The House Financial Services Committee today will mark up four bills designed to gut foreclosure prevention programs. No other legislation is being proposed to fill the gap and help the estimated five million mortgage holders at risk of losing their homes.
According to the Center for Responsible Lending’s (CRL) Julia Gordon, the proposed legislation would:
Eliminate the Home Affordable Modification Program (HAMP) going forward. This program allows for interest rate reductions and, in some cases principal reductions, for homeowners having trouble keeping up with their payments. Homeowners currently enrolled in HAMP would not be affected.
Kill the unemployment loan assistance program before it starts. This program was authorized under the Dodd-Frank Wall Street Reform Act and is designed to provide “bridge loans,” or short-term loans, to homeowners who have lost their jobs but could make their payments once they are employed again. It is modeled after successful programs currently available in eighteen states, and could fill the gap in remaining states where similar programs are not yet available.
End the FHA Short Refinance program. This program allows homeowners with FHA loans to refinance with a principal reduction.
Eliminate the third round of funding for the neighborhood stabilization program. This program provides communities that have suffered from foreclosures and abandonment with funds to purchase and redevelop foreclosed and abandoned homes and residential properties.
Sponsors of the bills claim the current efforts have not been effective enough, but they have not proposed any other solutions to stem the continuing tide of foreclosures. An estimated 50,000 new foreclosure actions are initiated every week, according to CRL. RealtyTrac reported a record 2.9 million foreclosures in 2010.
“When we’re in the midst of an epidemic, we don’t close all the hospitals—we work faster and harder to find a cure,” CRL president Mike Calhoun said in a statement. “We call on Congress to strengthen foreclosure prevention efforts by holding servicers accountable and requiring a review of every mortgage loan before foreclosures proceed.”
Image: Kevin Dooley, via Flickr.com