Washington, DC – The U.S. House of Representatives today approved legislation, co-sponsored by U.S. Representative Judy Biggert (R-IL-13^th), to terminate the Administration’s signature Home Affordable Modification Program, known as HAMP.  Biggert, Chair of the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity, co-sponsored H.R. 839 to end taxpayer funding for the program, which has been plagued by mismanagement, high costs, and poor reviews by homeowners left in worse financial shape after accepting trial assistance through the program.  Today’s bill marks the fourth House-approved measure spearheaded by Biggert and her colleagues on the House Financial Services Committee to terminate troubled housing programs identified by government auditors.

 The Administration launched HAMP in February 2009 to reduce mortgage payments for struggling homeowners and set aside $30 billion from the Troubled Assets Relief Program (TARP) to fund the initiative.  Projected by the Administration to help up to four million homeowners, HAMP has failed to meet expectations, permanently modifying only 521,630 loans with a high rate of re-default.

 “HAMP sounded great, but it quickly became the poster child for failed experiments in foreclosure prevention,” said Biggert.  “An estimated 735,000 homeowners, including residents of the 13^th district, were approved for a trial home loan modification under HAMP then later denied a permanent modification.  Many of these homeowners then were charged late fees and back payments, and left deeper in debt and still facing foreclosure.  Families seeking help don’t need false hope, they need jobs, and that’s where we should be focusing our resources – not on another failed housing program.”

           According to the Congressional Budget Office, terminating HAMP will save taxpayers $1.4 billion over ten years.  Earlier this month, the House also approved three other bills terminating funding for failed programs: H.R. 861 to terminate the Neighborhood Stabilization Program (NSP), H.R. 830 to terminate the FHA Refinance Program, and H.R. 836 to terminate the Emergency Homeowner Relief Program.   

 “NSP is a $7 billion dollar program that created perverse incentives for banks and other lenders to foreclose on troubled borrowers.  It created a slush fund for the purchase and rehab of foreclosed homes, helping banks unload unwanted properties onto the taxpayers,” said Biggert. 

 “These programs may have been well intentioned, but we need to stop spending money we don’t have to fund programs that don’t work.  Taxpayers spent $50 million on the FHA Refinance Program, which resulted in the refinancing of a mere 44 loans.  That’s not a record worthy of taxpayer support,” said Biggert, a former real estate attorney.

           The fourth bill terminated the Emergency Mortgage Relief Program, an emergency loan program designed in 1975 that was reauthorized under the Dodd-Frank Act.  The $1 billion program currently loses 98 cents of every dollar it lends out.

           “These four programs were set up in haste, executed poorly, and have done little to restore stability in the marketplace.  And they have cost taxpayers billions of dollars.  We need to create an environment where businesses can hire again and more Americans can afford to make their house payments.  That means cutting spending in Washington – starting with programs that don’t work.”

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