The tenuous Home Affordable Modification Program (HAMP) moved one step closer to being scuttled on Wednesday with passage of the “HAMP Termination Act” (H.R. 839) in the House Financial Services Committee. On March 9th the committee voted 32–23 to close the two-year old program has come in the wake of serious concerns about the program’s effectiveness and cost. The Act will now proceed to the floor of the House for debate and a vote.
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 Financial Services Committee also passed on Wednesday a bill calling for cessation of funding for the Neighborhood Stabilization Program (NSP). 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.
The House vote on the Home Affordable Modification Program and Neighborhood Stabilization Program bills may come as soon as next week.