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Congressmen aim to kill HAMP

By Marcie Geffner · Bankrate.com
Thursday, February 10, 2011
Posted: 12 pm ET

The debate over the success or failure of the federal government's Home Affordable Mortgage Program, or HAMP, entered a new phase two weeks ago, when Rep. Jim Jordan, R-Ohio, introduced a bill that would all but eliminate the entire program.

The bill, H.R. 430, HAMP Repeal and Deficit Reduction Act of 2011, would end any HAMP assistance to homeowners, unless they'd already received a trial or permanent loan modification offer though the program prior to the law's enactment. Authorized, but unobligated HAMP funds would be used to reduce the federal debt.

The bill, wonderfully short at just 647 words, so far has attracted three co-sponsors: Reps. Darrell Issa, R-Calif., Patrick McHenry, R-N.C., and Dennis Ross, R-Fla.

The full text of H.R. 430 points out that HAMP was supposed to aid 3-4 million financially struggling homeowners, but as of December 2010, had resulted in only 504,648 active permanent mortgage modifications, plus another 774,081 canceled mortgage modifications, a 3:2 ratio of failure to pending. The findings also state that "many homeowners whose modifications were canceled suffered because they made futile payments -- some were even forced into foreclosure as a result" and, quite bluntly, that "HAMP is a failure."

Jordan and Issa have had HAMP on their hit list for some time. In an August 2010 editorial in The Wall Street Journal, the two Congressmen wrote:

It is hard to conclude otherwise than that this program has wasted taxpayer money to accomplish in more time, with fewer results, what the private sector was already doing.

Unfortunately, too many people have struggled to stay in homes they cannot afford even with taxpayer-subsidized relief. They've thrown away resources on mortgage payments and fees that could have been applied toward other suitable housing within their means. Furthermore, their credit scores—which had already suffered serious hits—are now further threatened by redefaults and will take more time to recover.

Whether H.R. 430 will attract more support and actually move forward through the Congressional committees is an open question. Even less likely would be the necessary presidential signature for the bill to become law and actually do away with HAMP. Yet the effort nonetheless calls more attention to the program's well-documented limitations and shortcomings.

What's your opinion: Should HAMP be eliminated?

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8 Comments
david
March 20, 2011 at 11:47 am

Anyone who thinks HAMP should stay is a complete moron.

As an industry insider I can tell you it's the #1 reason why people AREN'T getting modifications today.

If you know anything about this business you would understand it's the worst train wreck government program period.

Before HAMP modifications had 80% success rate and took AT MOST 3 months. After HAMP less than 20% of people that apply get a FINAL modification.

Everyone gets a TRIAL MOD it's a debt collection service MORONS.

Less than 20% actually get accepted and it takes almost 12 months to get... that means 80% lose their homes because by the time they're FINALLY denied they've accumulated too much debt and don't qualify for Bankruptcy either...

END THE PROGRAM - IT'S COMPLETELY USELESS

bob
March 11, 2011 at 7:11 pm

GET RID OF IT. We are running a Federal $1.6 TRILLION DEBT this year is anybody noticing.

dave jones
March 06, 2011 at 1:53 pm

Take the lesson learned and improve the program. I am currently in a trial payment and expect a permanent mod in april. It was painful but less so than a foreclosure. The private sector ruined the housing market and can not be counted on as a solution.

Godsend in Minnesota
February 24, 2011 at 2:09 pm

In early Jan 2011, I called my bank about moving my mortgage payment because of changes in our family income and the date of our now-sole source of income, a disability check. They couldn't move the payment date but the bank rep thought we were good candidates for a HAMP program. I was forwarded to the bank's dept that handles the HAMP program. We had experienced a drop in our family's income of 60% due to my husband's disabling illness and my unemployment. It was a lot of information, paperwork, and phone calls but we were accepted into the three month trial period in less than three weeks of applying (with all the paperwork submitted)and it will absolutely make the difference of whether we can stay in our home or not. The bank staff has been helpful and professional and the program required us to go thru credit counseling and that process helped us even more with recommendations and resources while we are getting back on our feet and adjusting to the pretty dramatic change in our financial circumstances. This has been a godsend for us and I just wanted to show that we are one of the GOOD examples of how this specific program has worked!

Homeless
February 11, 2011 at 8:58 am

This program was a farce from the beginning. The number one reason it was a farce is because the banks had no accountability to follow through with anything. I tried the process and according to the HAMP website I was a prime candidate. 7 months into a grueling, stressful, time consuming and ridiculous process, with dozens of phone calls, faxes and mailings I was offered a payment lower by $180. That was their idea of a modification. Not very helpful to a family of 4 in THE most expensive state of CT, whose income was slashed in half due to a job loss that lasted over TWO YEARS. It was not a family that couldn't afford the house either. We made a down payment, we had emergency funds, retirement funds, and college savings. All that went out the window when one of the incomes was lost and that money dwindled down to nothing while the bank sat on their collective a$$, doing nothing in the "modification" process.

Had that plan, that was supposed to help, never been available, we would have cut our losses as soon as we lost the job and would have been able to keep our lifetime savings in tact. All that would have been lost was the home. Instead because our government falsey lulled us into the idea that we could do something to save our home, we lost the house and ALL of our savings (every penney), had to pack up our kids and move 900 miles away from everyone and everything they loved to live with my mom. At the age of 32 (may seem young but I have been employed full time since I was 16) I have absolutely NOTHING to show for all my years of hard work and we are getting ready to meet with a bankruptcy attorney. I wish they would get rid of the program AND I wish they would force the banks to pay back what the taxpayers gave them. If the bank can handle thier debts let THEM file bankruptcy and start over like the millions of Americans they have scammed.

s2kreno
February 10, 2011 at 4:37 pm

HAMP was designed to fail in my opinion. Treasury and Congress had to know (no one is that stupid) that unless participation from any institution that received government aid (TARP) was mandatory the mortgage servicers would avoid modifying loans. Why would they when they earn ten times as much by foreclosing? And with no agency given the power to force lenders to participate and apply guidelines fairly and in good faith there is no way this was ever going to get off the ground. It was designed as a sop, a way for Congress to pretend that they were trying to help while causing no hardship to those making those contributions. I'm not normally so cynical but I spotted this one a mile off.