The Subcommittee on Housing, Insurance and Community Opportunity will hold a hearing this week to examine the Obama Administration's response to the housing crisis, including new proposals announced by the President during his recent speech to a joint session of Congress.
The Administration created a number of programs designed to help borrowers avoid foreclosure or refinance high-cost mortgages. Funding for the programs has come largely from the Troubled Asset Relief Program (TARP) passed by Congress in 2008 to address the financial crisis.
None of the programs, however, has been successful and they have come under sharp criticism from TARP's special inspector general, the Congressional Oversight Panel, the Government Accountability Office, and the inspector general for the Department of Housing and Urban Development.
Witnesses at a hearing held by the Subcommittee earlier this year on the Administration's programs -- the Home Affordable Modification Program (HAMP), the Home Affordable Refinance Program (HARP), the FHA Refinance Program, the Neighborhood Stabilization Program, and the Emergency Homeowners Loan Program -- said the programs are ineffective and, in some cases, leave borrowers in worse financial condition then they were before.
The criticisms culminated in separate bills to terminate four of the programs. All four bills were reported out of the Financial Services Committee and approved by the House of Representatives in March.
As part of his September 8 address to a joint session of Congress, President Obama proposed expanding the Neighborhood Stabilization Program through a $15 billion initiative labeled "Project Rebuild," and easing the eligibility requirements on the HARP program to promote greater refinancings.
"The President's "new' proposals are really nothing more than reincarnated versions of programs that are already proven failures," said Financial Services Committee Chairman Spencer Bachus. "Job losses are the root cause of foreclosures. If the Administration is serious about preventing foreclosures, then it should promote policies that help the private sector create jobs as opposed to pouring more money into failed programs."
Subcommittee Chairman Judy Biggert said, "In the heat of the meltdown, the Administration took a varied and costly approach to intervention in the housing market. Rather than repeat mistakes of the past, we need to examine the lessons learned from these programs, and use that insight to guide polices that will facilitate a return of the private sector to housing and stem foreclosure rates. Our Committee will welcome input from industry experts and agency officials as we evaluate existing programs as well as the Administration's latest request for funding, and determine how federal efforts can be more effectively targeted."