Call it the political elephant in the room: 1.2 million families across the country are now at some stage of foreclosure, 3.8 million homeowners have been foreclosed upon since September 2008, 11.4 million are underwater on their mortgages, $6.5 trillion in home equity has been lost by owners since 2005, home building and sales are intimately linked with job creation, yet the subject of housing policy was virtually a no-show in either the Democratic or Republican conventions or in the party platforms.
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. They’d say: OK, here’s how we’re going turn this crucially important situation around – getting builders building again to pre-boom historical levels, helping out the good folks who paid their loans on time even when underwater, plus making sure banks make loans available to credit-worthy buyers who want a mortgage rather than penalizing them for the banks’ own past mistakes.
But Mitt Romney didn’t mention housing policy at all in his speech to the Tampa convention. President Barack 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 pretty much the whole mortgage finance system, kill Fannie Mae and Freddie Mac – which currently fund about two-thirds of all new home lending – and cut the role of the Federal Housing Administration, which is the primary source of mortgage financing for first-time and minority purchasers who have moderate incomes but less than 20 percent down-payment cash.
The Democratic platform claimed credit for assisting 5 million struggling homeowners “restructure their loans to help them stay in their homes.” 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 research 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 with modifications by HAMP, the actual number will be barely one-third that target.