House votes to end mortgage relief program

WASHINGTON — House Republicans pushed through legislation Tuesday to end an underachieving administration program intended to reduce mortgage payments for homeowners in danger of losing their homes to foreclosure.

Most Democrats, while acknowledging that the Home Affordable Modification Program has fallen short of it goals, protested the vote to kill it. The White House said in a statement that if the bill reaches President Barack Obama’s desk, his senior advisers would recommend he veto it. The vote was 252-170.

Nevada Rep. Shelley Berkley was one of 18 Democrats who voted to kill the program. She said it gave too much power to banks over homeowners seeking to modify loans and was not working in Nevada.

"It’s time we find other ways to address this need," she said. "Despite the best intentions of the administration, the most common stories I hear from Nevadans about HAMP involve lost paperwork and failed home loan modifications."

Berkley’s vote put her on the same side as Rep. Dean Heller, R-Nev., who also voted to kill the program.

"If HAMP was working for Nevada, we would not lead the nation in foreclosures," he said. "There are many federal programs that were created with good intentions, but in light of our nation’s massive debt, we cannot afford to spend taxpayer dollars on failed programs."

Nevada Rep. Joe Heck was one of two Republicans to vote to keep the mortgage aid program, along with Rep. Ed Whitfield of Kentucky.

Heck, whose suburban Las Vegas district is the epicenter of the national foreclosure crisis, disputed that the program isn’t working. He cited federal housing figures showing that 14,163 Nevadans had been approved for loan modifications as of January.

"Today, I voted to keep a program that helps Nevadans stay in their homes," he said. "Programs like HAMP offer Nevada’s families a landing softer than a hard crash, until market forces ultimately do their work and our economy recovers."

The GOP-led House this month voted to kill three other programs aimed at reviving the housing market, including one to aid homeowners who have lost their jobs or become sick and one that helps state and local governments buy and revamp abandoned properties. All face veto threats in the unlikely event they clear the Senate, but they have given Republicans a platform to show their commitment to ending inefficient or expensive federal programs.

HAMP, enacted two years ago with funds from the Troubled Asset Relief Program, offers incentives to loan servicers to modify loans for people having trouble making payments. But the Treasury Department has no authority to compel banks and loan servicers to participate, and so far the program has modified only about 600,000 loans, well below the 3 million to 4 million anticipated.

Rep. Patrick McHenry, R-N.C., the sponsor of the bill, said a majority of those who enter the program end up being harmed because they use up savings and damage credit ratings during months of waiting, and then are rejected for permanent reduced loans.

But Democrats questioned that conclusion and said Republicans were killing the program without offering an alternative. "Rather than try to get the program right, we abandon all those people who are underwater," said Rep. Keith Ellison, D-Minn.

Fifty House Democrats led by Rep. Maxine Waters of California on Monday wrote Treasury Secretary Timothy Geithner urging him to "act as quickly as possible" to overhaul the program.

Stephens Washington Bureau Chief Steve Tetreault contributed to this report.