Republicans target Treasury’s struggling homeowner program

A group of Republicans on the House Oversight Committee are pushing a bill to bring an end to the administration’s mortgage modification program, calling it a “colossal failure.”

Under the bill, the Treasury Department’s Home Affordable Modification Program (HAMP), which aims to help struggling homeowners permanently modify their mortgages to make them more affordable, would come to an end.

The legislation has been sponsored by Reps. Jim Jordan (R-Ohio), Patrick T. McHenry (R-N.C.), and Oversight Committee Chairman Darrell Issa (R-Calif.).

“HAMP is a colossal failure,” said Jordan, who chairs the Oversight Committee’s subcommittee on regulatory affairs, stimulus oversight and government spending. “In many cases, it has hurt the very people it promised to help. It’s one more example of why government interference in the private sector doesn’t work and that’s why it should be repealed.”

The legislation comes on the heels of the most recent report given the Congress by the Special Inspector General on the Troubled Asset Relief Program (SIGTARP), Neil Barofsky.

In the report, Barofsky has harsh words for the HAMP, saying the program “has been beset by problems from the outside” and “continues to fall dramatically short of any meaningful standard of success.”

“Today, HAMP appears to be under siege, with a chorus of criticisms from all points on the ideological spectrum growing more insistent and calls for termination or a dramatic restructuring gaining traction,” Barofsky wrote.

He called the amount of permanent modifications HAMP has accomplished “anemic.”

The report states that while a record 2.9 million homes entered foreclosure proceedings in 2010, just 522,000 modifications initiated by HAMP were underway. And the foreclosure tide is not expected to ebb any time soon. RealtyTrac, a firm that tracks foreclosures, estimates that foreclosure filings will grow another 20 percent in 2011, eclipsing 3 million homes, according to SIGTARP.

Barofsky told committee members at a Jan. 26 hearing that he wanted to see a “credible revamp” of the program.

“TARP was designed in part, just as much to help the Wall Street banks as to help struggling homeowners,” he said.

The legislation will be sent to the House Financial Services Committee, of which McHenry is a member.