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House committee votes to end FHA Short Refi program

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The House Financial Services Committee voted Thursday to end two new programs that would provide assistance to troubled homeowners. If passed, one bill will end the Federal Housing Administration's Short Refi program, which assists underwater homeowners with new FHA-insured loans. Just Wednesday, FHA Commissioner David Stevens said 23 lenders have signed up to participate in the Short Refi program. The other bill would end the Emergency Homeowner Loan Program. Through it, the Department of Housing and Urban Development provides mortgage assistance to unemployed borrowers in the form of 0% interest loans for up to $50,000. Both programs are relatively new. The FHA Short Refi program launched in September, and the EHLP wasn't set to accept applications until sometime this spring. Both bills that propose ending these programs are expected to reach the House floor next week. Rep. Judy Biggert (R-Ill.) co-sponsored both bills passed by the committee Thursday. "A government program that spends more to save a single borrower than it costs to buy a home is no help at all – it’s just a waste of taxpayer money," Biggert said. "We need to stop funding programs that don’t work with money we don’t have." Rep. Maxine Waters (D-Calif.) helped HUD develop both the NSP and the EHLP program . "I am very disappointed in my colleagues on the opposite side of the aisle, who in their mania to achieve fiscal austerity at all costs, moved to cut two nascent programs designed to really help struggling homeowners," Waters said. The committee heard testimony Wednesday on whether or not it should continue funding billions of dollars in help through several initiatives, including the Home Affordable Modification Program and the Neighborhood Stabilization Program. The House committee will hold a vote on discontinuing those programs next week. Write to Jon Prior. Follow him on Twitter: @JonAPrior

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