The House Financial Services Committee late Wednesday approved a bill (H.R. 839) to kill the Obama administration's signature foreclosure prevention program, calling it a failure for low performance.
The committee voted 32-23 along party lines to terminate the Home Affordable Modification Program with Republicans voicing dismay that half of all HAMP applicants have been turned down for a permanent modification after completing a three-month payment trial.
To date, HAMP servicers have restructured more than 500,000 loans, far short of the program's initial goal of 4 million units.
"H.R. 839 prevents $29 billion in TARP funds from being spent to continue this ineffective program," said Rep. Patrick McHenry, R-N.C. "Far from helping at-risk homeowners, HAMP has actually put many struggling borrowers in worse financial shape."
Democrats argue that many of HAMP's problems stem from poor servicer performance and their practice of "dual-tracking" which occurs when a mortgage banker files for foreclosure, but simultaneously starts the modification process.
"For some reason, the Republicans believe HAMP's failures mean we need less regulation of servicers, not more. That makes no sense," said Rep. Maxine Waters, D-Calif. She called on the Treasury Department to end dual tracking and "start issuing monetary penalties for servicer misbehavior."
The House of Representatives is expected to vote on the HAMP termination bill next week.
Meanwhile, the House is scheduled to vote on separate legislation that would kill a principal reduction/modification program created by the Federal Housing Administration. (Debate on the measures begins Thursday afternoon.)
Both the HAMP and FHA Short Refinancing termination bills are expected to die in the Democratic-controlled Senate.
The White House has already threatened to veto the FHA Short Refinancing termination bill (H.R. 830) if it reaches President' Obama's desk.