Mortgages

Congress Votes to Kill Mortgage Program

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The U.S Congress voted 252 to 170 on Tuesday to kill the Obama Administration’s signature program aimed at reversing the foreclosure crisis. The Home Affordable Modification Program (HAMP) has fallen far short of its goals to prevent 4 million homeowners from falling into foreclosure.

So far the program has helped just over half a million people win permanent changes to their mortgages, as we reported here.

HAMP is “a poster child for failed federal foreclosure programs,” said Rep. Judy Biggert (R-Ill.), chairwoman of the House Finance Committee’s housing subcommittee.

The vote is largely symbolic because it is unlikely to pass the Democratic-controlled Senate. Through a spokesman, President Obama has indicated he would veto any bill to scrap the program.

[Related: Multiple Fronts in Mortgage Industry War]

The HAMP program failed largely because it did not have the power to do its job, according to a report by the Congressional Oversight Panel. Instead of mandating that loan servicers modify loans that meet certain criteria, it uses subsidies to encourage loan servicers to modify mortgages.

But the subsidies are lower than the amount of money servicers make by pushing homes into foreclosure, according to this report by the Center for Responsible Lending.

Democrats argued that instead of killing HAMP, Congress should try to fix it.

“Rather than try to get the program right we abandon all those people who are underwater,” Rep. Keith Ellison (D-Minn) told the Associated Press.

Image: Kyle Rush, via Flickr.com

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