Members of the Regional Home Ownership Preservation Initiative, of which Woodstock Institute is a lead partner, sent a letter urging the Illinois delegation to the U.S. House of Representatives to vote against H.R. 839, The HAMP Termination Act of 2011, which would cancel funding for the Home Affordable Modification Program (HAMP). In the letter, Housing Action Illinois, Metropolitan Planning Council, Neighborhood Housing Services of Chicago, South Suburban Mayors and Managers Association, and Woodstock Institute told representatives:
We strongly oppose recent efforts to eliminate HAMP and other foreclosure response programs, like the Neighborhood Stabilization Program. Pulling out support to distressed homeowners at this juncture would be disastrous for neighborhoods trying to recover from the foreclosure crisis. Instead, legislators should focus their efforts on ways to make HAMP a useful, wide-reaching program with meaningful goals, such as requiring mandatory principal reduction when it is projected to be more economically viable than a foreclosure and offering assistance to unemployed homeowners.
Relying on servicers to offer widespread, sustainable loan modifications by their own initiative is insufficient to meet the needs of troubled homeowners. Data from bank regulators have shown that servicer-run proprietary modifications are twice as likely to re-default as are HAMP modifications; this is likely because proprietary modifications lack the affordability requirements of HAMP—some may even raise monthly payments. Active enforcement of servicer accountability standards that promote transparency and sustainability in the modification process must be a key component of any foreclosure response.
Unfortunately, H.R. 839 passed the House on Tuesday. Woodstock will continue to work against its passage in the Senate.