Mortgage rescue program in the balance
The Obama administration went on the offensive Wednesday to save its homeowner rescue programs as a key House committee prepared for a vote Thursday on ending them.
With the deficit ballooning, the Republican-led Financial Services Committee hopes to rescind about $39 billion in unspent funds by closing what it called four "failed and ineffective" efforts. That includes President Barack Obama's core Home Affordable Modification Program, aimed at lowering borrowers' monthly payments, and the Neighborhood Stabilization Program, which has funneled at least $24 million to Long Island agencies to turn vacant foreclosures into affordable homes.
"They're basically saying, 'Because you haven't helped enough people, you shouldn't help anymore,' " Treasury Assistant Secretary Tim Massad told reporters Wednesday. "That doesn't really make any sense."
To Long Island nonprofits and struggling homeowners, those two programs have been obstacle-ridden but essential to recovery. By several measures, the foreclosure crisis has hit harder here than in most parts of the state. Many Long Islanders lost jobs after Wall Street's meltdown or purchased and refinanced homes at overblown prices.
"They didn't reach as many people as they hoped, but by no stretch of the imagination is it a failure," said Carol Yopp, foreclosure program manager at the Long Island Housing Partnership. Federal officials said there have been problems with loan servicers and start-up delays. About 600,000 families have gotten permanent changes to their loans so far, they said, while 1.4 million delinquent borrowers so far are eligible.
A subcommittee Wednesday held a hearing on four bills, one for each program targeted. The two others are relatively new: the Federal Housing Administration plan to help borrowers who owe more than their homes are worth, and the Emergency Mortgage Relief Program, which would extend loans for mortgage payments.
The full committee is expected to pass the bills due to sheer numbers - 34 Republicans and 27 Democrats. Rep. Carolyn McCarthy (D-Mineola) and Rep. Gary Ackerman (D-Roslyn Heights) both said they would vote against all four bills, and Rep. Pete King (R-Seaford) would vote yes: "It's just not doing the job."
But Tamara Wheeling is grateful for the Mastic foreclosure she bought for $229,000 under the Neighborhood Stabilization Program. "It's a blessing, and I don't want someone else to lose out on that," said the mother of three who lived 16 years in a basement apartment. "Why would they want to destroy that?"
