Bipartisan study finds that less than one-quarter of allotted funds have been used to prevent foreclosures
WASHINGTON, DC – December 1, 2010 – (RealEstateRama) — U.S. Rep. Gabrielle Giffords today issued the following statement after the nonpartisan Congressional Budget Office reported that the U.S. Department of the Treasury will spend less than a quarter of the $50 billion it promised to help homeowners facing foreclosure.
I am deeply troubled that a program designed to aid American homeowners who have been caught in the clenches of the recession has produced far more hoopla than help.
Release of the Congressional Budget Office report is prompting me to renew my call for a national moratorium on foreclosures so lenders and loan servicers can address rampant problems that have led to homeowners being wrongly removed from their homes.
Just four weeks after President Obama took office, he came to Arizona to announce an ambitious foreclosure rescue effort. Under this Home Affordable Modification Program, or HAMP, many hoped that 3 million to 4 million homeowners would be able to modify the terms of their mortgages to avoid foreclosure.
The program was funded by $50 billion from the Troubled Asset Relief Program. The Treasury Department would use these funds to pay banks, investors and homeowners for home loan modifications that would save a borrower from foreclosure.
The TARP program was successful in helping banks on Wall Street recover from the recession. Homeowners have not seen that same level of success. Banks have been reluctant to participate in the program and the administration has been reluctant to force banks to participate.
Only 483,000 distressed homeowners are making reduced monthly payments under the HAMP plan. That is barely 16 percent of the administration’s most conservative estimate. More than 755,000 homeowners who did participate in the plan have been foreclosed upon because they failed to keep up with the reduced payments, had issues with documentation or were victimized by bank blunders.
Meanwhile, the Treasury Department has not punished a single mortgage company for failing to comply with its directives. Even more troubling, there has been widespread evidence that homeowners are being misled or taken advantage of by their mortgage servicers.
Nearly 1,000 constituents facing foreclosure have contacted me since the beginning of the housing crisis. I believe we could keep many of those families in their homes by making common sense changes to the HAMP, such as instituting disincentives to mortgage servicers that mismanage or refuse to consider mortgage modifications and requiring automatic permanent loan modifications for homeowners that successfully complete trial modifications.
Foreclosures are at an all-time high nationally and Arizona has the third-highest foreclosure rate in the country, exceeded only by Florida and Nevada. Standing by and doing nothing is not an option when the men and women I represent face the prospect of losing the roof over their heads. A moratorium would help make sure that homeowners facing foreclosure will be treated fairly.
The president’s program was a reasonable proposal. But it simply is not offering meaningful assistance to the Americans who so badly need it. We must do more and we must do so now.
U.S. Rep. Gabrielle Giffords
Arizona’s 8th Congressional District
(520) 881-3588 or (520) 909-8482