The Obama administration‘s key housing market rescue programs landed on the chopping block on Thursday as a committee in the U.S. House of Representatives scheduled a vote next week to terminate them.
The Republican leadership of the House Financial Services Committee said the panel will vote on a bill on March 3 that would kill the Home Affordable Modification Program, which it said has failed to help a sufficient number of distressed homeowners to justify its cost.
The committee also will vote on bills to shut down a Federal Housing Administration refinancing program and a fund to stabilize neighborhoods suffering from heavy foreclosures, they said. A fourth bill would kill a program to provide 12-month emergency loans to homeowners to stave off foreclosures.
“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,” committee Chairman Spencer Bachus said in a statement.
“These programs may have been well intentioned but they’re not working and, in reality, are making things worse,” the Alabama Republican said.
The Obama administration pushed back against the efforts, saying they would close the door on struggling homeowners facing the worst housing crisis in generations.
“The administration remains committed to reaching eligible homeowners to give them every opportunity to avoid foreclosure and will continue working to make our programs as effective as possible,” an Obama administration spokesperson said.
The bills face an uphill battle. If they clear the committee, they would have to be approved by the full House as well as by the Senate, which is controlled by Democrats.
Through a spokesman, Senate Banking Committee Chairman Tim Johnson signaled his opposition. “Simply ending foreclosure assistance, which has had modest success, won’t make the problem go away,” said Sean Oblack, a spokesman for Johnson, a South Dakota Democrat.
HAMP, the Obama administration’s premier program to aid borrowers struggling with costly mortgages, has provided permanent loan modifications for only 521,630 homeowners in the nearly two years it has been operating.
Conservatives and liberals alike have criticized the program for being ineffective. Elizabeth Warren, the Harvard law professor who is leading the administration’s efforts to set up an agency to regulate consumer financial products, last year likened the program to “bailing out the boat with a teaspoon while it takes on gallons of water.”
Rising foreclosures are weighing on a housing market already struggling under a glut of supply. Influential Yale economist Robert Shiller, who co-founded the closely watched Case-Shiller Home Price Index, said earlier this week there was a “substantial” risk home prices could fall another 15 to 25 percent.
HAMP provides cash incentives to mortgage servicing firms to lower monthly payments for borrowers to no more than 31 percent of their income. But only owner-occupants who can meet stringent documentation requirements for employment, income and acceptable overall debt levels can qualify, which has limited the program’s reach.
Thus far, the program has spent only $840 million of the $29 billion Treasury has earmarked for the program from its $700 billion financial bailout fund.
Much of the Obama administration’s estimated $28.1 billion net cost for TARP is tied to housing relief programs, which — unlike bank bailouts — do not offer any opportunity to recover funds spent.
Treasury Secretary Geithner last week acknowledged that HAMP will not likely reach its initial goals of aiding 3 million to 4 million U.S. homeowners by the end of 2012.
Copyright © 2011 Reuters
7 thoughts on “Republicans to those in mortgage trouble: ‘Go to hell’”
It’s a sad day when those who have never had a true financial disaster, bad mouth those who have. Just losing money on your savings is not as bad as losing a family member or having a family member with true health issues. My husband & I both were working & able to pay all our bills, then he had to have a hip revision in Nov. 2009. Since then he has had 5 surgeries on the same hip, spent most of April 2010 in the hospital because of it, now has blood clots in his right leg that will never go away. The doctor has released him every month to return to work with some restrictions – sitting most of the day,(we have disability scooter he could use but company will not let him), no climbing ladders – didn’t do that before surgery. His employer will not let him return to work until he is 100% – mmmm is any one 100%. His employer has long term disability that pays 60% of his salary and we have to pay cobra insurance to have health insurance. LTD makes their clients sign up for Social Security Disability and then LTD deducts that from what they pay so client can not make over 60% of salary.
I am the primary care giver for my ailing father – who has been in the hospital 10+ times since Nov 2009 – he has been close to death every time so someone had to be with him.
I lost my job in Feb 2010 – company downsizing – have sold my father’s house & moved him to an independent living unit, been with my husband thru all of his surgeries, moved my sister & nephew from an abusive relationship. And been unable to find a replacement job.
How is this my fault – how am I a deadbeat – I need some help some place – don’t take these programs away from those who truly need them. It was not because we purchased a house over our budget . We have lived here for 15 years – we owe less than $170,000. We did not and are not living high on the hog – we have just been dealt issues that have put us here needing help!!!
So basically this program does nothing more than keep a bunch of overpaid bureaucrats employed and living large.
Maybe the millions of people losing their homes can move in with them. Maybe John McCain will donate all but one of his umpteen mansions to these downtrodden people, who are guilty of nothing less that trusting their government.
I hope you all learned some thing.
By the way, wasn’t the first effort to pass TARP beaten down due to overwhelming opposition from the American people?
But some thing strange happened over the weekend following that vote.
The domestic terrorists on Capitol Hill – the Hill People, I call them – went to work, with the aid of their media mouthpieces. bombarding the American people with propaganda and, lo and behold! TARP passed with flying colors the following week.
The economy will be wrecked, they said. We’ll be cast into the darkest depression since the 1930’s, they said.
America will be doomed! they said.
Well…?
Maybe it’s time that the country stops focusing on the 5% of borrowerws who don’t pay their bills (the average foreclosed borrower hasn’t made a payment in a year-and-a-half) and make the system better for those of us who have paid their bills. It’s rediculous that this tiny share of delinquents — including those who were hit by hard times like the rest of us — stop screwing up the system for the rest of us who do pay our bills.
HUD is dumping property in my old neighborhood for $25,000 less than what they were originally built for in 1991. So I can’t sell my old house because the government is undercutting the market by some 20%.
And why is HAMP sitting on all these funds? They could have just paid off the mortgages of so many that needed the help and been more useful. What’s the point of sitting on the funds for 2 years unless they didn’t intend to help anyone?
FYI, they could have given those 521,630 home owners $50,000 and still had almost $3 billion left in the fund.
That would be too easy Woody. We like complicated…except for our rhetoric, that is. Or they could just give every one amnesty, and call it a day. The banksters already got paid any way. We’ve been robbed two and three times over already.
GOOD! There is no more money.
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