Republicans set to kill mortgage assistance programs

treasury

Republican members of Congress have set their sight on gutting assistance to troubled homeowners at risk of foreclosure.

A bill, H.R. 430, introduced by Rep. Jim Jordan, R-Ohio, and other Republicans would dismantle the Home Affordable Modification Program set up by George W. Bush during the height of financial crisis to modify mortgages and help families remain in their homes.

GOP representatives summoned Neil Barofsky, the special inspector general for the government's bank bailouts to testify before a House oversight committee.

Barofsky, while pointing to significant problems with the program - 10 new defaults for every HAMP modification - attributed the cause to the banking institutions themselves. The mortgage program "has failed because regulators are "afraid to rein in or impose penalties on the mortgage servicers" whose record "has been nothing short of abysmal" said Barofsky.

Kathleen Day, from the Center for Financial Responsibility, also faulted the big banks, reported USA Today: "Blame for HAMP's poor performance rests not with the Treasury Department, but with a mortgage-servicing industry that 'can't distinguish between the foreclosures that are inevitable and those that are avoidable,' Day said."

Significantly, Barofsky called for strengthening the program, not dismantling it. Avril Lighty, in a post on The Leadership Conference on Civil and Human Rights website, writes that the Inspector General said the program "could work better if the Treasury Department re-evaluates, sets clear and realistic goals, and holds loan servicers accountable for frequent errors and misconduct."

The program initially was supposed to help 3 to 4 million homeowners, however only "only 238,000 of the 522,000 modifications completed by December 31, 2010, can even be attributed to the program."

A large percentage - over three-quarters - of those receiving assistance are expected to default because of severe financial woes.

Americans for Financial Reform have called for several reforms to strengthen the program, among them that "The Department of Housing and Urban Development and all government housing programs must enforce their rules that require servicers to try to modify loans before proceeding to foreclosure."

Currently the program is voluntary and the government lacks any mechanism for enforcement. "I agree that the servicer performance has been abysmal and that's something that we have been trying to fix," said Timothy Massad, the Treasury official in charge of bank bailouts. "Let me first make it clear, this is a voluntary program. Congress didn't give us the tools to impose fines."

Image: Code Pink // CC BY-SA 2.0

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  • As someone on a low fixed income, I bought my house in 2006 from a (sic) bank, it was fixer upper, whose purchase and repairs were financed with my credit card credit lines. I strongly sympathize with people who got suckered by predatory bank mortgage policies (as I was offered those also) as they were defrauded by bankers with the government's consent. None the less I am still without consideration or relief from the government for my debts, that has been difficult eating up most of my income.

    Government repair building programs and even Habitat for the Humanity does not address and it is corporate welfare for the construction industry. So I am angry and frustrated at these sparsely written articles, though thankful of their views, since it is not something I should have to worry about at the age of 56.

    I reluctantly supported Obama and am sorely disappointed in his betrayal of working people, democratic ideals, in collusion with the Republicans for bankers who are international criminals who have destabilized dozens of countries.

    Carpenter, electrician, mason, laborer, writer.

    Posted by Andrew, 02/09/2011 3:42am (4 years ago)

  • The HAMP loan modification is a national disgrace, written to assist banks earns reports--not homeowners ! It has been & continues as a SCAM.
    It was written by US Treasury Secretary Geithner--a Democrat !

    Posted by J Alexander, 02/04/2011 11:51am (4 years ago)

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