We’ve been writing for a long time about the disastrous Home Affordable Modification Program, Obama’s well intentioned yet failure of a program to intervene with struggling homeowners.
HAMP is famous for spending taxpayer money with little return- few homeowners have actually received a modification, most end up in limbo and there are even claims of lost paperwork and stall tactics from servicers unwilling to properly execute the program.
Today, the House Financial Services Committee passed a vote to eliminate HAMP rather than let it run its full course through 2012 when it is set to expire. A full House vote is expected the week of March 28.
Other programs getting the axe
On March 16th, the House approved elimination of an additional $1 Billion in funding for the Neighborhood Stabilization Program (yet allowed the existing $6B already set aside).
This month, the House approved elimination of the Emergency Homeowners Loan Program which helps unemployed homeowners pay their mortgage for up to two years. The program is not yet in effect but it looks like it will be cut before it gets started.
This month, the House also nixed the FHA short-refi program wherein underwater borrowers can refinance into a new FHA backed loan. According to Reuters.com, only 44 borrowers have successfully obtained a new loan under this program despite $8.1 billion being set aside for the program. Fail.
Why all the cuts?
Depending on what cable news channel you watch, some will tell you the ignorant Republicans are out to kill the moral fiber of America while other channels will point failed programs that are draining taxpayer’s wallets. Others will point to the well intentioned programs that falsely prop up a housing market.
Will eliminating these programs cause more of a dip in housing but a proper recovery or will the cuts devastate an already hemorrhaging sector?