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News Now

Washington
House panel looks to end Obama mortgage-aid programs
WASHINGTON (2/25/11)—The House Financial Services Committee on March 3 will begin markup of legislation that would end funding of the Home Affordable Modification Program (HAMP), the Neighborhood Stabilization Program (NSP), the Federal Housing Administration (FHA) Refinance Program, and the Emergency Homeowner Relief Fund. The panel’s subcommittee on insurance, housing and community opportunity will hold a hearing on the four mortgage programs on March 2. HAMP, which has the largest amount of funding of the four programs, aims to aid homeowners facing foreclosure by reducing monthly payments to sustainable levels. Despite record levels of new foreclosures--2.9 million in 2010 and a projected 3 million in 2011-- only 522,000 homes were still undergoing permanent modifications via HAMP as of late December. More than 792,000 trial modifications have been cancelled, and 152,000 trial modifications have yet to be upgraded to permanent status. A 2010 Treasury report found that HAMP was having difficulties in part because mortgages are more complicated than a one-to-one relationship between borrower and lender. However, the Treasury has also said that HAMP permanent modifications perform well over time, with lower delinquency rates than those reported by the industry at large. The administration has earmarked $29 billion for HAMP, $7 billion for the NSP and $8 billion for the FHA Refinance Program. The NSP provides grants to state and local governments that wish to purchase foreclosed or abandoned homes to prevent neighboring homes from incurring significant losses in resale value. The Emergency Mortgage Relief Program authorized the Department of Housing and Urban Development to make emergency mortgage relief payments to homeowners facing foreclosure for up to 12 months, with a possible extension of another 12 months, according to the release. The FHA Refinance Program seeks to aid mortgageholders who owe more than their home is currently worth. The committee release noted that only 35 individuals had applied for assistance through the FHA program as of Dec. 13.


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