Obama Program That Hurt Homeowners and Helped Big Banks Is Ending
David Dayen
TheIntercept.com
Dec. 28 2015
When President Obama announced the Home Affordable Modification Program, or HAMP, on February 18, 2009, in Mesa, Arizona, he promised it would assist 3 to 4 million homeowners to modify their loans to avoid foreclosure. Almost seven years later, less than 1 million have received ongoing assistance; nearly 1 in 3 re-defaulted after receiving inadequate modifications; and 6 million families lost their homes over the same time period.
Now the program is ending.
Tucked away on page 1,983 of the omnibus spending package, signed into law earlier this month, is the following language: “The Making Home Affordable initiative of the Secretary of the Treasury, as authorized under the Emergency Economic Stabilization Act of 2008 … shall terminate on December 31, 2016.”
This language closes out a series of measures initiated after the financial crisis to aid homeowners facing foreclosure, but mostly, it ends HAMP. Few noted its passage, but progressives should be happy to see it go. Perhaps no program of the Obama era did more significant — and possibly irreparable — damage to the promise of an activist government that can help solve the country’s problems.
HAMP’s failure stemmed from its design. Rather than a cash-transfer program that hands vouchers to distressed borrowers so they can lower their mortgage payments, the government gives the money to mortgage servicing companies, to encourage them to modify the loans. But while the government sets benchmarks to follow, the mortgage companies ultimately decide whether or not to offer aid.
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