If Congressional efforts to end the Home Affordable Modification Program succeed, it will pinch an already fragile housing market, damaging prospects for a full recovery, Acting Assistant Secretary to the Treasury Timothy Massad said Thursday.

Massad made that statement while testifying before a Senate panel investigating the effects of the Trouble Asset Relief Program. In his testimony, Massad targeted Republican efforts to quash HAMP, noting proposals to end the FHA Refinance Program and the Emergency Homeowners' Relief Program are already on the table, threatening to stifle the recovery.

A vote also is scheduled for later this week on whether the Neighborhood Stabilization Program should be terminated.

"Ending these essential programs would further destabilize an already weak housing market," Massad warned the panel.  "We acknowledge that our housing programs have not been without criticism, and that housing is an area where there is still much work to be done," he said. "It should be remembered, however, that the forces that created this housing crisis had been building for nearly a decade."

Massad defended the administration's housing programs, saying HAMP saved 600,000 struggling borrowers by modifying their loans. In addition, it set up standards for servicers and lenders to follow when launching their own distressed borrower outreach programs, he said.

"Many have criticized HAMP because it will not achieve 3 million to 4 million permanent modifications," he told the panel. "It is important to remember that the program was not intended to prevent all foreclosures.  Today, there are approximately 5 million delinquent mortgages." Out of those 5 million, he said, only 1.4 million are eligible for HAMP based on the guidelines in play.

Massad also defended the Treasury's attempt to deal with what the  administration considers  the shortcomings of mortgage servicers. "[W]e developed specific guidelines and certifications on how and when homeowners must be evaluated for HAMP and other options before foreclosure," he said. "We developed a defined process for escalating homeowner complaints to be resolved promptly and fairly."

Massad said the administration's housing recovery programs faced obvious obstacles, considering policymakers had to balance the cost to taxpayers against the needs of distressed borrowers. "Implementation has been difficult, and much work remains to ease the housing crisis. But that should not obscure the importance of what has been accomplished, nor the fact that these programs can continue to help ease the pain of this terrible crisis," he told the panel.

Massad also defended TARP Thursday, saying taxpayers have recovered about 70% of the total funding distributed to the banks and troubled organizations after the 2008 economic meltdown. Three years ago, the Treasury injected $245 billion into financial institutions, and has already recovered $243 billion, including $211 billion in repayments and $32 billion in income, according to Massad's testimony.

"The latest estimates, both from Treasury and from the Congressional Budget Office, are that the overall cost of TARP will be between $25 and $50 billion," he said. "The TARP investment programs taken as a whole—including financial support for banks, AIG, the domestic auto industry, and targeted initiatives to restart the credit markets—are expected to result in very little or no cost to the taxpayer."

He said today — three years after the crisis — the Treasury's remaining investments in banks represent only 10% of the entire banking system.

Write to Kerri Panchuk.