MARCH 29, 2011: The House of Representatives voted Tuesday 252-170 to terminate the Home Affordable Modification Program two years early.
Rep. Patrick McHenry (R-N.C.) introduced H.R. 839 as part of a wide effort by Republicans to shut down programs designed by the Obama administration to aid borrowers and localities in the middle of a foreclosure crisis. The Treasury set aside $30 billion for HAMP but has spent roughly $1.2 billion so far.
The House already voted to cut the last $1 billion from the Neighborhood Stabilization Program, the yet-to-begin $1 billion Emergency Homeowner Loan Program from the Department of Housing and Urban Development and the recently started Federal Housing Administration Short Refi program.
Servicers participating in HAMP have started 600,000 permanent modifications since the program launched in March 2009, but at its current pace the program will not reach the 3 million to 4 million originally estimated.
Rep. Spencer Bachus (R-Ala.) said HAMP has caused more harm than good, and that taxpayers should no longer fund bailouts for the banks through a program that promotes strategic default.
“We should not waste taxpayer dollars on failed government programs that do not work and actually make things worse for struggling homeowners,” Bachus said. “These programs may have been well-intentioned, but they’re doing more harm than good.”
HAMP, as the program is known, has been widely criticized for lagging far behind President Barack Obama’s stated target of reducing mortgage payments for 3 to 4 million struggling homeowners. Republicans recited the program’s latest statistics on the House floor during debate before the vote: Since the program launched in early 2009, fewer than 600,000 homeowners are in permanent modifications as of February, while more than 800,000 homeowners have had their modifications canceled.
“The intent was to help homeowners, but two years after the fact, we’re left with the cold, hard fact that this program has hurt more people than it’s helped,” Rep. Patrick McHenry (R-N.C.) said on the House floor. McHenry was a principal sponsor of the HAMP Termination Act, which is unlikely to prevail in the Senate and would almost certainly be vetoed by the White House.
Speaking on the floor, McHenry related an anecdote about a constituent who’d spent 14 months trying to win a HAMP modification — a process that is not supposed to take longer than three months. “It’s false hope that this program delivers,” said McHenry, who also called the program “an epic failure.”