Posted on Monday, April 4, 2011
WASHINGTON -- Eighteen Democrats in the U.S. House of Representatives sided with Republicans in a symbolic vote to terminate the Obama administration's signature anti-foreclosure program. Among those Democrats was California Rep. George Miller, a member of House Democratic leadership and a key ally to Minority Leader Nancy Pelosi (Calif.), who voted the other way.
Miller told HuffPost he made up his mind to vote to kill HAMP after considering stories from California residents who said they tried to get reduced mortgage payments under the program and wound up ripped off or otherwise abused instead. In October, California Democrats compiled a report including dozens of stories about mortgage modifications gone bad.
"What we saw was just a commonality of abuse by servicers, the banks, of our constituents," Miller said. "They were being lied to. Their documents were being lost on a regular basis. Their phone calls were not returned. They were told they'd be handed off to another person, that never took place. They were told they would be eligible in a couple months, that never took place."
Miller said the Treasury Department's handling of the program has abetted "wholesale abuse and misinformation and lies" by the mortgage industry.
Under HAMP, eligible borrowers are supposed to see their mortgage payments reduced if they successfully make lower payments during a three-month trial period. But delays and mixed signals from mortgage servicers are common. Fewer than 600,000 homeowners are in permanent modifications, according to Treasury's data, while more than 800,000 have been kicked out of the program, which was projected to help between 3 and 4 million when President Barack Obama launched it in February 2009.
Treasury argues it can't punish servicers who violate program guidelines, citing what it believes to be the voluntary nature of HAMP. Federal bailout watchdogs, however, have repeatedly criticized that argument, on the grounds that the firms signed contracts that allow Treasury to withhold payment of taxpayer dollars for failing to comply with HAMP rules.
Miller said he did not think homeowners would be better off today without HAMP. He said he cast his vote to send a signal to the Obama administration that it needs to improve the program. The Senate is not likely to pass the bill, which would face a White House veto.
He was not among the Democrats who signed a letter to Treasury Secretary Timothy Geithner Tuesday with recommendations for improving the program. Their suggestions included eliminating the "dual track" system that allows servicers to move forward with foreclosures and modifications simultaneously.
"The real answer, of course, is to give these people access to the courts to get the modification, but the banks obviously have returned to their former position of power in the Congress," said Miller, apparently referring to the new Republican majority in the House of Representatives.
The Democratic-controlled House passed a bill allowing bankruptcy judges to modify mortgage terms in 2009, but the measure died in the Senate. Many consumer advocates consider judicial modification -- also known as "cramdown" -- the best way to address the housing crisis, arguing that the mere threat of cramdown will encourage lenders to reduce principal amounts owed by borrowers.
Nearly one in four U.S. homeowners with a mortgage owes more on the mortgage than the home itself is worth.
By Arthur Delaney, THE HUFFINGTON POST