Has HAMP Been a Huge Failure?

Nearly two years ago (March 2009), the Treasury Department of the federal government introduced a program that was designed to help people who were having trouble paying their mortgages. It was called the Home Affordable Modification Program, or HAMP for short. It was supposed to provide billions of dollars from the massive stimulus package to help people modify their mortgages so they could make their monthly payments rather than lose their home. To accomplish this, banks would receive incentives from the government to modify mortgages for homeowners.

But many Republicans who are on the House Oversight Committee think the program has proven to be nothing more than a “colossal failure.” Three prominent Republicans – Jim Jordan, Darrell Issa and Patrick T. McHenry – are spearheading legislation that would put an end to HAMP because, as they say, it has “hurt the very people it promised to help” and it is “one more example of why government interference….doesn’t work and that’s why it should be repealed.”

The decision to attempt to repeal HAMP was based on information received by the Special Inspector General on the Troubled Asset Relief Program. The report said the program has many problems and it “continues to fall dramatically short of any meaningful standard of success.” Out of nearly 3 million homeowners that began going through foreclosure last year, just a little more than a half million of those began modifications that were initiated by HAMP. In addition to that, experts say that the rate of foreclosures this year could increase by about 20 percent. That would include about 3 million homes. If these numbers are correct, HAMP has not been a huge help except for the half million people it actually helped.

The legislation is scheduled to go to the House Financial Services Committee for a vote. McHenry is a member of that committee. However, Democrats hold a majority in the Senate. As a result, the repeal is unlikely to go through. Many Republicans, especially the ones in charge of this pending legislation, plan to continue to point out the problems with HAMP and why something else is needed to help homeowners who are having problems paying their mortgage bill. If the Republicans had a more effective solution, the Democrats may be more willing to hear what they have to say.