On March 3, the House Committee on Financial Services voted along party lines to terminate the FHA refinance program and the Emergency Mortgage Relief Program, two assistance programs for homeowners having trouble making their mortgage payments. All Republican Members supported terminating the programs, while Committee Democrats opposed termination.
The Committee approved H.R. 830, which was introduced February 28 by Representative Robert Dold (R-IL) and cosponsored by Committee Chair Spencer Bachus (R-AL) and Representative Judy Biggert (R-IL), Chair of the Subcommittee on Insurance, Housing and Community Opportunity.
The bill would terminate the FHA refinance program, which writes down the mortgages of FHA-insured homeowners who are up to date on their mortgage payments, and provides Troubled Asset Relief Program (TARP) funds to cover a share of the lenders’ losses. The program has been operational since September 2010 and, thus far, there are 44 loan modifications in the program. Democratic members of the Committee argued that the program is in its infancy; Republican members argued that the program has proven to be a failure.
Representative Al Green (D-TX) offered an amendment to keep the FHA refinancing program running for members of the armed services and veterans. His amendment was further amended by Representative Michael Grimm (R-NY), who would require HUD to issue a study on the use of the program by these constituencies.
The Committee also approved H.R. 836, the Emergency Mortgage Relief Program Termination Act. This bill, also introduced on February 28, is sponsored by Representative Jeb Hensarling (R-TX) and cosponsored by Chairs Bachus and Biggert.
The emergency homeowner loan program provides loans to people who have experienced significant reduction in income and are at risk of foreclosure due to involuntary unemployment, underemployment or a medical condition. These loans are intended to help distressed homeowners keep current on their mortgages. According to Federal Housing Administration Commissioner David Stevens in testimony provided to the Committee on March 2, the program was authorized by the 2010 Dodd-Frank Wall Street Reform Act and HUD is on the cusp of beginning assistance. All Committee Republicans vote in support of H.R. 836; all Democratic Members opposed the bill.
Chair Bachus referred to both the FHA refinance and emergency relief programs as “poorly designed and poorly executed.” Ranking Member Barney Frank (D-MA) said that the programs help mitigate the impact of the foreclosure on American families and American cities.
On March 3, a broad coalition of civil rights and consumer groups urged opposition to both bills, saying, “It is in the nation’s interest to bring communities back. When families fail, communities fail.” The statement, signed by the National Fair Housing Alliance, the NAACP and the National Community Reinvestment Coalition, among others, also noted that, “Foreclosures continue to proceed at record levels, with disproportionately heavy impacts on communities and families of color, who are facing foreclosure at twice the rate of other families because of discrimination.”
In addition, the statement urged opposition to two equally controversial bills, which Committee Chair Bachus said will be marked up the week of March 7. These bills, H.R. 839 and H.R. 861, were introduced on February 28 and March 1, respectively. H.R. 839 would terminate the home mortgage modification program, referred to as HAMP. H.R. 861 would rescind all of the $1 billion in Neighborhood Stabilization Program funding provided in round three through the Dodd-Frank Act, and would terminate the NSP program. Mark up of these two bills was scheduled for March 3, but Chair Bachus said he and Ranking Member Frank agreed to move the Committee’s consideration of these bills to the week of March 7 due to the time needed to consider the bills in Committee as well as their controversial nature.
H.R. 830 and H.R. 836 are expected to be considered by the full House of Representatives the week of March 7.
Access Committee information regarding the March 3 markup at http://financialservices.house.gov/hearings/hearingDetails.aspx?newsid=1784