The Obama administration's key housing market rescue programs have landed on the chopping block as the U.S. House of Representatives Financial Services Committees scheduled a vote next week to terminate them.
The panel's Republican leadership said on Thursday it will consider a bill to kill the Home Affordable Modification Program, which it said has failed to help a sufficient number of distressed homeowners to justify its cost.
It also will vote on bills to shut down a Federal Housing Administration refinancing program and a fund to stabilize neighborhoods suffering from heavy foreclosures. A fourth bill would kill a program to provide 12-month emergency loans to homeowners to stave off foreclosures.
"In an era of record-breaking deficits, it's time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners," Financial Services Committee Chairman Spencer Bachus said in a statement.
"These programs may have been well-intentioned but they're not working and, in reality, are making things worse," said Bachus, an Alabama Republican.
HAMP, the Obama administration's premier program to aid homeowners struggling with costly mortgages, has provided permanent modifications for only 521,630 home owners in the nearly two years it has been operating.
HAMP provides cash incentives to mortgage servicing firms to lower monthly payments for borrowers to no more than 31 percent of their income. But only owner-occupants who can meet stringent documentation requirements for employment, income and acceptable overall debt levels can qualify, limiting the program's reach.
Thus far, the program has spent only $840 million of the $29 billion earmarked from the Troubled Asset Relief Program, the Treasury Deparment's $700 billion bailout fund.
Much of the Obama administration's estimated $28.1 billion net cost for TARP is tied to housing relief programs, which do not offer any opportunity to recover funds spent.
U.S. Treasury Secretary Timothy Geithner last week acknowledged that HAMP will not likely reach its initial goals of aiding 3 million to 4 million U.S. homeowners by the end of 2012.
The panel has scheduled a subcommittee hearing on housing relief programs on March 2, followed by an amendment and voting session on the termination bills on March 3.
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