Proposed Bills Would End HAMP, FHA Refi, Neighborhood Stabilization Program

Proposed Bills Would End HAMP, FHA Refi, Neighborhood Stabilization Program

A few weeks back, we discussed Republican proposals to end several of the Obama Administration's programs that were designed to alleviate the ongoing foreclosure crisis. These cuts may be a little closer to fruition, according to reports from HousingWire.com's Jon Prior on Friday, the House Financial Services Committee is now mulling over four bills that would end several of the government's foreclosure prevention programs.

The much-maligned Home Affordable Modification Program (HAMP), the Federal Housing Administration's Short Refi Program, the Neighborhood Stabilization Program (NSP), and the Emergency Homeowner Relief Fund would all get the ax under the new proposals. According to the article, the four programs are budgeted for $45 billion.

HAMP is probably the most harshly criticized of the programs, and the criticisms tend to cut across party lines. The Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Neil Barofksy, has said:

"What Treasury deems a universal benefit, many homeowners, members of Congress, and a growing number of commentators describe as "cruel" and offering little more than "false hope".

As of the end of 2010, HAMP only achieved 207,000 permanent modifications, while 5.5 million homes received foreclosure filings and 1.7 million homes were repossessed since 2009. As of December 2010, only 35 applications were processed through the FHA Short Refi Program.

The NSP has actually distributed $7 billion worth of money to the states. It is harder to measure the effectiveness of this program, as it allowed the states to decide what to do with the money, so each state program is different.

In my opinion, HAMP and FHA Short Refi have both been failures, and I don't mind seeing them go. I would probably keep the NSP around, because it allows states to try and come up with novel solutions for foreclosures on smaller scale than the other programs. The NSP also costs less money than the other plans. There were no mentions of any plans to replace the programs.

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