Legislation

H.R. 839, introduced by Rep. Patrick McHenry (NC), would terminate Treasury’ authority to provide new assistance under the Home Affordable Modification Program (HAMP) while preserving the contracts made prior to the bill’s enactment. H.R. 839 prevents $30 billion in TARP funds from being spent.

Background:
HAMP was announced by the Administration in February 2009 as part of a three-part “Making Home Affordable Program.” $30 billion in TARP funds were set aside for HAMP to provide payments to mortgage servicers for modifying mortgages of struggling borrowers. The Administration claimed HAMP would help up to 4 million homeowners. Instead, only 521,630 loans have been permanently modified under this program and the re-default rate is high. From the $30 billion earmarked for HAMP only $840 million has gone out the door. There is widespread criticism that HAMP is not working and is only making matters worse for many of the homeowners who participate or seek to participate. The Special Inspector General for TARP (SIGTARP), the Congressional Oversight Panel, and the Government Accountability Office have all detailed the shortcomings of HAMP and highlighted how this program has hurt, rather than helped, struggling homeowners. Rewarding servicers with taxpayer dollars to modify mortgages has proven costly, Treasury estimates a $20,000 cost to taxpayers for each successful HAMP modification.