House Shuts Door On Mortgage Assistance Program

By a vote of 252-170, the House voted Tuesday to end a federal program aimed at helping struggling homeowners refinance their mortgages.

Enacted in 2009 as part of the Emergency Economic Stabilization Act of 2008 — the law that authorized a massive bank bailout known as the Troubled Asset Relief Program — the Home Affordable Modification Program was designed to assist three-to-four million homeowners who were at risk of being foreclosed on. HAMP required lenders to reduce monthly mortgage payments, and provided incentives to homeowners who paid their mortgages on time.

However, only 600,000 people benefitted from the program, leaving lawmakers and independent analysts alike to label it a failure.

In fact, during testimony before the House Financial Services Committee earlier this year, Neil Barofsky, the Special Inspector General of TARP, said that HAMP had been “beset by problems from the outset and, despite frequent retooling, continues to fall dramatically short of any meaningful standard of success.”

The HAMP Termination Act blocks the Treasury from further administering the program, thereby saving taxpayers $1.4 billion, according to a recent estimate by the Congressional Budget Office. Those funds are required to be used toward paying down the nation’s projected deficit this year of $1.65 trillion. Borrowers who are currently enrolled in the program, however, will continue to receive assistance.

In a statement, the bill’s author, Rep. Patrick McHenry (R-N.C.), called HAMP a hindrance and said that it gave borrowers nothing more than a “false hope of keeping their homes, only to leave them with depleted savings, tarnished credit, and even higher bills to pay.”

Though it passed through the lower chamber, the bill is expected to be rejected by the Democratically-controlled Senate. Moreover, hours before the vote took place, the White House released a statement saying that President Obama would veto the bill should it reach his desk.