Duffy Statement on Voting to End HAMP

Statement

U.S.Congressman Sean Duffy (WI-07), a member of the Financial Services Committee and the Joint Economic Committee, issued the following statement today after voting to end the Home Affordable Modification Program (HAMP) and save the taxpayers nearly $30 billion:

"Our nation is in critical economic condition with a national debt at $14 trillion and annual deficits in excess of $1.6 trillion. One of the first things we can do is simply stop the bleeding by stemming the flow of precious tax dollars to ineffective programs.

"HAMP was unveiled over two years ago and it has failed by every objective measure. In fact, multiple government agencies have noted that instead of helping struggling citizens, HAMP has actually left them worse off. Furthermore, modifying mortgages with taxpayer dollars has proven quite costly. The Treasury Department estimates that each HAMP modification costs the taxpayers $20,000. Instead of extending this program and pretending it's working, we need to end this irresponsible government spending.

"Ultimately, the path to a sustained recovery in the housing market is paved with economic expansion and sustainable jobs. What Congress needs to continue focusing on are pro-growth policies that remove barriers to job creation, encourage investment and will get our people back to work."

BACKGROUND:

The Home Affordable Modification Program (HAMP) was announced by the Administration in February 2009 as part of a three-part "Making Home Affordable Program." $30 billion in Emergency Economic Stabilization Act (TARP) funds were set aside for HAMP to provide payments to mortgage servicers for modifying mortgages of struggling borrowers. HAMP has been singled out for slow uptake and the Treasury Department's failure to set and monitor metrics for the program's success.

The Administration claimed HAMP would help up to 4 million homeowners. Instead, only 521,630 loans have been permanently modified under this program and the re-default rate is high. From the $30 billion earmarked for HAMP only $840 million has gone out the door.

There is widespread criticism that HAMP is not working and is only making matters worse for many of the homeowners who participate or seek to participate. The Special Inspector General for TARP (SIGTARP), the Congressional Oversight Panel, and the Government Accountability Office have all detailed the shortcomings of HAMP and highlighted how this program has hurt, rather than helped, struggling homeowners. Rewarding servicers with taxpayer dollars to modify mortgages has proven costly, Treasury estimates a $20,000 cost to taxpayers for each HAMP modification.

As the SIGTARP reported in testimony, HAMP "benefits only a small portion of distressed homeowners, offers others little more than false hope, and in certain cases causes more harm than good." The Congressional Oversight Panel reported that the high re-default rates "signal the worst form of failure of the HAMP program: billions of taxpayer dollars will have been spent to delay, rather than prevent, foreclosures."

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