WASHINGTON – Republican efforts to end Obama administration programs aimed at preventing foreclosures would destabilize the housing market, a U.S. Treasury official said.
Scrapping the Home Affordable Modification Program would “relax the pressure on mortgage companies to offer better assistance to struggling homeowners and damage the prospects of recovery in our still-fragile housing market,” Timothy Massad, acting assistant secretary for financial stability, said in testimony prepared for a hearing before the Senate Banking Committee on Thursday.
Your Business Has Gone Global. Has Your Insurance?
A decade ago, “doing business internationally” was mostly a large-company concern. Today, a manufacturer in…
Learn More
The House may vote later this month on a bill to eliminate HAMP, which pays banks to modify borrowers’ monthly mortgage payments. The Republican-controlled House voted on Wednesday along party lines to eliminate the Neighborhood Stabilization Program, aimed at helping communities hit by foreclosures and abandoned properties. President Barack Obama has said he would veto the legislation.
HAMP has helped more than 600,000 homeowners get permanent mortgage modifications and stay in their homes, Massad said.
“Beyond direct assistance, many more homeowners have been helped by the standards that HAMP has catalyzed across mortgage modifications industry-wide,” Massad said. Overall, the Troubled Asset Relief Program “has been remarkably effective by any objective measure,” he said.
Neil Barofsky, special inspector general for TARP, told the committee that the Treasury’s foreclosure-prevention efforts have “come up tragically short.”
HAMP won’t come close to meeting its initial goal of helping 3 million to 4 million homeowners avoid foreclosure, Barofsky said. The program suffered from “a rushed launch based on deficient analysis, a flawed incentive structure” and rules that weren’t adequately developed, he said.
Still, “TARP’s financial prospects are without question far better today than anyone could have dared to hope just two years ago,” he said.
Barofsky, appointed by President George W. Bush in 2008, steps down March 30 and will join New York University’s law school as an adjunct professor.
