In response to huge national debt, the government is trying to trim the fat from their budget. As a result, multiple ideas have been kicked around including government worker pay freezes, gradual increases in the federal gasoline tax, severe cuts in the government's energy assistance fund for low-income Americans and major funding cuts for a dozen government housing programs. The latter is the hot topic of conversation for meetings held by the House Financial Services Committee.
For decades the government has been involved in the housing game. Until 1935, the most common type of assistance was from ‘county homes’ used for sheltering the homeless and needy. That changed with the collapse of the banking system in 1929 and the Roosevelt Administration's commitment to launching housing initiatives to stabilize the national economy and housing industry as a whole. Over time, dozens of housing programs to assist American citizens have come and gone and these are the programs currently facing the federal ax.
Making Home Affordable Program
The Making Home Affordable Program (HAMP) was launched by President Barack Obama's administration as part of the Financial Stability Act of 2009. The program was supposed to help qualified home owners refinance or modify their existing homeloans as a way to stop the foreclosure epidemic sweeping the nation. When launched, HAMP had a $75 billion budget to help an estimated four million homeowners. Unfortunately, HAMP has been filled with glitches and the program has only assisted a fraction of qualified homeowners in need. As of January 2011, approximately 500,000 homeowners have been able to avoid foreclosure courtesy of HAMP.
Because of the programs failures, the GOP has introduced a law to repeal the program and the House Financial Services Committee is discussing HAMP termination. House members on the committee are interested in "...rescinding unspent and unobligated balances currently committed to these programs" (HousingWire.com).
NeighborWorks America
When NeighborWorks America kicked off in 1973 it was dubbed the Urban Reinvestment Task Force and was a joint project between the Department of Housing and Urban Development (HUD) and the Federal Home Loan Bank. Since then, the program has experienced a name change to the moniker and has expanded to include 236 community development organizations. The government-charter, nonprofit corporation of NeighborWorks America aims towards providing decent housing for low and moderate-income families. The program is also facing scrutiny from the House Financial Services Committee.
According to the committee, the NeighborWorks America has an operating budget of $195 million. While the department does not object to the work the program is doing, it has come to the conclusion that NeighborWorks America serves duplicate functions of HUD. The oversight plan produced by the committee does not want the program to cease entirely but does favor program consolidation directly into HUD.
Federal Housing Administration Refinance Program
The Federal Housing Administration (FHA) Refinance Program had an allocation of $8 to assist underwater mortgage holders refinance their home loans at more reasonable mortgage rates. The program was launched as an addition to HAMP and was specifically designed to help owner's of one to four unit homes, financed with mortgages from Fannie Mae or Freddie Mac and the loan had to be up-to-date despite having the status of being underwater. Although the program became available to consumers in 2010, a scant 35 people applied for the assistance from Sept. 7, 2010 until the end of October of that year. That lackluster response is the main reason the program is now facing the federal ax.
