House Report 112-31 - THE HAMP TERMINATION ACT OF 2011

[House Report 112-31]
[From the U.S. Government Publishing Office]

112th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 112-31

======================================================================

THE HAMP TERMINATION ACT OF 2011

_______

March 11, 2011.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

_______

Mr. Bachus, from the Committee on Financial Services,
submitted the following

R E P O R T

together with

DISSENTING VIEWS

[To accompany H.R. 839]

[Including cost estimate of the Congressional Budget Office]

The Committee on Financial Services, to whom was referred
the bill (H.R. 839) to amend the Emergency Economic
Stabilization Act of 2008 to terminate the authority of the
Secretary of the Treasury to provide new assistance under the
Home Affordable Modification Program, while preserving
assistance to homeowners who were already extended an offer to
participate in the Program, either on a trial or permanent
basis, having considered the same, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``The HAMP Termination Act of 2011''.

SEC. 2. TERMINATION OF AUTHORITY.

Section 120 of the Emergency Economic Stabilization Act of 2008 (12
U.S.C. 5230) is amended by adding at the end the following new
subsection:
``(c) Termination of Authority To Provide New Assistance Under the
Home Affordable Modification Program.--
``(1) In general.--Except as provided under paragraph (2),
after the date of the enactment of this subsection the
Secretary may not provide any assistance under the Home
Affordable Modification Program under the Making Home
Affordable initiative of the Secretary, authorized under this
Act, on behalf of any homeowner.
``(2) Protection of existing obligations on behalf of
homeowners already extended an offer to participate in the
program.--Paragraph (1) shall not apply with respect to
assistance provided on behalf of a homeowner who, before the
date of the enactment of this subsection, was extended an offer
to participate in the Home Affordable Modification Program on a
trial or permanent basis.
``(3) Study of use of program by members of the armed forces,
veterans, and gold star recipients.--
``(A) Study.--The Secretary shall conduct a study to
determine the extent of usage of the Home Affordable
Modification Program by, and the impact of such Program
on, covered homeowners.
``(B) Report.--Not later than the expiration of the
90-day period beginning on the date of the enactment of
this subsection, the Secretary shall submit to the
Congress a report setting forth the results of the
study under paragraph (1) and identifying best
practices, derived from studying the Home Affordable
Modification Program, that could be applied to existing
mortgage assistance programs available to covered
homeowners.
``(C) Covered homeowner.--For purposes of this
subsection, the term `covered homeowner' means a
homeowner who is--
``(i) a member of the Armed Forces of the
United States on active duty or the spouse or
parent of such a member;
``(ii) a veteran, as such term is defined in
section 101 of title 38, United States Code; or
``(iii) eligible to receive a Gold Star lapel
pin under section 1126 of title 10, United
States Code, as a widow, parent, or next of kin
of a member of the Armed Forces person who died
in a manner described in subsection (a) of such
section.
``(4) Publication of member availability for assistance.--Not
later than 5 days after the date of the enactment of this
subsection, the Secretary of the Treasury shall publish to its
Website on the World Wide Web in a prominent location, large
point font, and boldface type the following statement: `The
Home Affordable Modification Program (HAMP) has been
terminated. If you are having trouble paying your mortgage and
need help contacting your lender or servicer for purposes of
negotiating or acquiring a loan modification, please contact
your Member of Congress to assist you in contacting your lender
or servicer for the purpose of negotiating or acquiring a loan
modification.'.''.

Purpose and Summary

H.R. 839, the HAMP Termination Act, would terminate the
authority of the Treasury Department to provide any new
assistance to homeowners under the Home Affordable Modification
Program (HAMP) authorized under Title I of the Emergency
Economic Stabilization Act (12 U.S.C. 5230), while preserving
any assistance already provided to HAMP participants on a
permanent or trial basis. The bill also provides for a study by
the Treasury Department to identify best practices for how
existing mortgage assistance programs can be applied to
veterans, active duty military personnel, and their relatives.

Background and Need For Legislation

H.R. 839, the HAMP Termination Act, was introduced by
Congressman Patrick McHenry and Chairman Bachus to terminate
new mortgage modification activities under the HAMP. Created
under the auspices of Section 109 of the Troubled Assets Relief
Program (TARP) enacted in 2008 (P.L. 110-343), HAMP is a
federally-funded mortgage modification program that provides
financial incentives to participating mortgage servicers to
modify the mortgages of eligible homeowners.
As the signature piece of the Administration's overall
Making Home Affordable initiative on foreclosure prevention,
HAMP has been both costly and ineffective. According to the
Treasury Department, as of February 3, 2011, the Administration
has obligated $29.91 billion to HAMP, although thus far it has
only disbursed $940 million. Overall, the Administration has
obligated $45.63 billion of TARP dollars to the Making Home
Affordable initiative, which also includes the Hardest Hit Fund
and the FHA Refinance program.
By any objective measure, HAMP and these other programs
have failed to produce their promised results. The
Administration originally projected that Making Home Affordable
would help 7 to 9 million homeowners, yet foreclosures have
remained elevated and the number of assisted families has
fallen far short of promised levels. For example, in 2009, an
estimated 2.8 million Americans had their homes enter
foreclosure. In 2010, that number rose slightly to 2.9 million.
Currently, 2.2 million mortgages in the United States are 90
days or more delinquent and around 13 percent of the loans
outstanding in the market are delinquent in some way.
HAMP itself, which was initially projected to modify 3 to 4
million loans, has only started 1.47 million trial
modifications in its two years of existence. Of those loans
trials, only 521,630 loans have been transitioned to a
permanent status and remained active. Meanwhile, more than half
of the trial modifications started--involving 792,529--loans
have ended up being cancelled. HAMP's lack of success has been
so pronounced that the New York Times noted in a January 2010
editorial that HAMP has ``raised false hopes among people who
simply cannot afford their homes''.
Additional concerns have been raised about the benefit to
participants of a mortgage modification program that gives
borrowers a false sense of hope as they struggle to keep their
homes. The Special Inspector General for the Troubled Asset
Relief Program (SIGTARP) has testified before Congress that
HAMP is a program that ``benefits only a small portion of
distressed homeowners, offers others little more than false
hope, and in certain cases causes more harm than good.'' That
harm comes from having borrowers provisionally make reduced
loan payments during a trial period, only to be told that they
owe back payments, interest, and fees, sometimes in one lump
sum, should they be rejected from the program before attaining
permanent status. For some borrowers, that reversal constitutes
their last gasp, as their increased indebtedness and tarnished
credit rating preclude them from qualifying for a private-
sector proprietary loan modification program which might have
helped them retain their home.
Finally, in addition to its high cost and poor track
record, HAMP has also been plagued by poor administration and
resistance to proper oversight since its inception, placing
taxpayers at risk. For example, the Government Accountability
Office (GAO) has cited the Treasury Department for having not
``fully implemented all of our prior recommendations to
increase the transparency, accountability, and consistency of
the program.'' The Congressional Oversight Panel for TARP has
noted that ``despite repeated urgings from the Panel, Treasury
has failed to collect and analyze data that would explain HAMPs
shortcomings, and it does not even have a way to collect data
for many of HAMPs add-on programs.'' SIGTARP has added that
HAMP ``has been beset by problems from the outset and, despite
frequent retooling, continues to fall dramatically short of any
meaningful standard of success.''
Continued government intervention and bailouts only prolong
our current economic crisis and ensure that the housing market
will continue to struggle. The market needs to find its own
footing free of government intervention and manipulation so
that we can get on with a full recovery. HAMP, for all its good
intentions, has thus far impeded that process and prolonged our
economic woes. Thus, Congress should enact H.R. 839 to
immediately end this costly, ineffective, injurious, and poorly
run program.

Hearing

The Subcommittee on Insurance, Housing, and Community
Opportunity held a hearing on March 2, 2011 entitled
``Legislative Proposals to End Taxpayer Funding for Ineffective
Foreclosure Mitigation Programs.'' The following witnesses
testified:
The Honorable Neil M. Barofsky, Special
Inspector General for the Troubled Asset Relief
Program, Office of the Special Inspector General
The Honorable David Stevens, Assistant
Secretary for Housing and Commissioner of the Federal
Housing Administration, Department of Housing and Urban
Development
The Honorable Mercedes M. Marquez, Assistant
Secretary, Community Planning and Development,
Department of Housing and Urban Development
Mr. Matthew J. Scire, Director, Financial
Markets and Community Investment, U.S. Government
Accountability Office
Ms. Katie Jones, Analyst in Housing Policy,
Congressional Research Service, Library of Congress

Committee Consideration

The Committee on Financial Services met in open session on
March 3, 2011 and ordered H.R. 839, the HAMP Termination Act,
as amended, favorably reported to the House by a record vote of
32 yeas and 23 nays, (Record vote no. FC-19).

Committee Votes

Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record vote
on the motion to report legislation and amendments thereto. A
motion by Chairman Bachus to report the bill, as amended, to
the House with a favorable recommendation was agreed to by a
recorded vote of 32 yeas and 23 nays, (Record vote no. FC-19).
The names of Members voting for and against follow:

RECORD VOTE NO. FC-19
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Bachus..................... X ........ ......... Mr. Frank (MA)... ........ ........ .........
Mr. Hensarling................. X ........ ......... Ms. Waters....... ........ X .........
Mr. King (NY).................. ........ ........ ......... Mrs. Maloney..... ........ X .........
Mr. Royce...................... X ........ ......... Mr. Gutierrez.... ........ ........ .........
Mr. Lucas...................... X ........ ......... Ms. Velazquez.... ........ X .........
Mr. Paul....................... X ........ ......... Mr. Watt......... ........ ........ .........
Mr. Manzullo................... X ........ ......... Mr. Ackerman..... ........ X .........
Mr. Jones...................... X ........ ......... Mr. Sherman...... ........ X .........
Mrs. Biggert................... X ........ ......... Mr. Meeks........ ........ X .........
Mr. Gary G. Miller (CA)........ X ........ ......... Mr. Capuano...... ........ X .........
Mrs. Capito.................... X ........ ......... Mr. Hinojosa..... ........ X .........
Mr. Garrett.................... X ........ ......... Mr. Clay......... ........ X .........
Mr. Neugebauer................. X ........ ......... Mrs. McCarthy ........ X .........
(NY).
Mr. McHenry.................... X ........ ......... Mr. Baca......... ........ X .........
Mr. Campbell................... X ........ ......... Mr. Lynch........ ........ X .........
Mrs. Bachmann.................. X ........ ......... Mr. Miller (NC).. ........ X .........
Mr. Marchant................... ........ ........ ......... Mr. David Scott ........ X .........
(GA).
Mr. McCotter................... X ........ ......... Mr. Al Green (TX) ........ X .........
Mr. McCarthy (CA).............. X ........ ......... Mr. Cleaver...... ........ X .........
Mr. Pearce..................... X ........ ......... Ms. Moore........ ........ ........ .........
Mr. Posey...................... X ........ ......... Mr. Ellison...... ........ X .........
Mr. Fitzpatrick................ X ........ ......... Mr. Perlmutter... ........ X .........
Mr. Westmoreland............... X ........ ......... Mr. Donnelly..... ........ X .........
Mr. Luetkemeyer................ X ........ ......... Mr. Carson....... ........ X .........
Mr. Huizenga................... X ........ ......... Mr. Himes........ ........ X .........
Mr. Duffy...................... X ........ ......... Mr. Peters....... ........ X .........
Ms. Hayworth................... X ........ ......... Mr. Carney....... ........ X .........
Mr. Renacci.................... X ........ .........
Mr. Hurt....................... X ........ .........
Mr. Dold....................... X ........ .........
Mr. Schweikert................. X ........ .........
Mr. Grimm...................... X ........ .........
Mr. Canseco.................... X ........ .........
Mr. Stivers.................... X ........ .........
----------------------------------------------------------------------------------------------------------------

During consideration of H.R. 839, the following amendments
were considered:
1. An amendment offered by Mrs. McCarthy of New York, no.
1, providing that termination does not apply to those who
submitted an application or made a verifiable request to the
servicer for a modification before March 1, 2011, was not
agreed to by a recorded vote of 24 yeas and 31 nays, (Record
vote no. FC-16).

RECORD VOTE NO. FC-16
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Bachus..................... ........ X ......... Mr. Frank (MA)... ........ ........ .........
Mr. Hensarling................. ........ X ......... Ms. Waters....... X ........ .........
Mr. King (NY).................. ........ ........ ......... Mrs. Maloney..... X ........ .........
Mr. Royce...................... ........ X ......... Mr. Gutierrez.... ........ ........ .........
Mr. Lucas...................... ........ X ......... Ms. Velazquez.... X ........ .........
Mr. Paul....................... ........ X ......... Mr. Watt......... ........ ........ .........
Mr. Manzullo................... ........ X ......... Mr. Ackerman..... X ........ .........
Mr. Jones...................... ........ X ......... Mr. Sherman...... X ........ .........
Mrs. Biggert................... ........ X ......... Mr. Meeks........ X ........ .........
Mr. Gary G. Miller (CA)........ ........ X ......... Mr. Capuano...... X ........ .........
Mrs. Capito.................... ........ X ......... Mr. Hinojosa..... X ........ .........
Mr. Garrett.................... ........ X ......... Mr. Clay......... X ........ .........
Mr. Neugebauer................. ........ X ......... Mrs. McCarthy X ........ .........
(NY).
Mr. McHenry.................... ........ X ......... Mr. Baca......... X ........ .........
Mr. Campbell................... ........ X ......... Mr. Lynch........ X ........ .........
Mrs. Bachmann.................. ........ X ......... Mr. Miller (NC).. X ........ .........
Mr. Marchant................... ........ ........ ......... Mr. David Scott X ........ .........
(GA).
Mr. McCotter................... ........ X ......... Mr. Al Green (TX) X ........ .........
Mr. McCarthy (CA).............. ........ X ......... Mr. Cleaver...... X ........ .........
Mr. Pearce..................... ........ X ......... Ms. Moore........ X ........ .........
Mr. Posey...................... ........ X ......... Mr. Ellison...... X ........ .........
Mr. Fitzpatrick................ ........ X ......... Mr. Perlmutter... X ........ .........
Mr. Westmoreland............... ........ X ......... Mr. Donnelly..... X ........ .........
Mr. Luetkemeyer................ ........ X ......... Mr. Carson....... X ........ .........
Mr. Huizenga................... ........ X ......... Mr. Himes........ X ........ .........
Mr. Duffy...................... ........ X ......... Mr. Peters....... X ........ .........
Ms. Hayworth................... ........ X ......... Mr. Carney....... X ........ .........
Mr. Renacci.................... ........ X .........
Mr. Hurt....................... ........ X .........
Mr. Dold....................... ........ X .........
Mr. Schweikert................. ........ X .........
Mr. Grimm...................... ........ X .........
Mr. Canseco.................... ........ X .........
Mr. Stivers.................... ........ X .........
----------------------------------------------------------------------------------------------------------------

2. An amendment offered by Mr. Grimm, no. 3a, requiring the
Secretary of Housing and Urban Development to study the usage
of the HAMP for members of the armed forces, veterans, and gold
star recipients, to the amendment offered by Mr. Green, no. 3,
allowing for the continuation of the program for members of the
armed forces, veterans, and gold star recipients was agreed to
by a recorded vote of 32 yeas and 24 nays, (Record vote no. FC-
17).

RECORD VOTE NO. FC-17
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Bachus..................... X ........ ......... Mr. Frank (MA)... ........ ........ .........
Mr. Hensarling................. X ........ ......... Ms. Waters....... ........ X .........
Mr. King (NY).................. ........ ........ ......... Mrs. Maloney..... ........ X .........
Mr. Royce...................... X ........ ......... Mr. Gutierrez.... ........ ........ .........
Mr. Lucas...................... X ........ ......... Ms. Velazquez.... ........ X .........
Mr. Paul....................... X ........ ......... Mr. Watt......... ........ ........ .........
Mr. Manzullo................... X ........ ......... Mr. Ackerman..... ........ X .........
Mr. Jones...................... X ........ ......... Mr. Sherman...... ........ X .........
Mrs. Biggert................... X ........ ......... Mr. Meeks........ ........ X .........
Mr. Gary G. Miller (CA)........ X ........ ......... Mr. Capuano...... ........ X .........
Mrs. Capito.................... X ........ ......... Mr. Hinojosa..... ........ X .........
Mr. Garrett.................... X ........ ......... Mr. Clay......... ........ X .........
Mr. Neugebauer................. X ........ ......... Mrs. McCarthy ........ X .........
(NY).
Mr. McHenry.................... X ........ ......... Mr. Baca......... ........ X .........
Mr. Campbell................... X ........ ......... Mr. Lynch........ ........ X .........
Mrs. Bachmann.................. X ........ ......... Mr. Miller (NC).. ........ X .........
Mr. Marchant................... ........ ........ ......... Mr. David Scott ........ X .........
(GA).
Mr. McCotter................... X ........ ......... Mr. Al Green (TX) ........ X .........
Mr. McCarthy (CA).............. X ........ ......... Mr. Cleaver...... ........ X .........
Mr. Pearce..................... X ........ ......... Ms. Moore........ ........ X .........
Mr. Posey...................... X ........ ......... Mr. Ellison...... ........ X .........
Mr. Fitzpatrick................ X ........ ......... Mr. Perlmutter... ........ X .........
Mr. Westmoreland............... X ........ ......... Mr. Donnelly..... ........ X .........
Mr. Luetkemeyer................ X ........ ......... Mr. Carson....... ........ X .........
Mr. Huizenga................... X ........ ......... Mr. Himes........ ........ X .........
Mr. Duffy...................... X ........ ......... Mr. Peters....... ........ X .........
Ms. Hayworth................... X ........ ......... Mr. Carney....... ........ X .........
Mr. Renacci.................... X ........ .........
Mr. Hurt....................... X ........ .........
Mr. Dold....................... X ........ .........
Mr. Schweikert................. X ........ .........
Mr. Grimm...................... X ........ .........
Mr. Canseco.................... X ........ .........
Mr. Stivers.................... X ........ .........
----------------------------------------------------------------------------------------------------------------

3. An amendment offered by Mrs. Maloney, no. 4, allowing
for the HAMP to continue operating after the date of enactment
until 500,000 additional loan modifications have been made
permanent, was not agreed to by a recorded vote of 23 yeas and
32 nays, (Recorded vote no. 18).

RECORD VOTE NO. FC-18
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Bachus..................... ........ X ......... Mr. Frank (MA)... ........ ........ .........
Mr. Hensarling................. ........ X ......... Ms. Waters....... X ........ .........
Mr. King (NY).................. ........ ........ ......... Mrs. Maloney..... X ........ .........
Mr. Royce...................... ........ X ......... Mr. Gutierrez.... ........ ........ .........
Mr. Lucas...................... ........ X ......... Ms. Velazquez.... X ........ .........
Mr. Paul....................... ........ X ......... Mr. Watt......... ........ ........ .........
Mr. Manzullo................... ........ X ......... Mr. Ackerman..... X ........ .........
Mr. Jones...................... ........ X ......... Mr. Sherman...... X ........ .........
Mrs. Biggert................... ........ X ......... Mr. Meeks........ X ........ .........
Mr. Gary G. Miller (CA)........ ........ X ......... Mr. Capuano...... X ........ .........
Mrs. Capito.................... ........ X ......... Mr. Hinojosa..... X ........ .........
Mr. Garrett.................... ........ X ......... Mr. Clay......... X ........ .........
Mr. Neugebauer................. ........ X ......... Mrs. McCarthy X ........ .........
(NY).
Mr. McHenry.................... ........ X ......... Mr. Baca......... X ........ .........
Mr. Campbell................... ........ X ......... Mr. Lynch........ X ........ .........
Mrs. Bachmann.................. ........ X ......... Mr. Miller (NC).. X ........ .........
Mr. Marchant................... ........ ........ ......... Mr. David Scott X ........ .........
(GA).
Mr. McCotter................... ........ X ......... Mr. Al Green (TX) X ........ .........
Mr. McCarthy (CA).............. ........ X ......... Mr. Cleaver...... X ........ .........
Mr. Pearce..................... ........ X ......... Ms. Moore........ ........ ........ .........
Mr. Posey...................... ........ X ......... Mr. Ellison...... X ........ .........
Mr. Fitzpatrick................ ........ X ......... Mr. Perlmutter... X ........ .........
Mr. Westmoreland............... ........ X ......... Mr. Donnelly..... X ........ .........
Mr. Luetkemeyer................ ........ X ......... Mr. Carson....... X ........ .........
Mr. Huizenga................... ........ X ......... Mr. Himes........ X ........ .........
Mr. Duffy...................... ........ X ......... Mr. Peters....... X ........ .........
Ms. Hayworth................... ........ X ......... Mr. Carney....... X ........ .........
Mr. Renacci.................... ........ X .........
Mr. Hurt....................... ........ X .........
Mr. Dold....................... ........ X .........
Mr. Schweikert................. ........ X .........
Mr. Grimm...................... ........ X .........
Mr. Canseco.................... ........ X .........
Mr. Stivers.................... ........ X .........
----------------------------------------------------------------------------------------------------------------

The following amendments were also considered by the
Committee:
1. An amendment offered by Mr. Bachus and Mr. Green, no.
2a, to add ``lender or'' before ``servicer'' on line 10 and to
strike ``stay in your home'' and insert ``negotiating or
acquiring a home modification'' on line 12, to the amendment
offered by Ms. Waters, no. 2, requiring HUD to post on its
website a notice regarding the termination of the program, was
agreed to by voice vote.
2. An amendment offered by Ms. Waters, no. 2, as amended by
an amendment offered by Mr. Bachus and Mr. Green, requiring HUD
to post on its website a notice regarding the termination of
the program inviting borrowers who are having trouble paying
their mortgage and need help in communicating with their lender
or servicer to contact their Member of Congress for assistance
in reaching the lender or servicer for the purpose of
negotiating or acquiring a loan modification, was agreed to by
voice vote.
3. An amendment offered by Mr. Green, no. 3, as amended by
an amendment offered by Mr. Grimm, no. 3a (Recorded vote no.
17), requiring HUD to study the usage of the HAMP for members
of the armed forces, veterans, and gold star recipients, was
agreed to by voice vote.
4. An amendment offered by Ms. Waters, no. 5, requiring HUD
to inform HAMP applicants of the program termination, was
withdrawn.

Committee Oversight Findings

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held a hearing and
made findings that are reflected in this report.

Performance Goals and Objectives

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
The purposes of H.R. 839, the HAMP Termination Act, are to
terminate the authority of the Treasury Department to provide
any new assistance to homeowners under the Home Affordable
Modification Program (HAMP) as authorized under Title I of the
Emergency Economic Stabilization Act (12 U.S.C. 5230), while
preserving any assistance already provided to HAMP participants
on a permanent or trial basis and to provide a study by the
Treasury Department to identify best practices for how existing
mortgage assistance programs can be applied to veterans, active
duty military personnel, and their relatives.

New Budget Authority, Entitlement Authority, and Tax Expenditures

In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.

Committee Cost Estimate

The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.

Congressional Budget Office Estimates

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:

U.S. Congress,
Congressional Budget Office,
Washington, DC, March 11, 2011.
Hon. Spencer Bachus,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 839, the HAMP
Termination Act of 2011.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Chad Chirico,
who can be reached at 226-2820.
Sincerely,
Douglas W. Elmendorf.
Enclosure.

H.R. 839--HAMP Termination Act of 2011

Summary: H.R. 839 would terminate the Department of the
Treasury's Home Affordable Modification program (HAMP).
CBO estimates that enacting the legislation would decrease
direct spending by $1.3 billion over the 2011-2016 period and
$1.4 billion over the 2011-2021 period. Pay-as-you-go
procedures apply because the legislation would affect direct
spending.
The bill contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Estimated Cost to the Federal Government: The estimated
budgetary impact of H.R. 839 is shown in the following table.
The costs of this legislation fall within budget function 600
(income security).

--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------------------------------------------------------------------------
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2011-2016 2011-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING

Estimated Budget Authority..... -10 -279 -354 -276 -222 -195 -91 -2 0 0 0 -1,337 -1,437
Estimated Outlays.............. -10 -279 -354 -276 -222 -195 -91 -2 0 0 0 -1,337 -1,437
--------------------------------------------------------------------------------------------------------------------------------------------------------

Basis of Estimate: For this estimate, CBO assumes that the
legislation will be enacted by June 2011. Because of the
complementary nature of the Treasury's Making Home Affordable
programs, CBO also assumes that the following related programs
would be terminated along with HAMP:
Second Lien Modification Program,
Federal Housing Administration HAMP,
U.S. Department of Agriculture Rural Housing
Service's Rural Development HAMP,
Home Affordable Foreclosure Alternatives,
Home Price Decline Protection,
Home Affordable Unemployment Program, and
Principal Reduction Alternative Program.
The Making Home Affordable programs are intended to help
homeowners who are facing the possibility of foreclosure by
subsidizing loan modifications as well as other foreclosure
alternatives. The Department of Treasury has obligated about
$27 billion of spending authority provided by the Emergency
Economic Stabilization Act of 2008 for HAMP and its related
programs.
Program funds are used to cover costs incurred for the
modification of mortgages that are not owned or guaranteed by
the government-sponsored enterprises (GSEs) Fannie Mae or
Freddie Mac. Generally, the programs provide incentive payments
to mortgage servicers, investors, and eligible homeowners to
either reduce the homeowner's mortgage payment to 31 percent of
monthly income or to sell their house outside of foreclosure.
All modification payments are contingent on borrowers remaining
current on their mortgages. Through December 31, 2010,
approximately 600,000 mortgages have been modified through the
HAMP and its related programs (listed above), 45 percent of
which were non-GSE mortgages. Servicers and borrowers currently
have until December 31, 2012, to modify mortgages through the
program.
CBO estimates that H.R. 839 would prevent the Treasury from
making payments for approximately 100,000 new modifications of
non-GSE mortgages. (The cost of modifications entered into
prior to enactment would continue to be paid by the Treasury.)
Based on data provided by the Office of the Special Inspector
General for the Troubled Asset Relief Program, CBO estimates
that such modifications, when combined with the costs of the
related programs mentioned above, cost an average of about
$13,000. As a result, CBO estimates that enacting H.R. 839
would reduce direct spending by $1.3 billion over the 2011-2016
period and $1.4 billion over the 2011-2021 period.
Pay-as-you-go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table. Enacting H.R. 839 would have no impact on
federal revenues.

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 839, THE HAMP TERMINATION ACT OF 2011, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES
ON MARCH 9, 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------------------
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2011-2016 2011-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact...... -10 -279 -354 -276 -222 -195 -91 -2 0 0 0 -1,337 -1,437
--------------------------------------------------------------------------------------------------------------------------------------------------------

Intergovernmental and private-sector impact: The bill
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Estimate prepared by: Federal Costs: Chad Chirico; Impact
on State, Local, and Tribal Governments: Lisa Ramirez-Branum;
Impact on the Private Sector: Paige Piper/Bach.
Estimate approved by: Peter H. Fontaine, Assistant Director
for Budget Analysis.

Federal Mandates Statement

The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates reform
Act.

Advisory Committee Statement

No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.

Applicability to Legislative Branch

The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.

Earmark Identification

H.R. 839 does not contain any congressional earmarks,
limited tax benefits, or limited tariffs benefits as defined in
clause 9 of rule XXI.

Section-by-Section Analysis of the Legislation

Section 1. Short title

This section establishes the short title of the bill, the
`The HAMP Termination Act of 2011.'

Section 2. Termination of authority

This section amends Section 120 of the Emergency Economic
Stabilization Act of 2008 to terminate the authority of the
Treasury Department to provide any new assistance to homeowners
under the Home Affordable Modification Program (HAMP). It also
preserves the Treasury Department's authority to continue to
provide any assistance to homeowners who have already been
extended an offer to participate in HAMP on a permanent or
trial basis.
Further, this section directs the Treasury Secretary to
conduct a study to determine the extent of usage of HAMP by
``covered homeowners.'' Covered homeowners are defined as
individuals who are active duty members of the U.S. armed
forces and their spouses or parents, veterans of the U.S. armed
forces, and individuals eligible to receive a Gold Star lapel
button under 10 U.S.C. 1126 as the widow, parent, or next of
kin of a fallen member of the U.S. armed forces. The Treasury
Secretary is then required to submit a report to Congress
including the results of that study and identifying any best
practices that could be applied to existing mortgage assistance
programs available to covered homeowners within 90 days of
enactment of this Act.
Finally, this section requires the Treasury Secretary to
publish in a prominent location on the Treasury Department's
website, in a noticeable font, a statement that HAMP has been
terminated and inviting borrowers who are having trouble paying
their mortgage and need help in communicating with their lender
or servicer to contact their Member of Congress for assistance
in reaching the lender or servicer for the purpose of
negotiating or acquiring a loan modification.

Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italics and existing law in which no change is
proposed is shown in roman):

EMERGENCY ECONOMIC STABILIZATION ACT OF 2008

DIVISION A--EMERGENCY ECONOMIC STABILIZATION

* * * * * * *

TITLE I--TROUBLED ASSETS RELIEF PROGRAM

* * * * * * *

SEC. 120. TERMINATION OF AUTHORITY.

(a) * * *

* * * * * * *

(c) Termination of Authority To Provide New Assistance Under
the Home Affordable Modification Program.--
(1) In general.--Except as provided under paragraph
(2), after the date of the enactment of this subsection
the Secretary may not provide any assistance under the
Home Affordable Modification Program under the Making
Home Affordable initiative of the Secretary, authorized
under this Act, on behalf of any homeowner.
(2) Protection of existing obligations on behalf of
homeowners already extended an offer to participate in
the program.--Paragraph (1) shall not apply with
respect to assistance provided on behalf of a homeowner
who, before the date of the enactment of this
subsection, was extended an offer to participate in the
Home Affordable Modification Program on a trial or
permanent basis.
(3) Study of use of program by members of the armed
forces, veterans, and gold star recipients.--
(A) Study.--The Secretary shall conduct a
study to determine the extent of usage of the
Home Affordable Modification Program by, and
the impact of such Program on, covered
homeowners.
(B) Report.--Not later than the expiration of
the 90-day period beginning on the date of the
enactment of this subsection, the Secretary
shall submit to the Congress a report setting
forth the results of the study under paragraph
(1) and identifying best practices, derived
from studying the Home Affordable Modification
Program, that could be applied to existing
mortgage assistance programs available to
covered homeowners.
(C) Covered homeowner.--For purposes of this
subsection, the term ``covered homeowner''
means a homeowner who is--
(i) a member of the Armed Forces of
the United States on active duty or the
spouse or parent of such a member;
(ii) a veteran, as such term is
defined in section 101 of title 38,
United States Code; or
(iii) eligible to receive a Gold Star
lapel pin under section 1126 of title
10, United States Code, as a widow,
parent, or next of kin of a member of
the Armed Forces person who died in a
manner described in subsection (a) of
such section.
(4) Publication of member availability for
assistance.--Not later than 5 days after the date of
the enactment of this subsection, the Secretary of the
Treasury shall publish to its Website on the World Wide
Web in a prominent location, large point font, and
boldface type the following statement: ``The Home
Affordable Modification Program (HAMP) has been
terminated. If you are having trouble paying your
mortgage and need help contacting your lender or
servicer for purposes of negotiating or acquiring a
loan modification, please contact your Member of
Congress to assist you in contacting your lender or
servicer for the purpose of negotiating or acquiring a
loan modification.''.

* * * * * * *

DISSENTING VIEWS

H.R. 839, ``The HAMP Termination Act of 2011,'' is one of
four bills being advanced by the Majority as a coordinated
assault on federal programs designed to address the nationwide
housing and foreclosure crisis. The bill would prohibit new
mortgage loan modifications under the Home Affordable
Modification Program (HAMP), which is funded under authority
generally referred to as TARP. However, the bill would
grandfather in assistance on behalf of homeowners who, prior to
the date of enactment, had already been extended an offer to
participate in RAMP, either on a permanent or trial basis.
This program is one of a number of complementary federal
programs that address different problems posed by our current
housing programs. The other programs the Majority is shutting
down are an FHA refinance program that is used in conjunction
with principal mortgage reductions, loans to unemployed
homeowners to bridge the gap so that homeowners can resume
payments when they find a job, and grants to local communities
for purchase and rehabilitation of foreclosed and abandoned
homes, to address blight and deterioration of neighborhoods
experiencing a high foreclosure rate. At the hearing on these
four bills, not a single witness--including the GAO and
SIGTARP, who were witnesses called by the Majority--supported
shutting down any of these four programs at this time.
A major factor in the housing crisis was private sector
lenders originating loans to borrowers that could not afford
them, with such loans often combined with predatory loan
features, such as exploding mortgage rate reset terms. As the
housing crisis hit and homeowners started to default on loans,
these same private sector lenders announced that they would
address problems through proprietary loan modifications. In
practice, there is a general consensus that these initial
efforts were woefully inadequate to address the default and
foreclosure crisis, particularly since a majority of these
modifications actually increased the payments borrowers were
required to make. Therefore, in early 2009, the Obama
Administration started to roll out the first of a number of
initiatives, using general authority under the TARP
legislation, to facilitate loan modifications and refinancings
of borrowers in or at risk of default, and in danger of
foreclosure.
Now, two years later, as some of these initiatives are
showing real results and others are just beginning to take off,
the Majority wants to shut these efforts down. They claim that
these federal programs have not helped enough homeowners. But,
their answer to the criticism that not enough homeowners have
been helped by these programs . . . is to stop them from
helping anyone else in the future. Their answer is to eliminate
federal assistance that helps keep people in their homes and to
eliminate the nationwide loan modification standards that go
with them. Their answer is to turn over resolution of the
foreclosure crisis to the very entities that created the bad
loans in the first place and failed to achieve meaningful loan
modifications in the period before these government programs
were put in place. The result would lead inevitably to a
worsening of the foreclosure crisis, dampened home prices, and
economic instability.
The HAMP program was put in place by the Obama
Administration in early 2009. Servicers of over 90% of
mortgages nationwide currently participate in HAMP, under which
homeowners who have defaulted on, or are at serious risk of
defaulting on, a mortgage may be eligible for a mortgage
modification. A HAMP modification reduces the homeowner's
payments to a sustainable debt to income ratio of 31%. This
significantly enhances the ability of homeowners to make their
mortgage payments and keep their home, as well as improving
loan performance, by avoiding the heightened cost of a
foreclosure. The program provides incentives to loan investors
and servicers in consideration for the loan modifications, and
incentives for homeowners to continue to make on-time payments.
program is authorized to run through the end of 2012. As of
January 31, 2011, there are approximately 540,000 homeowners
with current permanent HAMP loan modifications. The number of
new permanent HAMP modifications averaged around 29,000 per
month over the last six months of 2010. Therefore, assuming a
modestly declining rate from this, a reasonable estimate is
that program participation will double by the end of next year,
for a cumulative total of 1.1 million homeowners. Based on this
estimate, the bill would deny modifications to more than a half
million homeowners at risk of foreclosure.
Median savings on a HAMP loan modification is $527 a month,
and Treasury estimates aggregate homeowner savings to date of
some $5 billion. After 12 months of a HAMP loan mod, 85% of
homeowners have remained in a permanent modification. The OCC
has reported that the re-default rate for HAMP loan
modifications (60+ days delinquent) at six months was about
half the rate of non-HAMP modifications done by lenders.
To date, only around $1 billion has been spent on these
540,000 permanent HAMP modifications, and a reasonable estimate
of the ultimate cost of assisting these families would be in
the range of $5 billion. Since these families are grandfathered
in under the bill, the bill produces no cost savings related to
these homeowners.
However, as noted, the bill would prevent new mortgage
modifications going forward. The Majority has argued that this
program imposes a cost on taxpayers, and therefore this bill
will save taxpayers the cost of the program going forward. In
fact, the TARP statute requires the President to propose a fee
on financial institutions to recover any TARP expenditures not
previously recovered. Thus, assuming the President's proposal
is adopted, all program costs will be borne by financial
institutions, and there will be no cost to the taxpayer.
The Majority has criticized HAMP on the grounds that the
program has not met initial Administration estimates that it
could help 3 to 4 million homeowners. There are a number of
reasons for this failure to meet initial numerical goals.
First, the program appropriately excludes different categories
of borrowers--including investors, owners of second homes,
homeowners whose mortgages are unsustainable even with HAMP
assistance, and homeowners that can pay their mortgage without
government assistance. Secondly, legally, banks and other
mortgage holders cannot be forced to reduce interest payments
or principal. Therefore, programs have had to be voluntary,
targeting financial assistance to incentivize lenders to reduce
mortgage payments in lieu of foreclosing on defaulted
borrowers.
Finally, banks and other mortgage servicers were generally
understaffed and unprepared to carry out the level loan
modifications precipitated by the housing crisis. This has
resulted in widespread homeowner complaints about lost files,
conflicting guidance given to them about the program, and
outright non-responsiveness in the application process for a
loan modification.
Many in the Minority Party have expressed concerns about
these issues, urging the Treasury Department to take stronger
actions to ensure that servicers respond to HAMP applications
in a more timely, responsive, and effective way--criticisms
that tend to echo those raised by the TARP Inspector General
(SIGTARP).
However, regardless of the criticisms of servicer
performance, and regardless of the fact that the program has
not reached as many homeowners as hoped, it is a mistake to
terminate this program at a time of heightened default and
foreclosure levels, and a fragile housing market. Terminating
the program at this time would simply increase our nation's
foreclosure level. The bill should be rejected.

Barney Frank.
Maxine Waters.
Luis V. Gutierrez.
Carolyn B. Maloney.
Brad Miller.
Ruben Hinojosa.
Michael E. Capuano.
Keith Ellison.
Melvin L. Watt.
Joe Baca.
Gary L. Ackerman.
Al Green.
Stephen F. Lynch.
Emanuel Cleaver.
Nydia M. Velazquez.