WASHINGTON (4/14/10)--The House Financial Services Committee on Tuesday discussed the Obama administration's 2nd Lien Modification Program, or 2MP, which gives federally based incentives to second lien mortgage holders that write down or extinguish those second liens. Under the plan, homeowners are be required to have their first lien modified through the Administration’s Home Affordable Modification Program (HAMP) before they can become eligible for the 2MP program. During the Tuesday hearing, some members of the committee expressed caution at the potential “moral hazard” that the 2MP legislation creates by allowing some homeowners to voluntarily allow their mortgages to become delinquent to qualify for the Administration’s homeowner assistance programs. Committee Chairman Rep. Barney Frank (D-Mass.) agreed that not every homeowner should receive help, and Rep. Brad Miller (D-N.C.) said he was concerned by the prospect of potential conflicts of interest for financial institutions that hold second liens and service primary liens on the same homes. Credit unions have not been impacted by the current mortgage crisis as much as other types of lenders due to their normally conservative lending practices. However, credit unions have been impacted when they have made second lien loans, according to the Credit Union National Association. The House will hold additional hearings on the Community Reinvestment Act, HAMP revisions, and the housing finance system both today and tomorrow.