programs seeking to help troubled homeowners avoid foreclosure, an effort that is unlikely to become law any time in the near future because of staunch Democratic opposition.
House Financial Services Committee Chairman Spencer Bachus, (R., Ala.) said he plans to hold a vote on March 3 on legislation to terminate the Home Affordable Modification Program, the Neighborhood Stabilization Program and other programs that seek to modify mortgages for troubled borrowers, among other endeavors, all part of a GOP plan to cut spending and reduce the deficit.
The HAMP program has been criticized for failing to help as many homeowners as the White House and others had hoped. A Congressional Oversight Panel recently reported that Treasury will likely only spend $4 billion of $30 billion in taxpayer funds allocated for loan modifications. The Congressional Budget Office said recently that the Treasury is likely to spend $12 billion on all of its foreclosure programs combined.
"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," said Chairman Bachus. "These programs may have been well-intentioned but they're not working and, in reality, are making things worse."
However, even if the program is approved by the House it is not expected to receive support of the Democrat-controlled Senate or the White House. Bachus's Democratic counterpart on the House Financial Services Committee came out, as expected, in opposition to the Bachus efforts. Democrats insist that limiting some of the expected 8 to 13 million foreclosures expected by 2012 is critical to the economic recovery.
Rep. Barney Frank (D., Mass.), ranking member of the House Financial Services Committee, called GOP efforts to axe the neighborhood stabilization program as an attack on cities. Frank said the program provides funding to cope with the "blight, expense and destabilization" that comes with large numbers of empty properties.
"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," Frank said.
Rep. Maxine Waters, (D., Calif.) is urging lawmakers to expand the programs, not shut them down. "I have consistently said for months now that the HAMP program has failed to help some homeowners. But unlike my colleagues on the other side of the aisle, who would replace it with nothing, I have pushed for stronger solutions like mandatory loss mitigation and principal reductions and have demanded that our regulators hold servicers accountable," Waters said.