Eclectic Rant: GOP Says No To Distressed Homeowners and Consumers

By Ralph E. Stone
Tuesday March 08, 2011 - 10:26:00 PM

Republican members of the U.S. House of Representatives are trying to terminate funds for foreclosure-prevention programs that help families fend off foreclosure and trying to strip the Consumer Financial Protection Bureau of its funding before it even opens its doors.  

The Home Affordable Modification Program (HAMP) has helped about half a million homeowners remain in their homes, while another eight million families are at risk of losing their homes. HAMP's aim is to reduce borrowers' monthly payments to affordable levels. When it was launched in March 2009, the administration projected that it would prevent 3 million to 4 million foreclosures before it expired in December 2012.  

The program has permanently modified about 521,000 mortgages as of December. But Republican lawmakers say the results are not worth the costs. 

As of February, the program had disbursed $1.04 billion in incentive payments to mortgage servicers that permanently modified loans. The Treasury Department had initially set aside $75 billion for the initiative. 

Some of that money was allocated to other housing programs that are also targeted for termination. About $8.1 billion was set aside to enable certain borrowers who are current on their mortgage to refinance into Federal Housing Administration loans if their homes are worth less than what is owed on the mortgage. About 44 loans have been closed under that program. Another $7.6 billion was reallocated to emergency mortgage relief payments to unemployed workers in some states. The other targeted program helps communities buy and redevelop foreclosed properties. 

The Obama administration and consumer advocates argue that ending the program's funding would destabilize a fragile housing market as foreclosures continue to mount. On March 1, Timothy G. Massad, the Treasury Department's acting assistant secretary for financial stability, said, "Ending HAMP now, without a meaningful alternative in place, would mean that struggling homeowners would have far fewer ways of coping with the worst housing crisis in generations."  

If something is wrong with the programs, fix them, don't just throw them out. 

The legislation to kill these programs is likely to pass the House, but its fate in the Senate is uncertain. 

House members are also trying to strip the Consumer Financial Protection Bureau (CFPB) of its funding before it even opens its doors. The independent CFPB is within the Federal Reserve and was created to prevent the kind of unsafe, predatory lending practices that gave rise to the subprime crisis and resulted in millions of Americans losing their homes to foreclosure. The central mission of the CFPB is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products. The CFPB won't officially start exercising its rule-making power until July 21. 

The CFPB will provide financial education to inform consumers about abusive practices. It will supervise banks, credit unions, and financial companies, and it will enforce Federal consumer financial laws. The CFPB will also gather and analyze available information to better understand consumers, financial services providers, and consumer financial markets. 

What the House Republicans plan to do is strip federal salaries from Elizabeth Warren -- expected to be nominated CFPB director -- and 24 other top administration officials from drawing a salary. That would technically render them unable to continue working for the government.  

The House GOP budget plan already includes language that would cut the CFPB's current funding nearly in half, to $80 million. In a failed effort to restore the CFPB funding, Rep. Rush Holt (D-N.J.) argued, "[The Republican plan] handcuffs the CFPB to protect big banks that hurt American consumer interests."  

The public, including homeowners, helped bailout the banks in their time of need even though they helped create the financial crisis that caused mass foreclosures. Now a handful of House Republicans are turning their backs on American families. We need more, not less, regulation and oversight of financial institutions and the financial marketplace. 

We can make a difference by contacting our U.S. Senators urging them to preserve help for struggling homeowners and a strong, independent CFPB.