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The Nation's Housing: Housing, mortgage problems missing from campaign talk

Campaigns avoiding housing problems

WASHINGTON — Given the huge impacts that the housing and mortgage crashes have had on millions of voters and workers, you would think housing would have been high on both parties' priority lists. Yet housing policy was virtually a no-show at either the Democratic or Republican conventions or in the party platforms.

Mitt Romney didn't mention housing policy at all in his convention speech. President Obama barely touched it, saying that "I've shared the pain of families who've lost their homes." The Republican platform panned the Obama administration's response to the housing crisis as having "done little to improve, and much to worsen, the situation." The GOP solution: privatize the mortgage finance system, kill Fannie Mae and Freddie Mac — which funds about two-thirds of new home lending — and cut the role of the Federal Housing Administration, which is the primary source of mortgage for first-time and minority buyers with moderate incomes but less than 20 percent down-payment.

The Democratic platform claimed credit for assisting 5 million struggling homeowners "restructure their loans to help them stay in their homes" — a total far beyond most analysts' estimates for the Home Affordable Modification Program (HAMP) and related federal efforts. The left-leaning Firedoglake blog called the 5 million claim "dishonest nonsense on housing," and added that the platform's numbers failed to account for "the (mortgage) modifications that went into redefault or the trial modifications that were canceled and squeezed the borrower by demanding the difference between the original payment and the trial modification immediately." Last month, an independent study by federal and academic economists reported that rather than the 3 million to 4 million families originally projected by the White House to be assisted by HAMP, the actual number will be barely one-third that target.

In the Nation, commentator George Zornick ridiculed the Democratic platform's boasting of a "crackdown" on the fraudulent lenders who helped create the subprime crisis, noting that "no high-ranking Wall Street officials or firms have been held responsible for the subprime catastrophe" that they facilitated by buying and securitizing poorly underwritten mortgages.

The Republican platform, meanwhile, blamed the whole subprime mess and housing collapse on Fannie Mae and Freddie Mac, even though private investment banks played far larger roles in the securitization money machine that fueled the subprime mania. The roles of Wall Street and the big banks get no direct criticism by the Republicans, even though the private secondary market they control would be the foundation for any new system of mortgage finance under a Romney administration.

The parties even waffled about continuing tax benefits for homeownership, particularly the mortgage-interest deduction. The Democratic platform avoids the issue entirely; Obama has proposed reducing the mortgage write-off for owners with incomes above $250,000. The Republican platform drafters initially rejected any pledge of support but later relented with language agreeing to continue the deduction if Congress fails to enact tax reforms.

So why has housing become a political orphan this election? Could it be that both parties feel vulnerable about any discussion of their own roles in the crash: regulators blind to irresponsible lending during the Bush years and the inadequate response to the foreclosure explosion during Obama's? Or the possibility that neither side has viable solutions for fixing the system? Try both.

The Nation's Housing: Housing, mortgage problems missing from campaign talk 09/15/12 [Last modified: Saturday, September 15, 2012 4:30am]

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