HOUSE REPUBLICANS MOVE TO END FORECLOSURE AID PROGRAMS
U.S. House Republicans plan to move forward with bills that would end anti-foreclosure programs put in place by the Obama administration, saying that they are doing more harm than good, Bloomberg News reported today. The House Financial Services Committee will consider bills next week to terminate four mortgage assistance programs, including the Treasury Department's Home Affordable Modification Program. "In an era of record-breaking deficits, it's time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners," House Financial Service Committee Chairman Spencer Bachus (R-Ala.) said. The panel also will mark up bills that would terminate the Federal Housing Authority Refinance Program, funding for the Emergency Homeowners Relief Program and the Neighborhood Stabilization Program. Read more.
In related news, data from the Mortgage Brokers Association (MBA) indicate that loans reaching the foreclosure stage almost never avoid default, and that borrowers who become 90 days delinquent cure their default only about 1 percent of the time, according to a commentary by Prof. Joseph R. Mason of Lousiana State University in today's Wall Street Journal. Recent statements by Comptroller of the Currency John Walsh and FDIC Chair Sheila Bair suggest that they remain focused on using a potential settlement with mortgage loan servicers to extend, rather than end, ongoing foreclosure delays. Meanwhile, states including New Jersey and Hawaii are considering imposing their own moratoriums on foreclosure that, if they conflict with federal policy, may lead to protracted litigation. In addition to the MBA data, recent research done for the National Bureau of Economic Research demonstrates that loan-modification programs have mixed effectiveness. Data suggest that many delinquent borrowers have the means to afford their mortgage payments, but are so deeply "under water" on their mortgages that they are simply no longer willing to pay. Others have insufficient income to afford any reasonable mortgage payment. Read more. (Subscription required.)