Efforts by Republicans to terminate President Obama’s programs for the prevention of foreclosures will harm economic recovery, said a U.S. Treasury official.
Plans to bin the HAMP (Home Affordable Modification Program) will lead to mortgage companies being less willing to assist homeowners who are struggling to meet payments, according to assistant secretary for financial stability Timothy Massad. This in turn will harm the recovery hopes of what remains a fragile property market.
A bill to terminate HAMP could be put to the vote by senators in the next two weeks. The purpose of the HAMP scheme is to help out struggling homeowners by helping them to reschedule mortgage payments, by paying banks compensation in order to get them to agree to modifications.
So far, over 600,000 homeowners have been saved from foreclosures by HAMP, Massad said.
Homeowners have benefited not just from direct assistance, but also from the standards it has set, which has persuaded many mortgage brokers to modify payment plans without direct intervention by HAMP.
Massad claimed that HAMP has been hugely successful by any measure.
However, according to special inspector general for TARP Neil Barofsky, HAMP’s efforts had fallen “tragically short”.
He said that the program hasn’t even come near to its target of assisting 3 million homeowners to stave off the threat of foreclosure. A flawed structure together with a rush launch without proper analysis had prevented HAMP from providing the kind of assistance that was expected of it.
A vote last Wednesday in the Republican-dominated Senate has already gone against a similar scheme that is geared towards helping communities, the Neighborhood Stabilization Program. However, President Obama will veto this decision, raising hopes that he will take the same action if senators decide to scrap HAMP.