House Committee Gives Final Vote to Terminate HAMP

By Kyle Chezum Updated on 3/10/2011

Since March of 2009, the Home Affordable Modification Program (HAMP) has modified 600,000 mortgages to ease pressure on underwater homeowners, far less than the four million expected by government representatives of the project.  In the wake of this colossal failure, the program has come under harsh criticism.  Now, a House committee has voted to abolish it altogether.

The new bill protects those homeowners who have already received modifications through the program but cuts funding that would allow further modifications to be made.  Much of the criticism aimed at HAMP focused on the enormous amount of money spent to modify these mortgages.  Representative Spencer Bachus said, "These programs may have been well-intentioned but they’re not working and, in reality, are making things worse.  In an era of record-breaking deficits, it’s time to pull the plug."

The dissolution of the program was not without some criticism of its own.  Tim Massad, the assistant secretary for financial stability with the Treasury Department, claimed that HAMP was not, in fact, a waste of taxpayer dollars but rather an opportunity to rebuild stability in local communities.  "HAMP has been carefully designed to protect taxpayer interests.  It does not apply to loans for vacant properties or second homes, and loans are modified only where it makes economic sense to do so," he said.  "Taxpayer funds are only spent if homeowners make their payments.  Keeping families in their homes on these terms is good for families, neighborhoods and our economy as a whole."

The majority of public opinion appears to rest in the other direction, however.  With HAMP formally dissolved, billions of dollars will return to the government, creating an opportunity to reduce the federal deficit.  The House also recently voted to end the FHA short refinance program, financial burden that hasn't lived up to expectations.