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October 31, 2014

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The Policy Racket

Lawmakers consider cutting programs to help struggling homeowners

Joe Heck

Joe Heck

The House is teeing up the first of several bills on home lending Congress is expected to address in the coming weeks, the legislative culmination of a debate that’s been raging around Washington about how — and whether — to get the government out of the housing market.

The House will consider two bills as early as tomorrow to rescind all unobligated funds from an emergency mortgage assistance program created under the 2010 Wall Street reform bill designed by former Connecticut Sen. Chris Dodd and Massachusetts Rep. Barney Frank, both Democrats, and from a Federal Housing Administration program that allows people with underwater loans to refinance with the FHA, which offers government-guaranteed loans at lower rates.

Republicans are eyeing almost $9 billion in savings if both programs are clipped. But while the initiatives have the support of House Republican leadership, it’s not clear they’re going to get the full support of Nevada’s Republicans in the House.

Nevada’s Republicans are expected to vote to take the remaining $1 billion out of the emergency mortgage relief program — a program Nevada has never been eligible to receive funding under, because the state opted to get federal help under the Department of Treasury’s “Hardest Hit” program, which targets states that have suffered from acute housing and employment crises.

But Rep. Joe Heck is expected to split from his caucus Thursday when it comes to the FHA bill.

The FHA’s refinancing program was a creation of the Troubled Asset Relief Program, or TARP, also known as the bank bailout bill. The recipients of the program aren’t banks though — they’re existing homeowners, who got an $8 billion nod under the program’s structure.

So far, only $50 million of that $8 billion has been doled out, leading Republicans to render it ineffective.

But others in Congress have protested that the program’s not so faulty as it has been poorly advertised — and that those dollars ought to be given a chance to reach needy homeowners before the plug is pulled.

That’s the rationale that’s expected to lead Heck to vote against the Republican position and defend the TARP’s FHA program when it comes up.

It’s no secret that Nevada has the unfortunate honor of having sustained the worst foreclosure crisis in the nation as a result of the 2008 financial collapse, which took its hardest toll on the housing market.

But even within those terms, Heck’s 3rd Congressional District is worst off. It ranked highest in the nation in 2010 for foreclosures.

Still, other sources point out that while a vote for the bill might keep hope alive, it won’t necessarily do that much good for Nevada, because the FHA program works in partnership with lender institutions — most of which have turned down the FHA’s offer to market its refinancing program in Nevada.

The Department of Housing and Urban Development, or HUD, is defending the value of both programs.

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  1. "Nevada's Republicans are expected to vote to take the remaining $1 billion out of the emergency mortgage relief program..."

    Good, it's just another bank bailout thinly disguised as homeowner "relief." Like many if not most government programs it really doesn't do the good its touted to do. For starters the pretender lenders aren't forced to prove they own the loans they demand to be paid for.

    "If you're going to take my house away from me, you better own the note." -- Joe Lents (who hasn't made a payment on his $1.5 million mortgage since 2002) in Bloomberg's 2/22/08 "Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish"