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Federal HOPE program has helped few homeowners

Costs and restrictions are deterring participation, the Housing Department says. A bill that would let HUD loosen some restrictions is scheduled for a vote today.

February 04, 2009|Bloomberg news

The federal HOPE for Homeowners lending program, created last year to assist 400,000 struggling borrowers, has refinanced only 25 loans so far as the costs and restrictions deter participation, according to the U.S. Department of Housing and Urban Development.

"The program restrictions have proven to be more and more difficult over time, as economic conditions worsen," HOPE for Homeowners Executive Director Meg Burns said at a House Financial Services Committee hearing in Washington on Tuesday. "At this stage in the mortgage crisis, program standards that effectively shut out large numbers of families in trouble may only perpetuate the foreclosure crisis."

Committee Chairman Barney Frank (D-Mass.) has scheduled votes today on a bill that would allow HUD to loosen pricing restrictions and reduce the amount of losses banks would have to take in some instances to participate. Legislation that created the program was "drafted badly" in a rush to insure taxpayers against losses, Frank said.

Changes are needed "as quickly as possible," said Burns, who runs residential housing programs at the Federal Housing Administration under HUD.

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