House Puts Making Home Affordable Under the Microscope
The House Financial Services Subcommittee on Housing and Community Opportunity on Wednesday studied the progress of the Making Home Affordable Program (MHA Program). On March 4, 2009, the Obama Administration introduced MHA Program to stabilize the housing market and reduce monthly mortgage payments for Americans. The program aimed to help 3-4m homeowners, and so far 15% of eligible homeowners -- or 2.7m -- received help after six months, according to Federal Housing Administration (FHA) commissioner David Stevens. “MHA has achieved clear success in a relative short time period and there are some indications that the housing market is stabilizing with home price declines slowing,” he said in prepared testimony delivered to the House subcommittee hearing Wednesday. Not all agree on the need for the MHA Program. The ranking member on the House committee, Spencer Bachus (R-Ala.), said the program was unnecessary. “As long as people are losing jobs, they’re going to lose their homes. We need to let the private sector create those jobs, and that’s how we’re going to save those homes,” Bachus said. Barney Frank (D-Mass.), the committee’s chairman, said although it would be useful to get more jobs, the majority of foreclosures are not related to job loss because the foreclosure crisis began last year when the unemployment rate was healthier. Since the MHA Program began, 48 servicers, representing 85% of the market, joined the Home Affordable Modification Program (HAMP), which provides incentive payments to servicers, lender/investors and borrowers that participate. In a recent progress report, the servicers had extended more than 571,000 loan modification offers. Of those, 360,000 entered the 90-day trial period, a required task before the modification becomes permanent, FHA's Stevens said. He also noted the obstacles facing MHA Program servicers and borrowers, recognizing that a needed improvement in the responsiveness and accountability of servicers to reach more homeowners and to streamline the processing of applications that have just entered into the program. HousingWire reported in August an uneven performance among servicers initially participating in the program. In July, Treasury secretary Timothy Geithner and the Housing and Urban Development (HUD) secretary Shaun Donovan sent a letter to servicers urging them to do more. On July 28, a meeting between the servicers and Admistration officials developed three steps to improve the program: public reports of servicer performance, working with servicers to improve operations and the development of a “second look” program to catch applications that fall through the cracks. Mary Coffin, executive vice president of Wells Fargo Home Servicing, one of the HAMP particpators that received the letter and attended the meeting, noted the 200% increase in borrowers that have requested assistance from the program, in a statement prepared for the hearing Wednesday. "Despite widespread decreases in home values, more than 92% of our customers in our entire servicing portfolio remain current on their mortgage payments," Coffin said. Michael Barr, the Treasury assistant secretary for financial institutions said in written testimony that servicers at the meeting committed to reaching a target of 500,000 trial modifications by Nov. 1, 2009. When asked at the hearing what the expected rate of enrollment would be in the future, Barr stated that the program is on track to reach nearly 4m borrowers over the next three years. Write to Jon Prior.