GOP moves to scrap two of Obama’s housing programs

The first piece of legislation, which would eliminate a mortgage-refinancing program administered by the Federal Housing Administration (FHA), was approved by a party-line vote of 33-22. 

The second bill, which would bring to an end the Emergency Mortgage Relief Program authorized by the Dodd-Frank financial reform law, was also approved 33-22. That program gave the Department of Housing and Urban Development $1 billion to make emergency mortgage relief payments to homeowners facing foreclosure.

The bills represent the first half of a broader Republican effort to eliminate the administration’s housing relief programs. Next week, the committee will take up two more bills that each would eliminate another housing program, including the administration’s keystone effort, the Home Affordable Modification Program (HAMP).

Special Inspector General to the Troubled Asset Relief Program (SIGTARP) Neil Barofsky told lawmakers on the committee Wednesday that it was “somewhat shameful” how the administration had mishandled HAMP. However, he stopped short of calling for its dissolution.

The administration’s efforts to help struggling homeowners modify their mortgages have so far failed to meet expectations. HAMP was designed to help 3 million to 4 million homeowners modify their home loans, but the latest numbers from the administration indicate that just over 600,000 modifications have begun.

Republicans, eager to cut spending, fingered the programs as being wastes of money.

“Congress needs to stop funding programs that don’t work with money we don’t have,” said House Financial Services Committee Chairman Spencer Bachus (R-Ala.).

Even Democrats acknowledged the programs were coming up short, but said fixing them was the proper course.

“I’m not going to defend the details of these programs; many of us have been disappointed,” said Rep. Michael Capuano (D-Mass.). “But something is better than nothing, and I’m waiting to see a proposal that would replace these programs with something better.”

For its part, the administration has strongly backed the programs. Treasury Secretary Timothy Geithner, testifying before the panel Tuesday, warned that eliminating HAMP “would cause a huge amount of damage to a very fragile housing market.”

The partisan standoff over the two bills was evident immediately when the markup devolved into a shouting match after the first amendment. Democrats accused Republicans of fudging numbers to paint the programs as costly and ineffective.

In particular, a comment from Rep. Blaine Luetkemeyer (R-Mo.) led to a strong rebuttal from Rep. Mel Watt (D-N.C.), who also accused Republicans of pushing bills that have no chance of being enacted in an effort to score political points.

“They’re going nowhere in the Senate — this is all about the message game,” said Watt. “Don’t make up figures just because your leadership gave them to you.”

{mosads}The standoff came during talks on an amendment to the bill that would eliminate FHA’s refinancing program. Rep. Carolyn Maloney (D-N.Y.) offered an amendment that would shutter the program only after it had refinanced 500,000 mortgages.

Republicans, meanwhile, complained that the FHA program was expensive with little to show for it. Rep. Robert Dold (R-Ill.) said that just 44 mortgages had been refinanced under the program, while $50 million had been disbursed for it — good for $1.1 million per mortgage.

“This program is a failure for homeowners and can’t be saved,” he said.

Luetkemeyer ran with Dold’s assertion, arguing that, under Maloney’s amendment, the program would cost $550 billion. 

“This is almost worse than TARP,” he said.

The comment led to an immediate response from Democrats.

“That simply isn’t true,” said ranking member Barney Frank (D-Mass.).

“There doesn’t have to be any reality to this — they’ll get the talking points … they’ll just make up the figures,” Watt said.

Democrats defended FHA, saying that while $50 million was disbursed for the program, not all of it went to those 44 mortgages. Maloney equated the $50 million to a line of credit or checking account that hadn’t been tapped entirely.

Lawmakers began to shout over each other while Bachus attempted to keep control.

“We’re going to maintain decorum in this body,” he said, later adding, “We’re stretching the rules of this committee.”

The dispute came during the debate on the first amendment on the first of four bills being pushed by committee Republicans, each of which would eliminate one of the administration’s housing relief programs.

Maloney’s amendment was voted down on a party-line vote of 22-33.