Last week, the House Financial Services Committee approved two bills that would terminate two foreclosure-prevention programs. The panel passed by a 32-23 vote legislation (H.R. 839, “HAMP Termination Act”) that would end the Home Affordable Modification Program that offers incentives for lenders to modify troubled borrowers’ mortgage loans, in the wake of serious concerns about the program’s effectiveness and cost. H.R. 839 would amend the Emergency Economic Stabilization Act of 2008 to terminate the authority of the Secretary of the Treasury to provide new assistance under the Home Affordable Modification Program, while preserving assistance to homeowners who were already extended an offer to participate in the Program, either on a trial or permanent basis.
HAMP has suffered from myriad problems since its launch in February 2009, including low enrollment and high rates of re-default on modified mortgages. House Rep. Patrick McHenry (R-NC), who introduced the bill, has called the program an “epic failure”. The ranks of supporters of the bill are thinning, even among Democrats, a group of whom recently sent a letter to Vice-President Biden urging immediate action to help struggling homeowners, and calling efforts to date “inadequate” and a “critical problem”. Growing dissatisfaction with HAMP on both sides of the aisles suggest that the bill could possibly garner passage even in the Senate, where Democrats maintain a slim majority. The White House has threatened a veto of all bills that terminate emergency loan and mortgage modification measures.
The committee also approved by a 31-24 vote a bill (H.R. 861) that would terminate the Neighborhood Stabilization Program that provides money for state and local governments to help clean up blighted properties and redevelop them. The NSP has received $6 billion to enable state and local governments to purchase and either rehabilitate or destroy distressed properties in their jurisdictions. Local governments in areas hard-hit by foreclosures claim that the program helps them to cope effectively with the fallout from the housing downturn, which has left thousands of homes empty and prone to vandalism, squatters and blight. Critics of the NSP have claimed that the program fails to address the needs of troubled homeowners, and incentivizes banks and property owners to “dump” distressed properties onto taxpayers.
In related news, on March 10th, the House also voted on legislation H.R. 830, the Federal Housing Assistance (FHA) Program Termination Act that would end the FHA Refinance Program that enables underwater borrowers to refinance into less-costly Federal Housing Administration-insured mortgages. It is scheduled to go to the Senate soon; however, the Obama administration is opposed to the passage of the bill and according to the White House’s official website, “If the President is presented with H.R. 830, his senior advisors would recommend that he veto the bill.” You can read the statement here: http://www.whitehouse.gov/sites/default/files/omb/legislative/sap/112/saphr830h_20110308.pdf
The House also passed bill H.R. 836, the Emergency Mortgage Relief Program Termination Act. This program was created to help homeowners who have lost jobs to continue making mortgage payments. The bill now goes on to be voted on in the Senate. Keep in mind that debate may be taking place on a companion bill in the Senate, rather than on this particular bill. You can read the full text of the bill here:http://www.gpo.gov/fdsys/pkg/BILLS-112hr836eh/pdf/BILLS-112hr836eh.pdf
All these legislation will greatly impact the housing recovery initiatives that we as Realtors support. To find out how these changes will affect you either as a seller or buyer, contact us today at 702-285-1990.