Politico: GOP strikes at housing programs
By Meredith Shiner
Congressional Republicans aiming to dismantle President Barack Obama's agenda have set their sights on an easy target: housing programs that even Democrats, gearing up to fight the cuts, concede have been mismanaged.
In the House Financial Services Committee, Republicans plan to mark up four separate bills that will pull the plug on four programs designed to help struggling home owners stave of foreclosure: the Home Affordable Modification Program (HAMP), the Neighborhood Stabilization Program, and the FHA Refinance Program and the Emergency Homeowner Relief Fund.
While both parties acknowledge the serious flaws in these initiatives — particularly the Treasury-backed HAMP, whose results TARP Special Inspector General Neil Barofsky called "remarkably discouraging" Wednesday — Democrats are focused on "mending, not ending" programs designed to keep Americans in their homes and want to ensure that funds keep flowing to troubled homeowners. Republicans are driving full-speed-ahead on de-funding the efforts.
"The thing I'm most concerned about is taking away the HAMP program and being left with nothing," Rep. Elijah Cummings (D-MD) told POLITICO. "There are too many people who are suffering and losing their houses — definitely in my district and in districts all over the country — to be left with nothing. And if it were up to the Republicans, that's exactly what would happen. So my position has been, do whatever is necessary to fix it. Mend it, not end it."
Cummings, along with California Democrat Maxine Waters, has emerged as one of the leading advocates for voters facing foreclosure. The underperformance of HAMP, which had a stated goal of assisting three to four million homes, but had only 522,000 ongoing mortgage modifications as of Dec. 31, 2010, was one of the first policy areas over which members of the Congressional Black Caucus attacked Obama more than a year ago.
But now the White House has to manage not only friendly fire from Democrats who want to get foreclosure-assistance on track and the independent assessments of Barofsky, but the attempts of an emboldened Republican House caucus hell-bent on cutting government spending.
Conventional wisdom might dictate that in this economy, and with a record 2.9 million homes served with foreclosure notices in 2010, trying to take down mortgage assistance programs would be a losing message battle for the GOP. Treasury Secretary Timothy Geithner even told the Financial Services Committee Tuesday that eliminating HAMP "would cause a huge amount of damage … [and] I would recommend against it." Foreclosure notices are expected to increase by 20 percent in 2011 and the Center for Responsible Lending reports that all 50 state Attorneys General and 11 federal agencies now are investigating unfair business practices among loan servicers.
But Republicans captured the majority in the House this fall by riding an anti-government, tea party-driven wave. Angry voters took to rallies waiving signs bashing "government bailouts," and declaring that a neighbor's mortgage is not their problem.
A picture painted by Barofsky in a hearing before the panel Wednesday gives Republicans additional cover to end the programs entirely.
The independent auditor of the Troubled Asset Relief Fund, which funded assistance to 238,000 homes under HAMP referred to the Obama administration initiative as "a program that only benefits a small portion of distressed homeowners, offers others little more than false hope, and in certain cases causes more harm than good."
Barosky added that SIGTARP has offered 18 recommendations to Treasury to improve the flailing program and that the agency has fully implemented four of those recommendations, partially implemented five, not implemented seven and is in the process of at least partially implementing the remaining two.
"While these admissions about the fundamental flaws in HAMP represent a step forward, they come very late in the game and appear to be unaccompanied by any consequential changes to the program or meaningful statement of program goals," Barofsky said of Geithner's recent claim that Treasury "won't come close" to its stated goal of helping 3 to 4 million at-risk home owners.
It's enough to make Republicans want to terminate the administration's efforts entirely.
"Not only is this a failing program, it's a failing program that causes real financial pain to the very people it was set up to help. HAMP gives at-risk homeowners false hope and encourages them to use their dwindling savings to participate in a program that at its best has a 72 percent rejection rate," said Rep. Patrick McHenry (R-N.C.), chairman of the Oversight Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs.
McHenry introduced this week the "HAMP Termination Act," which will be considered by the Financial Services Committee Thursday.
The battle over what to do with HAMP and programs like it is emblematic of a larger debate dividing the Capitol: Republicans want to slash spending across the board, arguing reducing spending is better for the economy, while Democrats believe government programs are the solution and that existing measures are suffering from being under-funded.
Moreover, and again in line with many of the battles of the new Congress, the efforts of House Republicans could end up dead on arrival in either the Senate or on the President's desk.
"It is just so, so wrongheaded for them to go after these programs just because they came from the White House," Senate Majority Leader Harry Reid said of Republicans Wednesday. "That is a perfect example of why they're not concerned about jobs. I know Nevada has more problems than anyone else with housing, but it's the same [elsewhere]. I talked to a senator from Georgia last night, same in Florida. It's all over the country."
"They complain that only about a millon people have been helped by this program. Well what would those million people have done without the program?" added Reid, whose home state of Nevada has one of the highest home foreclosure rates in the country.
Despite the failures in implementation of the White House's programs — and to pass legislation last Congress like an emergency "cramdown" bill that would have aided a million homeowners —Democrats believe they are in the right on the foreclosure issue. And they're willing to go to the mats in what is proving to be one of the few openings to reinforce their talking points.
"Simply doing away with these critical programs that serve the American people without offering any real solutions that reforms or replaces these programs does nothing to alleviate our nation's foreclosure emergency," Rep. Luis Gutierrez (D-Ill.), ranking member of the Housing and Community Opportunity Financial Services subcommittee said in a statement Wednesday. "Republicans are willing to give large breaks to the wealthiest in our nation yet they're unwilling to provide the necessary aid to devastated families and distressed communities and this is just the latest example."
Though there certainly will be plenty of back-and-forth barbs in Thursday's mark-ups, the actual solution both the foreclosure crisis and the inefficient measures designed to solve it is more difficult to find.
Cummings conceded he was "not sure exactly how we go about funding" the Treasury-backed measures in the current budget crunch. But completely slashing programs, he says, is not the answer.
"People say that the President did not exert as much pressure as they hoped he would… but somehow we've got to find a way to attack this from the standpoint of what will it take to improve the program itself and what will it take to get servicers more involved in helping people modify," Cummings said. "We've got to think this thing through and say, ‘What can we do, Treasury, to make this program work so that we can avoid having more and more people lose their homes.'"