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Digital News Report – While Americans are divided on whether the government loan modification program helped or hurt the American homeowner, the U.S. House of Representatives voted 252-170 to abolish it.
The complaint has been that homeowners were denied permanent modifications after making all of their payments during the trial period. Servicers of the loans sometimes found it more profitable to foreclose on the property, even though it may not have been in the best interests of the investors.
Numerous lawsuits have sprung up across the country.
The Obama Administration had hoped the program would help millions of households who were facing foreclosure. Of the 1.5 million homeowners that began the trial modification period, only 600,000 made it though to a permanent modification.
Critics said there wasn’t enough money to give the servicer as an incentive to make a permanent modification. Servicers, mostly banks, made more money by filing the paperwork for a foreclosure than they would have made making the loan permanent.
Some in congress proposed increasing the incentive, but before that could happen, H.R.839, the HAMP Termination Act of 2011, was passed abolishing the program.
By Tina Brown