House votes to end mortgage assistance program for unemployed

The House of Representatives voted 242-177 Friday to end a new program that would provide interest-free loans to aid unemployed borrowers with their mortgage payments. In January, the Department of Housing and Urban Development said the Emergency Homeowner Loan Program, created under the Dodd-Frank Act, would begin taking applications in the spring of 2011. HUD set aside $1 billion to provide up to $50,000 in interest-free loans covering mortgage payments for up to 24 months. Roughly 30,000 homeowners are expected to take part in the program. Texans are slated to receive the most funding through the program. HUD designated $135 million for unemployed borrowers in the state, followed by $111.6 million for New York and $105 million for Pennsylvania. It’s the second program in as many days the House elected to end. On Thursday, a bill was passed to end the newly formed Federal Housing Administration‘s Short Refi program. Next week the House will hear debate on two more bills that would end the Home Affordable Modification Program and the Neighborhood Stabilization Program. Republicans drove the bills through committee and eventually through the House, calling for an end to excessive government spending. Meanwhile, Democrats asked Republicans to improve the programs instead of terminating them. Rep. Spencer Bachus (R-Ala.), chairman of the Financial Services Committee, called the EHLP another bailout for the largest banks who hold the debt on these mortgages. “This Washington spending binge is driving our country right off a cliff,” Bachus said. “When the taxpayers pay a $50,000 check, who do you think it goes to? It goes to Bank of America. It goes to JPMorgan Chase. It goes to Citigroup. This billion dollars is not going to homeowners. It’s going to the largest institutions.” Attached to the bill was an amendment introduced by Rep. Randy Neugebauer (R-Texas) that would require a study for how the program could assist military service members and veterans who have service-related injuries. Still, he favored the bill, calling it a grant program that put tax dollars at risk. Rep. Barney Frank (D-Mass.) said 84% of the funding will essentially become grants. But he added Democrats are planning a bill that would require all of the funding to come from institutions with more than $50 billion assets and hedge funds with more than $10 billion in assets. Rep. Chaka Fattah (D-Pa.) said the program has worked well for the state of Pennsylvania for the past 30 years. He pointed out the state appropriated $222 million for its program through the Pennsylvania Housing Finance Agency, and received back nearly $245 million. The Obama administration said Tuesday night it will veto the bills should they reach the president’s desk, but they may not make it that far. Sources in the Senate told HousingWire Thursday the bills would essentially be “dead on arrival.” Write to Jon Prior. Follow him on Twitter: @JonAPrior