Romney Housing Plan: An Opening Salvo
The Romney-Ryan team issued a much-anticipated white paper about U.S. housing policy. While the paper is short on specific details of how to address the housing and mortgage market, it does attack the Obama administration’s policies, as well as paint a broad picture of their policy.
President Obama inherited a crumbling housing market and a failing Fannie Mae and Freddie Mac. This included the pre-Obama Sept. 8, 2008 $100+ billion bailout of Fannie Mae and Freddie Mac, which were placed in conservatorship under the FHFA. Since that time, the Obama administration instituted the Making Home Affordable program (MHA) with refinance, loan modification and short-sale programs.
Four years later, however, the housing market has still not rebounded. The debate in Washington continues over the best way to solve the many problems. Romney, not surprisingly, called for less government and more private action. However, he also called for some government intervention, to help clear the way for a healthier housing market.
Romney-Ryan Housing White Paper: Strong Criticism of Obama
Romney’s blog included a link to his Sept 21, 2012 white paper, as well as an infographic titled "The Middle Class under Barack Obama." Romney blasted Obama’s record on housing and jobs, as would be expected in the midst of a Presidential election campaign. Romney’s main criticism of Obama’s housing policy is "Too much Government."
Romney’s housing white paper points out Obama’s failures, caused by "uncertain responses and a bigger government role". His criticism centered on the numerous MHA programs (including HAMP, HARP, and other smaller programs) that produced poor results below expectations that were set, and have constantly changing rules and regulations.
The second area of too much government intervention deals with the Dodd-Frank Act, regarding the regulation of Wall Street and the financial market. Romney’s criticism is that the law is too complicated, has far too many regulations added, and is only ? finished. Furthermore, the Dodd-Frank Act set out strict requirements regarding writing new "qualified mortgage" rules defining who would be eligible for a loan. Romney’s claim is that since these new regulations have not been finalized, many lenders have been paralyzed due to lack of certainty, rejecting many creditworthy borrowers.
Romney’s Housing Plan: General Areas for Improvement
Romney’s main thrust, consistent with his general economic policies, is to reduce government involvement and get the private sector back into the housing market. Although his September 21, 2012 white paper is short on details, it does make these points.
Reduce the role of Government
Reform the GSE’s: Perhaps the biggest news is Romney’s call for the reform of GSEs Fannie Mae and Freddie Mac. Romney’s call for an end to "too-big-to-fail" GSE’s, implies that he will aim to get more private money back into the housing market. We are still waiting for more specifics regarding how he would dismantle these huge and central players in the housing market.
Sell Government owned Foreclosures: Romney plans to sell 200,000 vacant foreclosed homes to get them into private hands and enhance communities and housing prices in those areas.
Revitalize the role of private sector in the Housing Market
The second step Romney offers in his housing plan is to get the private sector to return to the private market. He offers three general solutions, which are:
- Make foreclosure alternatives easier.
- Implement sensible, not overly complex, financial regulation that gets credit flowing again.
- Improve the Job market: Romney proposes to create 12 million jobs in 4 years.
According to the paper, under the Romney-Ryan plan "families will benefit from fairer, flatter taxes, sensible regulation, the opening of new markets for American goods and investment in our vast energy resources."
The Romney-Ryan Housing Plan – What’s Next?
Hopefully, the Romney housing white paper was just an opening salvo, to be followed by more concrete action plans and an opportunity for a real debate, with deep content, about a serious election issue.
In the bottom line, any solutions to these complex problems will require cooperation and agreement between both sides of the political spectrum. We all know that there are no quick and easy solutions to the job market and the housing market problems.
Although drawing the battle-lines around the amount of government intervention needed is an important first step, the housing market needs and deserves a deeper analysis and more detailed policy plan. Let’s hope that Romney and Ryan will continue to address and offer concrete policy measures to fix the housing market.