Posted on Thursday, March 17, 2011
The House Financial Services Committee voted Thursday to scrap two foreclosure relief programs – one that gives underwater homeowners a federal refinancing option, and a second that provides temporary mortgage assistance to unemployed homeowners.
The FHA Refinance Program Termination Act (H.R. 830) targets the Federal Housing Administration’s (FHA) Short Refi Program, which allows homeowners who own more on their loan than the property is worth to refinance into a new FHA-insured mortgage as long as their lender agrees to write off at least 10 percent of the unpaid principal balance on the original mortgage.
The Emergency Mortgage Relief Program Termination Act (H.R. 836) would end a program established by the Dodd-Frank Reform Act last summer to provide home-
owners who’ve lost their jobs with a “bridge loan” of up to $50,000 to cover past due mortgage expenses, plus up to 24 months of monthly mortgage payments while the borrower searches for new employment.
The two bills to terminate these programs now move to the full House for debate. Democrats have indicated that they will challenge any moves to completely scrap the programs, although they concede that some retooling might make them more effective. The party-line division over the termination legislation could become an even bigger factor if the bills find their way to the Democratic-controlled Senate.
The House committee was also planning to consider two separate bills to end the administration’s Home Affordable Modification Program (HAMP) and HUD’s Neighborhood Stabilization Program, but votes on these two have been pushed to next week, reportedly simply because of time constraints.
Rep. Spencer Bachus (R-Alabama) is chairman of the House Financial Services Committee and one of the main forces pushing the bills through.
Bachus said, “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. These programs may have been well-intentioned but they’re not working. Congress needs to stop funding programs that don’t work with money we don’t have.”
By: Carrie Bay, DS News