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House Votes To Terminate Another Failed Government Program, Prevents $29 Billion In TARP Funds From Being Spent
Washington, Mar 29 -
The House of Representatives voted on Tuesday to terminate another failed government program by passing a bill that ends the Administration’s highly criticized Home Affordable Modification Program (HAMP). H.R. 839, introduced by Rep. Patrick McHenry, terminates the troubled program that received TARP funds while preserving the contracts made prior to the bill’s enactment. The House approved the measure by a vote of 252-170. ###
Financial Services Committee Chairman Spencer Bachus noted HAMP has come under harsh criticism from both Republicans and Democrats, as well as the Special Inspector General for TARP and the Congressional Oversight Panel.
“HAMP is the poster child for ineffective government programs. It does not work and has actually made things worse for many struggling homeowners,” said Chairman Bachus.
Rep. McHenry said, “If we can’t eliminate a blatant failure of a program that is actively harming Americans every day and costing them billions of dollars, then what can we cut?”
In February 2009, the Administration announced the creation of HAMP to provide payments to mortgage servicers for modifying mortgages of struggling borrowers. The Administration set aside $30 billion in TARP funds to finance the incentive payments to mortgage servicers. Treasury recently estimated that each permanent HAMP modification will cost taxpayers $20,000.
By every objective measure HAMP has failed. Not only are permanent modifications under the HAMP too costly for taxpayers, the program has also fallen short of the Administration’s stated goal of modifying up to 4 million loans. To date HAMP has only permanently modified 521,000 loans. The Congressional Oversight Panel said in a December 2010 report that Treasury "refused to specify meaningful goals by which to measure HAMP's progress, while the program's sole initial goal -- to prevent three to four million foreclosures -- has been repeatedly redefined and watered down. Treasury has also failed to hold loan servicers accountable when they have repeatedly lost borrower paperwork or refused to perform loan modifications.”
The Special Inspector General for TARP (SIGTARP), Neil Barofsky, reported in testimony to the Financial Services Committee that HAMP “benefits only a small portion of distressed homeowners, offers others little more than false hope, and in certain cases causes more harm than good.”
The SIGTARP has also found that people who apply for modifications via HAMP sometimes “end up unnecessarily depleting their dwindling savings in an ultimately futile effort to obtain the sustainable relief promised by the program guidelines. Others, who may have somehow found ways to continue to make their mortgage payments, have been drawn into failed trial modifications that have left them with more principal outstanding on their loans, less home equity (or a position further ‘underwater’), and worse credit scores. Perhaps worst of all, even in circumstances where they never missed a payment, they may face back payments, penalties, and even late fees that suddenly become due on their ‘modified’ mortgages and that they are unable to pay, thus resulting in the very loss of their homes that HAMP is meant to prevent. While it may be true that many homeowners may benefit from temporarily reduced payments even though the modification ultimately fails, Treasury’s claim that ‘every single person’ who participates in HAMP gets ‘a significant benefit’ is either hopelessly out of touch…or a cynical attempt to define failure as success.”