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Talking In Circles On Housing

RNC Communications - February 1, 2012

Today in Falls Church, VA, Obama will announce another housing program which he already unveiled at the State of the Union. The program joins the “alphabet soup” of housing proposals enacted by Obama, which have failed to keep millions of Americans in their homes.

Obama’s Housing Proposal Is Just “The Latest Addition To A Mosaic”

Obama’s Proposal “Is The Latest Addition To A Mosaic Of Obama Administration Programs” That Have Failed To Boost The Housing Market. “The proposal, to be released in the coming weeks, is the latest addition to a mosaic of Obama administration programs aimed at boosting the housing market, which is entering its fourth year of weak sales and high foreclosures.” (Lorraine Woellert, “Obama Pushes Proposal To Streamline Refinancing For Homeowners,” Bloomberg, 1/25/12)

The Last Two Incarnations Of Obama’s Refinancing Program Only Helped About 1,000 Homeowners. “Haven’t similar programs been tried before? Yes. But those programs put in place a series of rules designed to ensure that government entities weren’t taking on more risk by allowing investors and banks to offload risky mortgages onto the government. In 2010, for example, the Obama administration rolled out a program to let underwater borrowers refinance through the FHA, but that program required banks to first write down loan balances so that borrowers could qualify under existing rules. Fewer than 1,000 loans have refinanced through the program. Congress approved a more complicated version of this idea in spring 2008 called Hope for Homeowners, but it also resulted in just a few hundred refinances.” (Nick Timiraos, “Six Questions On Obama’s Mortgage Refinance Proposal,” The Wall Street Journal, 1/25/12)

The Brookings Institute: Obama’s Proposal Does Not Address The Main Reasons Borrowers Default And Would “Only Contribute Mildly To Foreclosure Prevention.” “It is important to note that reducing mortgage interest rates for underwater borrowers should only contribute mildly to foreclosure prevention. The key determinant of foreclosure is the cumulative loan-to-value ratio for the borrower, with a contributor factor being an inability to pay due to job loss. This program would not affect the loan-to-value ratio, as the amount of mortgage debt is unaffected by the refinancing. (This is why the administration’s previous plans to lower mortgage interest rates, through the Home Affordable Modification Program (HAMP), did not result in a substantial reduction in foreclosures.)” (Ted Gayer, “President Obama’s State Of The Union Housing Proposal,” The Brookings Institute, 1/25/12)

Chief Economist At Truila.com, Jed Kolko: “It Won’t Impact The Housing Market Much. Underwater Borrowers Will Remain Underwater, And You Need To Be Current On Your Payments To Refinance.” “Jed Kolko, chief economist and head of analytics at real estate website Trulia.com, said other potential government initiatives such as turning foreclosures into rentals or increasing loan modifications would ‘help the housing market more directly’ ‘This is primarily economic stimulus,’ Kolko said. ‘It puts money in the pockets of people with mortgages. It won’t impact the housing market much. Underwater borrowers will remain underwater, and you need to be current on your payments to refinance.’” (Alejandro Lazo, “Obama Takes Aim At Housing Bust In State Of The Union Speech,” Los Angeles Times, 1/24/12)

Even Obama Can’t Deny The Facts And Admits His “Alphabet Soup Of Housing Assistance Programs” Have Fallen Short

“This Summer At The White House, Obama Offered A Rare Acknowledgment That His Response To The Housing Crisis Had Fallen Short.” (Zachary A. Goldfarb, “Obama’s Efforts To Aid Homeowners, Boost Housing Market Fall Far Short Of Goals,” The Washington Post, 10/23/11)

  • Obama Said That Housing Has Been The “Most Stubborn To Us Trying To Solve The Problem.” “We’ve had to revamp our housing program several times to try to help people stay in their homes and try to start lifting home values up.  But of all the things we’ve done, that’s probably been the area that’s been most stubborn to us trying to solve the problem.” (President Barack Obama, Twitter Town Hall, Washington, D.C., 7/6/11)

PROMISE: President Obama Promised That His Housing Program Would Prevent 7 To 9 Million Families From Foreclosure. OBAMA: “And we will pursue the housing plan I'm outlining today. And through this plan, we will help between 7 and 9 million families restructure or refinance their mortgages so they can afford—avoid foreclosure.” (President Barack Obama, Remarks On The Home Mortgage Industry , Mesa, AZ, 2/18/09)

FACT: Obama Has Helped Only 1.7 Million Avoid Foreclosure Of The 9 Million Homeowners He Promised. “President Obama pledged at the beginning of his term to boost the nation’s crippled housing market and help as many as 9 million homeowners avoid losing their homes to foreclosure. Nearly three years later, it hasn’t worked out. Obama has spent just $2.4 billion of the $50 billion he promised. The initiatives he announced have helped 1.7 million people.” (Zachary A. Goldfarb, “Obama’s Efforts To Aid Homeowners, Boost Housing Market Fall Far Short Of Goals,” The Washington Post, 10/23/11)

“Every Program Has Fallen Far Short Of Goals.” “‘Every program has fallen far short of goals. I can't think of one that's been largely successful,’ says John Dodds, director of the Philadelphia Unemployment Project, a non-profit that's been involved in foreclosure prevention for decades.” (Julie Schmit, “What Went Wrong With Foreclosure Aid Programs,” USA Today, 12/12/11)

  • “The Alphabet Soup Of Housing Assistance Programs To Date -- HAMP, HARP, EHLP, 2MP -- Have Been Too Poorly Administered And Too Limited In Scope And Eligibility To Slow Or Halt The Slide In The U.S. Housing Market.” (Eric Wieffering, “Fixing economy Requires More Work On Housing,” Star Tribune, 9/17/11)

 “The Failure Of Administration To Point To Any Successful Intervention That Helps Homeowners And The Persistence Of Weakness In The Housing Market Is Tailor-Made For Becoming A Political Football As This Campaign Heats Up.” “Housing experts warn the issue could become a problem for Obama if he does not take significant action. ‘The failure of administration to point to any successful intervention that helps homeowners and the persistence of weakness in the housing market is tailor-made for becoming a political football as this campaign heats up,’ said Barry Zigas, director of Housing Policy for Consumer Federation of America.” (Alexander Bolton, “White House Signals More Aggressive Stance To Protect Homeowners,” The Hill, 1/15/12)


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