Treasury Notes

 The Real Impact of Terminating HAMP

By: Steve Adamske
3/4/2011

Earlier this week, Treasury laid out the case  for rejecting legislation in the U.S. House of Representatives that would terminate HAMP SM and other critical foreclosure prevention programs. Since then, the chorus of voices expressing opposition to this effort by some in Congress to deny critical assistance to struggling homeowners has continued to grow.

Today, the New York Times editorial board came out against this damaging legislation, writing that it would result in “hundreds of thousands of additional foreclosures and steeper [housing] price declines.”

That editorial also makes crystal clear what those who are advocating for this legislation are really proposing. In the wake of the worst housing crisis since the Great Depression, they want to eliminate foreclosure prevention assistance for struggling homeowners and “replace it with nothing.”

That would mean that more Americans would lose their homes. It would mean that more families have to endure the painful process of foreclosure. It would mean that there would be more vacant homes in local communities that are already suffering.  And it would mean that the still-fragile housing market and our nation’s broader economic recovery would be put at greater risk.

That’s simply the wrong choice. And, as the New York Times editorial board writes, if this legislation becomes law, “all Americans will pay the price.”

A letter that a broad coalition of community, consumer, and labor groups sent yesterday to Congress outlines what that price would be:   

“When families fail, communities fail. Families who have suffered foreclosure will feel the impact of foreclosure for years to come. Among many destabilizing consequences, they must confront their lives’ disruption, the loss of their credit standing, and the higher cost and limited availability of future credit. But the impact of the foreclosure crisis is being felt far beyond the immediate home and neighborhood. This crisis has devastated entire communities, which suffer from a loss of community members, the disruption of community institutions, a decline in property values, and an increase in vacant and abandoned properties. Virtually every community across the country is feeling the fallout in the form of falling tax revenues and growing budget crises. Now is not the time to cut the programs created to prevent the foreclosures that fuel these broader problems.”

As Congress considers denying critical assistance to struggling homeowners, it’s important that we remember the real impact that this legislation would have beyond the walls of the Capitol – in neighborhoods, towns, and cities across our country. HAMP was not designed to prevent every single foreclosure. But it’s clear that the House proposal to terminate that program would cause significant damage to a still-fragile housing market and millions of American families in local communities throughout our nation.

 

Steve Adamske is Deputy Assistant Secretary for Public Affairs at the U.S. Treasury Department

Posted in:  Making Home Affordable
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