Republicans vote to end Obama’s mortgage modification program
WASHINGTON (Reuters) – The House of Representatives on Tuesday voted to kill President Barack Obama’s signature program to help struggling homeowners avoid foreclosure.
A bill to terminate the program was approved on a 252-170 vote. But the bill is unlikely to clear the Senate.
It was the last in series of four measures brought forward by newly empowered House Republicans to end government assistance for homeowners hurt by the housing crisis.
Republicans argued the foreclosure prevention plan, known as the Home Affordable Modification Program, is ineffective and not worthy of taxpayer support amid soaring budget deficits. The vote broke largely along party lines.
The program, which offers incentives for lenders to modify loans, was launched to great fanfare in the spring of 2009. The Obama administration had hoped it would permanently lower mortgage payments for 3 million to 4 million homeowners.
But fewer than 600,000 borrowers have received permanent loan modifications, and the program has been widely criticized as ineffective from critics on both the left and the right.
“The HAMP program is a failure,” said Representative Patrick McHenry, the North Carolina Republican who sponsored the bill. “If we can’t eliminate this failed program, what program can we eliminate?”
Analysts see the votes as an effort by Republicans, who last seized control of the House in an election in November with an anti-bailout, anti-spending message, to score points with their political base.
The White House has already threatened to veto the measure. However, it is unlikely to come to that since Democrats, who retained control of the Senate, largely opposed the measure. Both the House and Senate would have to approve the bill for it to reach the president’s desk.
About $30 billion has been set aside for the program from the government’s $700 billion financial rescue fund, but only about $1 billion of that has been spent so far.
Democrats argued the program should be fixed, not killed.
“The absence of any program leaves people worse off,” said Representative Barney Frank, the top Democrat on the House Financial Services Committee.
Even as the Obama administration argues for keeping HAMP in place, it is pressing forward on a separate track that could result in much larger aid for struggling homeowners.
Big U.S. banks are meeting with federal officials and state attorneys general at the Justice Department on Wednesday as they negotiate what could turn into a multi-billion dollar settlement over alleged abuses by the companies that collect mortgage payments.
The banks and authorities are expected to discuss a settlement proposal that the state officials sent out earlier this month, which called on banks to treat borrowers better and to reduce loan balances for some struggling homeowners.
A group of 50 state attorneys general and about a dozen federal agencies are probing bank mortgage practices that came to light last year, including the use of “robo-signers” to sign hundreds of unread foreclosure documents a day.
On March 3, state attorneys general leading the probe sent banks the outline of a proposed settlement endorsed by some federal agencies, including the Justice Department, the Housing and Urban Development Department and Treasury staff setting up the Consumer Financial Protection Bureau.
The banks that received the proposal and that will have representatives at Wednesday’s meeting are Bank of America Corp, JPMorgan Chase & Co, Citigroup Inc, Wells Fargo & Co and Ally Financial, according to sources briefed on the meeting.
(Additional reporting by Dave Clarke; Editing by Carol Bishopric)
[Image via Jeff Turner, Creative Commons licensed]