Less than a week after approving bills to terminate the Emergency Homeowners Relief and the FHA Short Refinance programs, the House Financial Services Committee has approved bills to end the Home Affordable Modification Program (HAMP) and the Neighborhood Stabilization Program (NSP).
Stating that the two programs are ineffective and represent wasteful spending totaling $30 billion, Committee Chairman Spencer Bachus said, "We are on an unsustainable path that will lead to ruin, that will lead to a diminished standard of living for our children and grandchildren, and that will reduce the greatness of our country. We must take action immediately to change course and put a stop to this reckless culture of spending that has ruled Washington for far too long.”
HAMP was introduced in February of 2009 with $30 billion in TARP funds set aside for the program. The goal was to assist up to 4 million homeowners to modify their home loans. To date, $840 million has been spent and only 521,630 loans have been permanently modified. The committee also noted that the re-default rate is high. The bill, if approved, would not impact loans permanently modified or the 1.4 million that are currently in modification trial periods. According to Special Inspector General for TARP, Neil Barofsky testimony to the committee, HAMP “benefits only a small portion of distressed homeowners, offers others little more than false hope, and in certain cases causes more harm than good.”
In presenting a bill to terminate the NSP, Rep Gary Miller noted that $6 billion of the $7 billion allocated to the program has accomplished little to assist struggling homeowners. Instead, it has allowed lenders and speculators the ability to off-load foreclosed properties onto the taxpayers. "NSP was inefficient and it did not target resources to those areas with the most need," Rep Miller said. "Even worse, there was no requirement for repayment of the allocated funds."
The bills to terminate the four programs still have to go to the floor for a vote in both houses of congress, than, if approved, to President Obama's desk for signature. In two statements released by the Obama Administration via the Office of Management and Budget, the Administration has stated the President will veto the bills if they reach his desk.