Duffy: "Instead of Giving People a Life Raft, This Program Gives Them an Anchor"

Statement

U.S.Congressman Sean Duffy issued the following statement today after the House passed H.R. 836 -- The Emergency Mortgage Relief Program Termination Act:

"Following up on yesterday's vote to save the taxpayers $8 billion, the full House has continued the strong work of the Financial Services Committee by voting yet again to end a failed, ineffective housing program and save nearly $1 billion.

"The so-called "emergency mortgage relief program' established a $1 billion fund to provide loans or credit advances to unemployed homeowners who cannot pay their mortgages.

"While this program may sound like a good idea to some, instead of giving people a life raft, it gives them an anchor. It increases the debt of borrowers who are already struggling with their current obligations, thus leaving them worse off. Besides being bad for distressed homeowners, this program is also bad for taxpayers; for every dollar spent, merely two cents is paid back--meaning the taxpayers lose 98 percent of their money. At a time when the government is already spending money it doesn't have, this rate of inefficiency is unconscionable and needs to stop.

"The best way to help homeowners avoid default and prevent foreclosures is with a job. Continued government intervention and questionable use of taxpayer money only prolongs our current economic crisis and ensures that the housing market will continue to struggle. Instead of trying to borrow and spend our way to prosperity, I am working hard in Congress to pass pro-growth policies that will create jobs and get this economy moving again."

BACKGROUND:

H.R. 836, introduced by Congressman Jeb Hensarling (R-TX) would rescind and permanently cancel all unobligated balances made available under section 1496(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

This legislation would repeal Title I of the Emergency Housing Act of 1975, as amended by section 1496(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The legislation would direct that any amounts made available and expended prior to the date of enactment of this Act to continue to be governed by any laws, regulations, orders, or notices as already in effect.

The legislation would direct the Secretary of Housing and Urban Development to terminate the Emergency Mortgage Relief Program. The legislation would also direct the HUD Secretary to conduct a study to determine the extent of use of the Emergency Homeowner Relief Program by members of the Armed Forces, Veterans, and Gold Star recipients.

The Dodd-Frank Act established a $1 billion HUD Emergency Homeowner Relief Program, which provides loans or credit advances to unemployed borrowers who cannot pay their mortgages because of unemployment or reduction in income. Payments under the program may be provided for 12 months, with a possible 12-month extension. The Obama administration, in its FY 2012 budget proposal, estimates the program to have a 98 percent subsidy rate. This means for every $1 spent on this federal program, the taxpayers will lose 98 cents. The program was initially authorized in 1975 and was never funded during its 35 year history.

Congressman Duffy serves on the House Financial Services Committee's Subcommittee on Financial Institutions and Consumer Credit and Subcommittee on Insurance, Housing, and Community Opportunity.

Source