Killing HAMP Called Destabilizing

By:: Kirk Haverkamp | March 18, 2011

Ending HAMP and other anti-foreclosure programs would further destabilize an already weak housing market, a top Treasury official told a Senate panel Thursday.

Eliminating HAMP, as House Republicans are trying to do, would eliminate mortgage assistance to tens of thousands of at-risk homeowners each month, Acting Assistant Treasury Secretary Timothy Massad testified. It would also ease the pressure on lenders to offer better terms to at-risk homeowners when working out foreclosure avoidance plans and would damage prospects for recover in the weak housing market.

Massad was testifying before the Senate Committee on Banking, Housing and Public Affairs the week after House Republicans voted to eliminate HAMP and several other programs. The HAMP termination bill was voted out of committee on March 9 and is expected to come up before the whole House shortly.

It’s unlikely the bill would make it through the Democratic-controlled Senate, however, and the White House has said President Obama would veto the measure if it did.

While acknowledging that the program has fallen short of its original goals of providing permanent loan modifications to 4-5 million homeowners, Massad stressed that the program was never intended to help all homeowners avoid foreclosure. He said there are currently about 1.4 million homeowners seriously delinquent on their mortgages who would qualify for HAMP, out of 5 million delinquencies overall.

To date, the program has provided permanent loan modifications to over 600,000 homeowners, with another 25,000-30,000 being approved each month, Massad said. The average savings for homeowners has been $500 a month, he said, with a total savings of $5 billion to date from the program.

Massad said the program has made a number of improvements to the program since it was launched, including procedures to ensure that qualifying homeowners are offered meaningful loan modifications, or other alternatives to foreclosure when appropriate. Treasury has also prodded servicers to increase staffing levels to improve customer service for borrowers seeking loan modifications, and has developed specific guidelines spelling out how homeowners must be evaluated for HAMP before a foreclosure can proceed.

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