The House of Representatives voted late Tuesday evening to end the Obama administration’s embattled foreclosure prevention program, arguing that it is wasting tens of billions of taxpayer dollars without a significant return or benefit to the struggling economy.
The Republican-controlled House voted 252-170 to scrap the Home Affordable Modification Program, known as HAMP. The vote was largely divided down party lines, with just 18 Democrats crossing the aisle to vote to terminate the program and just two Republicans voting to keep it going.
However, Tuesday’s vote in the House appears to be as far as the GOP’s push will go.
Earlier Tuesday President Obama threatened to veto the bill if it managed to pass both houses of Congress, but even that is unlikely since Senate Democrats have shown little appetite for picking up the Republicans’ effort to stop the program.
In a statement released before Tuesday’s vote, the White House said, “This program offers eligible homeowners an opportunity to lower their mortgage payments, helping individuals avoid foreclosure and leading to the protection of home values and the preservation of homeownership.”
“The Administration is committed to helping struggling American homeowners stay in their homes, and has taken many steps over the last two years to stabilize what was a rapidly-declining housing market. As tens of thousands of responsible American homeowners struggling with their mortgages receive permanent assistance each month from HAMP, the Administration believes that continuation of HAMP is important to the Nation’s sustained economic recovery.”
The program has been blasted by GOP lawmakers and non-partisan government watchdogs almost since its inception in the spring of 2009. The administration said the program would help 3 to 4 million struggling homeowners avoid foreclosure, but to date it has only helped around 540,000 borrowers receive permanent loan modifications to enable them to stay in their homes.
By comparison, over 800,000 homeowners have dropped out of the program.
House Majority Leader Eric Cantor, R-Va., reacted to the vote in a statement, stating “the House voted to put an end to the ineffective” program and “will prevent nearly $30 billion in TARP funds from being spent.”
“This ill-conceived program failed to meet expectations and was one of the Obama Administration’s attempts to fix the weakened housing market by throwing taxpayer dollars at faulty mortgages, which ignores the root cause of the problem. However, of the $30 billion allocated, only a small portion has been used, providing sub-par services resulting in a high rate of re-default,” Cantor stated. “By all accounts, including experts within the Administration, this failed program costs taxpayers too much money and is actually doing more harm than good to the homeowners it aims to help.”
Neil Barofsky, the outgoing Special Inspector General for TARP (SIGTARP), has contended that the program “continues to fall woefully short of meeting its original expectations” and there is now “near universal agreement that the program has failed.”
“HAMP has been beset by problems from the outset and, despite frequent retooling, continues to fall woefully short of meeting its original expectations,” Barofsky recently told a House subcommittee. “Today the program is under siege from all quarters, with near universal agreement that the program has failed to meet its goals, and the current debate centering mostly on whether the program should be terminated, replaced or revamped. Treasury, it seems, stands alone in defending the status quo.”
That was fuel for the fire of House Republicans who want to end the program before it expires at the end of next year.
But the administration has argued that even though the program will not meet its stated goal of keeping 3 to 4 million homeowners in their homes, it is still helping some 25,000 to 30,000 borrowers every month, so getting rid of it would hurt the housing market.
“It would cause a huge amount of damage to a very fragile housing market and leave hundreds and hundreds of thousands, if not millions, of Americans without the chance to take advantage of a mortgage modification that would allow them to stay in a home they can afford,” Treasury Secretary Tim Geithner told a House hearing earlier this month.