Washington (AP) — Lawmakers are taking aim at the Obama administration’s struggling mortgage assistance program, with Republicans calling it a worthless exercise and Democrats saying it doesn’t go far enough.
In a report Thursday, Reps. Darrell Issa, R-Calif., and Jim Jordan, R-Ohio, called the program a misuse of taxpayer money. Though $75 billion has been set aside for the program, so far only $15 million has been spent.
They also said it distorts the housing market by keeping people in their homes who would be better renting.
Democrats, however, argued that the Treasury Department needs to put more pressure on the lending industry to reduce borrowers’ outstanding principal balances.
The program is designed to lower borrowers’ monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years. To complete the process, homeowners need to make three payments and provide proof of their income, plus a letter documenting their financial hardship.
But experts warn that hundreds of thousands of borrowers will not complete the process because they are found to be ineligible during an initial trial phase. Housing counselors complain that many homeowners remain stuck in limbo without final word on their applications.
Treasury officials acknowledge that the treatment of borrowers under the program has been a problem. They have been working on new consumer protections such as giving those rejected from the program 30 days to appeal the decision and barring lenders from lenders continuing with foreclosures while homeowners were being evaluated for help.