Rep. Randy Neugebauer, the chairman of the House Financial Services Oversight Subcommittee, said the government needs to come to terms with the fact that its foreclosure-prevention efforts are failing and actually making the housing market worse.
The Texas Republican said the programs need to be shut down because they are preventing the housing market from bottoming out, which is critical before recovery can begin.
I really, truly believe that if we will go ahead and quit trying to throw Band-Aids on this housing market ... this limbo-like state is prolonging the recovery of the housing market, Neugebauer said.
The Treasury Department's Home Affordable Modification Program and other government-sponsored loan modification efforts aren't helping many home owners.
My perception is right now that most of the people that can keep their homes can keep them, but we are probably postponing the people that long-term aren't going to be able to keep them. ... Some of these crazy programs that we've dreamed up, I think we may have to pull the plug on them: HAMP - no more government modifications, Neugebauer said.
Also during the interview, Neugebauer said another important unresolved issue is Fannie Mae and Freddie Mac's fate. Neugebauer is in favor of privatizing the government-sponsored enterprises as well as remove any government guarantee from the mortgage market.
Somebody asked me what would be the one thing by the end of 112th Congress that would be the most important thing to get done, Neugebauer said. I'd have to put getting the mortgage market back on track again and having an overall plan of how we are going to get the taxpayers out of that business.
Source: House Panel Head: Stop the 'Crazy' Loan Mod Initiatives, American Banker (Jan. 25, 2011) (login required)