March 2, 2011; Source: Politico | Republicans have four bills pending in the House Financial Services Committee that will terminate the Home Affordable Modification Program (HAMP), the Neighborhood Stabilization Program (NSP), the Federal Housing Administration Refinance Program, and the Emergency Homeowner Relief Fund. The combined force of the bills would essentially end federal initiatives to help families stave of foreclosure and renegotiate or refinance troubled mortgages.

By terminating the Neighborhood Stabilization Program, the House Republicans would be killing the program used by nonprofits (and others) to acquire and redevelop bank-foreclosed properties and put them back on the market for affordable occupancy. Why the hostility to these initiatives? Certainly, the HAMP program has been milque-toasty with the banks, with results that TARP Special Inspector General Neil Barofsky has called "remarkably discouraging" (it was supposed to help 3 to 4 million homeowners facing foreclosure, but has only generated 522,000 active mortgage modifications).

But the solution to HAMP might be to put some muscle into federal oversight of banks and servicers to get them to make substantial modifications rather than proceeding at the current pace of a wounded snail. Democrats have conceded that these programs are "mismanaged," according to Politico, but it is more accurate to say that HAMP was completely misdesigned and the others have serious design flaws.

In essence, as in many of the stimulus programs, nonprofit developers and their municipal government and local financial partners have made programs like NSP work despite itself on occasion. The solution shouldn't be a simple-minded "throw the baby out with the bathwater" answer, but a reconsideration and thoughtful redesign of these foreclosure mitigation and alleviation programs so that they work as they should.

Remember that in 2010, when the recession was supposedly waning, 2.9 million homes were hit with foreclosure notices and 2011's rate may be just as high. The need for foreclosure mitigation and intervention isn't over. Given the record number of foreclosures filed in 2011, Congressional Democrats and Republicans might want to think about fixing these programs rather than dumping them.—Rick Cohen