The largest reduction in Obama's 2012 budget is the end of the TARP-era mortgage program called Making Home Affordable.
The program spent almost $100 billion in 2009, providing incentives for banks to modify mortgages, according to OMB documents. It will get $35 billion in 2011, and by the next fiscal year, its funding mostly vanishes – down to $1.4 billion. This $34 billion drop is the largest single one-year “savings” in the budget.
Making Home Affordable resulted in lower monthly payments for 1.4 million mortgages, according to the US Treasury, but critics say most of those were “temporary” modifications – only 450,000 were permanent.
Although the program may end, the problem hasn’t, says John Taylor, CEO of the National Community Reinvestment Coalition, which advocates for affordable housing.
“If this program is ending, it raises the question, ‘Are they throwing in the towel on the 11 million people facing foreclosure?’” he asks. “What is the substitution? Bankruptcy reform?”
