House Financial Services Chairman Spencer Bachus (R-AL) — who has said that Washington’s role is to “serve the banks” — announced today that his committee will mark up legislation to “pull the plug” on the Obama administration’s foreclosure prevention efforts:
“It’s time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners,” he said. “These programs may have been well-intentioned, but they’re not working and, in reality, are making things worse.”
House Republicans want to rescind the funding that has already been allocated for these programs. This effort comes at the same time that the housing market is staring at a double-dip, due in part to a buildup of empty, foreclosed-upon homes. “You have massive oversupply” thanks to overbuilding in boom times and the current glut of foreclosed homes, economist Dean Baker told the Los Angeles Times.
Republicans have been no friend to foreclosure prevention programs recently, even though one million homes were foreclosed upon last year and another one million will likely enter foreclosure this year. Rep. Randy Neugebauer (R-TX) said last month that foreclosure prevention efforts “need to stop,” and the GOP even blocked an Obama administration nominee because they though he might have been sympathetic to helping underwater homeowners with their mortgages.
While the administration’s foreclosure prevention efforts have fallen far short of their goals (and in some cases did put homeowners in worse financial shape than if they had simply foregone federal aid), the answer is to fix the programs, not abandon them. For instance, we could allow housing counselors to approve HAMP modifications (instead of waiting months as banks lose paperwork and punt the problem down the road) and make more of a push to implement automatic foreclosure mediation programs, which have been quite successful across the country in preventing foreclosures. We could also end the absurd practice of “dual-tracking,” under which the foreclosure process continues even while homeowners are under evaluation for a loan modification, which results in families who are eligible for modifications losing their homes anyway.
There is nothing to be gained by allowing more preventable foreclosures to go forward, blighting more neighborhoods and acting as an even bigger drag on the economy. But the GOP is pretending that the housing crisis simply doesn’t exist.
In a statement, Rep. Barney Frank (D-MA) said:
I am very disappointed that the Republican House members who during the debate on government spending last week refused to limit agricultural subsidies to $250,000 per individual have announced that they will attempt to eliminate programs which help the victims of the financial crisis.