(NNPA)—In votes during the next weeks, two programs that provide mortgage help to troubled borrowers may be rejected by the U.S. House of Representatives. The Home Affordable Modification Program serves homeowners who cannot pay their mortgage or are in imminent danger of default. The other program known as the Emergency Homeowner Loan Program would be stripped of funding to provide emergency loans for unemployed homeowners facing foreclosure. The U.S. House of Representatives wants to strip all funding from both programs.
The House also wants to scrap two more foreclosure programs: a Federal Housing Administration program that provides refinancing to homeowners who are current on their mortgage; and the Neighborhood Stabilization program that rehabilitates foreclosure-ravaged neighborhoods.
According to the Center for Responsible Lending, cutting these programs would leave millions at risk and the nation’s economic recovery in jeopardy. Current trends show 50,000 new foreclosures start every week and more than five million mortgage holders now are at high risk of losing their homes.
“When we’re in the midst of an epidemic, we don’t close all of the hospitals—we work faster and harder to find a cure,” said CRL president Mike Calhoun. “We call on Congress to strengthen foreclosure prevention efforts by holding servicers accountable and requiring a review of every mortgage loan before foreclosure proceeds.”
According to the March 2010 HAMP servicer performance report, more than half—59.1 percent of participating homeowners identified loss of income as their predominant hardship. Additionally, the median savings for borrowers in permanent mortgage modifications is $512.39 or 36 percent of the median before modification payments. States with the largest HAMP activity are Arizona, California, Florida, Georgia, Illinois and New York. Although HAMP has helped about 600,000 homeowners across the country, the program originally was projected to help three to four million homeowners. This difference between modifications made and the much larger numbers of homeowners who need them has shaped opinions of those who call for program improvements as well as those who call for its termination.
EHLP, the second program facing an imminent House vote, received $1 billion via the Dodd-Frank Wall Street Reform and Consumer Protection Act. Administered by HUD, the program offers zero interest ‘bridge loans’ to qualified unemployed homeowners for up 24 months or $50,000 in assistance, whichever comes first. Geographically, it is designed to serve the 32 states where the U.S. Treasury Department’s Hardest Hit Housing Markets program for unemployed homeowners is not available.
Many journalists and consumer advocates have observed that the problems with foreclosure prevention are the fault of mortgage servicers—not the government or homeowners. According to Dana Milbank, a Washington Post columnist, “The problem in the nation’s housing market now isn’t subprime lending. It’s subpar lenders.” In a recent column, Milbank shared his own household’s fretful dealings with servicers and cited a litany of issues including misquoted rates, legal documents issued in wrong names, freezing of bank accounts, and more.
Hilary Shelton, NAACP Washington Bureau Director and Senior Vice-President for Advocacy in part said at a recent panel convened by the National Council of LaRaza, “We’re looking for transitions. We’re seeing victims being blamed for what happened to them…The government has to be involved.”
Had the mortgage industry done its job well, the response to the foreclosure crisis would have been more effective. Against a backdrop of millions of foreclosures that in turn triggered a national recession, government indeed has an important role to play.
(Charlene Crowell is the Center for Responsible Lending’s communications manager for state policy and outreach. She can be reached at: Charlene.email@example.com. For more information on foreclosures and other consumer lending issues, visit: www.responsiblelending.org.)