But instead of listing the specific ways a Romney White House would support a housing recovery — the early stages of which already appears to be underway — roughly half of the 700-word “plan” is dedicated to attacking President Obama’s record. Where Romney does mention policy, he’s characteristically light on details and heavy on platitudes. The Romney plan has four components:
• Responsibly sell the 200,000 vacant foreclosed homes owned by the government;
• Facilitate foreclosure alternatives for those who cannot afford to pay their mortgage;
• Replace complex rules with smart regulation to hold banks accountable, restore a functioning marketplace and restart lending to creditworthy borrowers;
• Protect taxpayers from additional risk in the future by reforming Fannie Mae and Freddie Mac”
If none of these ideas sound new, it’s because they aren’t. Let’s take each in turn.
First, foreclosed homes. The Obama administration this year worked with Fannie Mae and its federal regulator to conduct an unprecedented bulk sale of government-owned homes. The sale, which was extremely successful in attracting private capital, is now moving thousands of homes off the government books to be converted to rentals. Romney offers no ways to improve or expand this initiative.
Second, foreclosure prevention. The Obama administration’s Making Home Affordable program has helped millions of families avoid foreclosure by refinancing to today’s historically low rates, modifying their loan, or negotiating a short sale or deed-in-lieu-of-foreclosure; it has established an industry standard for mitigating losses and keeping families in their homes. Meanwhile, Romney has yet to offer any specific alternatives for families facing foreclosure, other than letting the foreclosure process “run its course and hit the bottom.” (Imagine if Obama’s jobs plan was “facilitate alternatives to unemployment for those who cannot find a job.”)
Third, regulation. Thanks to the landmark financial reform law Obama signed two years ago, federal agencies are now finalizing rules of the road for the entire mortgage market. These include rules to streamline and simplify mortgage disclosure paperwork and requirements that lenders verify a borrower’s ability to pay back a mortgage before making the loan. Romney has long called for repealing the law, but does not say which of these rules he dislikes, or how he would change them.
Fourth, Fannie Mae and Freddie Mac. Just about everyone — including the Obama administration — agrees that the government-controlled mortgage giants will eventually have to be wound down and replaced with private capital. In fact, just last month the administration sped up the rate at which Fannie and Freddie must dispose of their investment portfolios. The question is no longer whether Fannie or Freddie will continue to exist in their current form, but what the housing finance system of the future will look like and how we get from here to there — to which Romney offers no answers.
There’s a stunning lack of relevance to yesterday’s release, perhaps hinting that the Romney campaign doesn’t fully understand the housing problems facing millions of families today. That might explain why Romney’s 59-point economic plan unveiled last year made only a couple of passing references to the housing market.
The Romney plan is built around the assumption that “the only path to a healthy housing market is a healthy economy.” In reality, the U.S. housing market is where the Great Recession began and we’re unlikely to see a full recovery until the market heals.