For voters who continue to worry about the recovery of the U.S. housing market, the presidential candidates’ virtual silence on the issue is somewhat disheartening.
Though the candidates frequently criticise each other’s housing plans, the subject is conspicuously absent from both campaigns’ websites. (This might have something to do with the fact that foreclosed-upon individuals are unlikely to vote.)
Below, Movoto Real Estate attempts to demystify the candidates’ positions and plans for the U.S. housing market.
Team Romney Says: Leave It Be
In an October 2011 interview with the Las Vegas Review-Journal, Romney stated, “Don’t try to stop the foreclosure process. Let it run its course and hit the bottom.” While Romney supporters claim this quote has been misinterpreted, its sentiment aligns with Romney’s vision to:
- cut federal aid,
- downsize government programs,
- and let the free market sort things out.
Outside of a public fundraiser in Florida back in April, Romney also remarked that he might do away with the Housing and Urban Development (HUD) program entirely.
Though the Romney camp has released its housing plan, the plan lacks concrete details of how Romney intends to achieve his goals. One can assume the Republican nominee aims to succeed in “correcting” the crisis where the Obama administration failed–perhaps by simply allowing the market to hit bottom.
And what about Romney’s running mate, rising GOP star Paul Ryan? Ryan has previously come out in support of the privatization of Fannie May and Freddie Mac.
In what has been dubbed his “Post-Truth Convention Speech,” Ryan included one reference to housing: “It began with a housing crisis they didn’t start,” Ryan said, referring to the Obama administration. “It ends with a housing crisis they didn’t correct.”
Team Obama Says: Our Efforts Are Better Than Doing Nothing
Obama inherited the worst housing crisis since the Great Depression, and his efforts to stanch the bleeding have had lackluster results. The Washington Post compellingly argues that the Obama administration got the solution backwards: They thought that fixing the economy would resolve the housing crisis, while in fact the housing issue should have been addressed first.
At the time of Obama’s inauguration, there were $7 million households at risk of foreclosure. In February 2009, Obama unveiled his $75 billion plan to get the housing market back on track. This included the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP), which both aim at preventing foreclosures. Both programs, however, have fallen far short of their goals.
Here’s a look at what hindered a strong recovery for the housing market:
- Strict eligibility requirements proved problematic, although they were intended to prevent giving aid to those who borrowed irresponsibly.
- HARP set out to refinance borrowers with loans backed by Fannie Mae and Freddie Mac, but by 2010 had only helped 390,000 homeowners and left about one third of borrowers underwater on their mortgages.
- The housing market was approached with caution, unlike the banks and auto industry that received enormous government bailouts.
- Though Obama originally pledged $50 billion to the housing industry, so far only $3.7 billion has been spent.
The 99 per cent Says: Who Will Help?
By Obama’s own admission, the current administration was not aggressive enough in rescuing the housing market, and he announced a revamped housing plan in February.
The new plan will:
- Expand the field of eligibility to include homeowners whose mortgages are backed by federal and private lenders (made possible by changes to Federal Housing Administration refinancing guidelines).
- Cost $5 to $10 billion in loan reserves to cover the FHA’s risk, an amount covered by a fee on the nation’s largest banks–which seems only fair, considering the massive government bailout those banks received
- First have to gain Congressional approval.
The Obama campaign, meanwhile, criticises Romney’s housing plan as cold and unsympathetic to middle-class families in a post on the 2012 campaign website. “The Romney housing plan is clear: As president, he would simply get out of the way and tell American families to hope for the best.”
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