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House votes to scrap Home Affordable Modification Program

Lawmakers vote largely along party lines to cut off funding for HAMP, the Home Affordable Modification Program, but the bill and three similar measures are likely to be rejected by the Senate and White House.

March 30, 2011|By Jim Puzzanghera, Los Angeles Times

Reporting from Washington — The House voted 252 to 170 to end the Obama administration's main mortgage foreclosure prevention program, saying the much-criticized initiative has been ineffective and given false hope to hundreds of thousands of homeowners who ultimately lost their homes anyway.

The vote Tuesday to cut off funding for the Home Affordable Modification Program went largely along party lines and follows votes this month by the House Republican majority to end three smaller federal programs designed to help homeowners and communities deal with the foreclosure crisis.

But none of those bills are likely to pass the Democratic-controlled Senate. And the White House has threatened to veto all of them.

HAMP is the centerpiece of the Obama administration's efforts to keep struggling homeowners in their houses but has drawn bipartisan criticism for failing to meet its objectives.

It was launched with great fanfare in early 2009 with the goal of helping 3 million to 4 million homeowners avoid foreclosure through 2012 by providing cash incentives for lenders to reduce monthly payments.

Funded with as much as $30 billion from the $700-billion Troubled Asset Relief Program, HAMP has permanently lowered payments for about 540,000 homeowners through January. An additional 145,000 homeowners are in three-month trial modifications.

But more trial and permanent modifications — about 770,000 — have been canceled by lenders because the homeowners were unable to make the lower payments. That left many of those homeowners facing foreclosure again, but with less money after having made the additional payments.

"We're ending this failure," said House Financial Services Committee Chairman Spencer Bachus (R-Ala.).

Many House Democrats argued that the Treasury Department program, although flawed, still has helped thousands of people and should be fixed, not ended. Because the incentives to banks aren't paid until a modification becomes permanent, the program has spent only about $1 billion so far, they noted.

"To simply walk away without offering an alternative means we don't care, this Congress doesn't care, if you lose your home," said Rep. Michael E. Capuano (D-Mass.). He was among 50 House Democrats who sent a letter to Treasury Secretary Timothy F. Geithner on Monday urging improvements.

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