The Obama administration threatened to veto two measures being pushed by U.S. House Republicans that would eliminate programs aimed at helping people who are struggling to pay their mortgages, the administration said.
The House of Representatives is set to vote this week to kill an effort to lower mortgage payments for so-called underwater borrowers as well as an emergency fund for homeowners who have lost their incomes.
A statement from the White House Office of Management and Budget said the administration “strongly opposes” legislation that would cut the Federal Housing Administration Short Refi Option program and the Department of Housing and Urban Development’s Emergency Homeowners Loan Program. President Barack Obama’s advisers would recommend that he veto the bills if they reach his desk.
The FHA program is tailored for borrowers whose home values have dropped below the amount still owed on the mortgage. If lenders volunteer to write down at least 10 percent of a loan’s principal, the FHA refinances the remaining debt, often at a lower, more affordable rate.
Forty-four loans have been modified under the program since it began in September, according to the FHA. Because no borrowers have defaulted, the program has cost nothing so far, according to the FHA. The administration statement called it “vital to the nation’s sustained economic recovery.”
The Emergency Homeowners Loan Program targeted by the panel remains in the planning stages. It would provide temporary, interest-free loans to borrowers who have lost their jobs.