"Romney’s Housing ‘White Paper’: No Plans For Foreclosure Prevention, Just Debunked Right-Wing Rhetoric"
Our guest blogger is John Griffith, a Policy Analyst with the Economic Policy team at the Center for American Progress Action Fund.
There’s an old rule of thumb in politics: if you have rotten news to drop, do it late on a Friday afternoon. Mitt Romney tweaked that rule yesterday: if you have a rotten policy to announce, do it at 4:00 on a Friday afternoon.
The campaign at 4:16 p.m. yesterday released a white paper laying out the Romney-Ryan housing plan, about an hour after dumping 1,200 pages of the candidate’s highly-anticipated tax returns. The paper expands on a 700-word blog post on housing from earlier this month.
Similar to Romney’s previous statements on the topic, the white paper is short on specific ways a Romney-Ryan White House would support a housing recovery, the early stages of which already appears to be underway. The plan makes broad statements about ending the housing crisis, helping families avoid foreclosure, reforming the government-controlled mortgage giants Fannie Mae and Freddie Mac, and enacting sensible Wall Street regulations. But it offers little to no details on how to actually accomplish any of it.
For example, here’s everything the plan says about foreclosure prevention:
Foot-dragging by the Obama Administration has made it harder for homeowners to get alternatives to foreclosure, such as short sales, deed-in-lieu-of foreclosure and shared appreciation. A Romney-Ryan Administration will bring clarity in this area, reduce the inventory of foreclosed homes that is clogging the market, and more importantly, spare thousands of families from going through the foreclosure process.
Set aside for the moment that Romney last October vowed to let the foreclosure process “run its course and hit the bottom,” and that the president’s policies have so far helped millions of struggling families avoid foreclosure by refinancing or modifying their home loans. The paragraph above isn’t really a policy statement, but more a string of platitudes. The paper gives no details on how Romney will “give clarity” to current foreclosure prevention efforts – or even what that phrase means.
Similarly, the white paper chides the Obama administration for not moving quicker on reforming Fannie Mae and Freddie Mac, the mortgage financiers that the Bush administration placed under government conservatorship four years ago. “Rather than just talk about reform,” the paper says, “a Romney-Ryan Administration will protect taxpayers from additional risk in the future by reforming Fannie Mae and Freddie Mac and provide a long-term, sustainable solution for the future of housing finance reform in our country.”
Sounds great. But just about everyone — including the Obama administration — agrees that Fannie and Freddie cannot continue to exist in their current form. The key questions before policymakers today are how you wind them down, how you structure the housing finance system of the future, and how you get there from here — to which Romney offers no answers.
And then there’s regulation. Romney doubles down on his past promises to repeal the Dodd-Frank financial reform law, saying in the paper that he will “usher in a new era of responsible lending” through new regulations that “allow banks to approve loans to families with good credit rather than rejecting their mortgage applications.” How exactly will Romney accomplish that? No one knows.
It was unchecked lending by private firms, often backed by Wall Street capital, that lead to the subprime bubble, housing bust, and subsequent financial crisis. Romney sidesteps this inconvenient fact by pinning the financial crisis on Fannie Mae, Freddie Mac, and government housing policies, a theory that’s been routinely debunked by any serious research on the topic.
It’s refreshing to see the Republican presidential candidate finally talking about housing. But given all the flimsy facts and ambiguous policies in this white paper, the Romney campaign had good reason to bury its release on a Friday afternoon.