Yesterday, the Inspector General for TARP, who also oversees the Home Affordable Modification Program (HAMP), the Obama administration’s signature foreclosure prevention program, said that only $600 million of the $50 billion allocated to HAMP has been spent. And if it were up to Kentucky Republican Senate candidate Rand Paul, the rest of the money would be rescinded and struggling homeowners would be left on their own.
During a debate last night, Paul was asked if he would continue HAMP and whether the government should be trying to keep “deserving” borrowers in their homes. Paul first said that he would cancel the remaining funds for HAMP. When asked what would happen to borrowers who would lose one of their last viable chances at staying in their homes, Paul simply replied “nothing good”:
PAUL: I think that the TARP funds that are left should go to restore the deficit and to try and pay off debt. I think the TARP funds, the whole entire $800 billion should have never been spent…I would vote for any unused funds to go back to try to offset the deficit. [...]
Q: What’s going to happen to those people [who are underwater on their mortgages]?
PAUL: Well, nothing good. And it’s not something that makes any of us happy. I mean, it’s really a tragedy. But the tragedy really, if you want to think this through, is the bad policy by Barney Frank and others.
HAMP obviously has its problems, but they stem from the inability to get borrowers through the program successfully and the banks’ obvious foot dragging. These are design flaws that should be fixed. Paul, though, would simply give up and leave borrowers to the mercy of mortgage servicers who have shown no interest in creating sustainable mortgage modifications on their own.
Instead of advocating a way to actually help struggling borrowers stay in their homes — and thus prevent all of the negative consequences of a foreclosure on individuals and the surrounding neighborhood — Paul resurrected the conservative fiction that lending in traditionally under-served communities caused the financial meltdown. Paul blamed the Community Reinvestment Act for the country’s economic woes, a thoroughly debunked narrative, and refused to lay out any plan for helping distressed homeowners.
This position fits in with the rest of Paul’s ideology, which basically involves leaving people to the mercy of Big Business. But 100,000 foreclosures occurred last month alone, and there is a straightforward way to help struggling borrowers, if HAMP were streamlined and taken out of the hands of the banks.