White House extends flagship housing relief program (The Hill)

The Hill
(5/30/2013 10:46 AM, Peter Schroeder)

The Obama administration announced Thursday that it was extending for two years its signature housing relief program, which has failed to meet once-lofty expectations.

The Home Affordable Modification Program (HAMP) will be available to struggling homeowners through the end of 2015 under the new extension, after it was previously set to shutter at the end of 2013.

While the housing market is showing signs of a significant comeback, White House officials maintained that homeowners could still take advantage of the program for the next several years.

"The housing market is gaining steam, but many homeowners are still struggling," said Treasury Secretary Jack Lew. "Extending the program for two years will benefit many additional families while maintaining clear standards and accountability for an important part of the mortgage industry."

The extension comes alongside a similar extension for housing relief efforts administered by the Federal Housing Finance Agency via Fannie Mae and Freddie Mac.

The administration touted the program in announcing the extension, noting that in the roughly four years of its existence, nearly 1.3 million homeowners received direct assistance under the program, and homeowners receiving permanent modifications to their mortgages are enjoying median savings of $546 on their monthly mortgage payments.

President Obama rolled out HAMP shortly after taking office. While the program was billed as one that could help 3 to 4 million homeowners modify their mortgages and avoid foreclosure, it has failed to live up to those heightened expectations.

According to the official government watchdog monitoring the program, slightly more than 860,000 homeowners have received permanent mortgage modifications under the program. The watchdog also noted in an April report to Congress that many of those homeowners receiving assistance under the program are still struggling and in danger of losing their homes. Homeowners that were among the first to receive HAMP modifications in the second half of 2009 are now redefaulting out of the program at a rate of roughly 40 percent.

Rep. Jeb Hensarling (R-Texas), who chairs the House Financial Services Committee, blasted the administration's decision, calling HAMP an "abject failure."

"The best foreclosure prevention program is a job – it's a paycheck, not a government check," said he said in a statement. "If we are to have a healthy economy, Washington must stop spending money it doesn't have. We must eliminate expensive government programs like HAMP that have failed the American people."