Romney's and Obama's Housing Policies: Why the Candidates Seem Reluctant to Go There

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It may seem hard to believe, but this year's presidential candidates have mostly avoided discussing an industry that's largely responsible for the last five years of economic pain.

That may be because, for President Barack Obama and GOP White House hopeful Mitt Romney, the subject of housing remains an extremely sensitive one. Obama might like the real estate market, whose imbalances sparked the financial crisis, to remain a ghost issue because of a lackluster record at combating the foreclosure epidemic. Romney, meanwhile, might like to steer clear of the topic because a hard stance on housing could alienate voters whom he needs to win.

The Dismal State of the Housing Market

During Obama's tenure, around 4 million people have lost their homes to foreclosure and 9 million have been served foreclosure notices. There are alternatives that can save homeowners from foreclosure, but federal relief programs that were designed to foster them haven't fixed the problem.

"Obama's major housing initiatives have fallen short of expectations, and so Obama doesn't have big victories to point to," said Jed Kolko, chief economist for listing service Trulia. "The housing market is still struggling in many parts of the country, so this is not a problem that's been solved."

The administration's flagship relief program, the Home Affordable Modification Program, has helped 1 million homeowners obtain lower interest rates, principal reductions, more time to pay their mortgages or any combination of the three. But that pales in comparison to the 3 to 4 million homeowners whom the program was supposed to help.

Meanwhile, the Home Affordable Refinance Program, designed to help 5 million homeowners refinance their mortgages into lower interest rates, has only benefited about 1.5 million homeowners.

Recent allegations made by Neil Barofsky, the former inspector general of the Troubled Asset Relief Program, give Obama even more reason to avoid calling attention to these assistance programs. Barofsky claimed in his recent book, "Bailout," that Treasury Secretary Tim Geithner engineered HAMP to help banks not homeowners. He wrote that Geithner said HAMP was a way to "help foam the runway" for financial institutions.

Obama also can't say that he's removed systemic risk from the housing system. His administration hasn't reformed Fannie Mae and Freddie Mac, two government-sponsored organizations that some say are directly responsible for the housing bust.

In fact, the two mortgage giants, along with the Federal Housing Administration, wield a much greater influence over the housing market now than before the bubble burst. Though they are now highly regulated, the organizations guarantee about 90 percent of the mortgages originating today.

"Some of the most pressing housing policy issues that need to be resolved have to do with the future of Fannie Mae and Freddie Mac," Kolko said. "And that doesn't work easily in sound bites."

A Third Rail for Romney

Indeed, partly for this reason, the fate of Fannie and Freddie is a subject that Romney isn't too keen on bringing up either, said Mark Calabria, director of Financial Regulation Studies at the Cato Institute. The Republican nominee has said that he believes in reeling in government involvement in the housing market. He even commented at a private fundraiser that he might abolish the Department of Housing and Urban Development.

But broadcasting an ambition to dismantle government support of the mortgage market could turn off a wide swath of voters whose businesses depend on the liquidity provided by government muscle.

"To stake out what you think Fannie and Freddie's future is, is to alienate somebody," Calabria said. "Realtors and homebuilders tend to be politically active -- and Republicans."

Indeed, Romney's free-market stance on housing, if articulated bluntly, could unsettle many distressed homeowners as well. He has said that he believes that the housing market should naturally "hit bottom," and has harshly criticized Obama's relief programs.

That outlook jibes with Republican views toward government intervention in the housing market. Only 42 percent of Republicans said that they thought helping homeowners avoid foreclosure should be a housing priority, according to a survey administered by Trulia in December 2011. By contrast, 63 percent of Democratic respondents said it was a priority.

Toeing a middle ground, Romney said in a seven-page housing policy white paper that his administration would encourage foreclosure alternatives but didn't say how.

Why? "It's hard to come up with housing policies that don't cost money," Kolko said, adding that such programs also raise the specter of moral hazard. In terms of housing relief, the moral hazard refers to the temptation to default in order to receive assistance, and that's anathema to many Republicans.

Expect a Debate Stalemate

Housing experts say that voters can probably expect both candidates to avoid painting a full picture of their housing policy platforms and instead launch into partisan attacks on each other over the issue.

Romney will probably rail against Obama's disappointing relief programs, while Obama may blame Republican obstructionism for the market's dismal performance during his stay in office.

"The most he [Obama] can do is say, 'I had a bunch of plans and ... the Republicans wouldn't pass them," Calabria said.

See also:
Election 2012: Will It Affect Your Decision to Buy a Home?

Barack Obama's and Mitt Romney's Homes
Romney's Housing Fix: Let Foreclosures 'Hit Bottom'


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Romney's and Obama's Housing Policies: Why the Candidates Seem Reluctant to Go There

The former governor of Massachusetts owns a smattering of real estate across the country, including homes in Massachusetts, California and New Hampshire. This collection has been pared down; Romney previously owned two other homes — a large estate in Belmont, Mass., that he sold for $3.5 million in 2009 and a ski home in Park City, Utah, that he also dumped in 2009 for a little over $5.25 million.

When Romney is not on the campaign trail, his main home is in San Diego's beachfront community of La Jolla. Romney and his wife, Ann, purchased the $12 million La Jolla home in 2008, telling reporters that he wanted to be somewhere he could “hear the waves.” Apparently a home on the high-priced California coast (median La Jolla home values hit $1,186,200), was the right location.

It may be the ideal location, but it isn’t quite the ideal home, at least not yet. In August 2011, Romney filed an application with the city to bulldoze the single-story beachfront home and replace it with a larger, two-story home. The construction won’t begin until after election season, though.

In June 2010, the Romneys bought a two-bedroom townhouse in suburban Belmont, shown above. According to property listing information, the Romneys paid $895,000 for the 2,100-square-foot home in the new residential development, The Woodlands. This is the first purchase the Romneys have made in the Massachusetts area in two years; previously they claimed their son’s basement apartment as their legal address.

The Romneys own an 11-acre property, pictured above, smack dab on the shores of Lake Winnipesaukee in Wolfeboro. Purchased for $3 million in 1997, the Romneys’ 5,400-square-foot main house and additional guesthouses are home to the extended Romney family each summer.

While Obama did spend part of his childhood in Hawaii before moving to Chicago, he owns just one home -- in the Windy City. He and wife Michelle bought the brick home in 2005 for $1.65 million. Located on Greenwood Avenue, the home was built in 1917 and offers 6,199 square feet of space.

Although Obama hasn’t owned any other properties, an apartment that he rented while attending Columbia University in the mid-’80s is on the rental market in New York.

The two-bed, one-bath Upper West Side apartment has been updated and is available for $2,400 a month.

When it came time for former President George W. Bush to retire from the Oval Office, the 43rd president decided to go back to his home state of Texas, picking up a sprawling 8,000-square-foot home at 10141 Daria Place, which was a downsize from the 55,000-square-foot White House. The Bushes also purchased the property next door but tore it down in 2008. People speculated at the time that the demolition was to expand the former first family’s yard.

Unlike many other presidents, Bill Clinton didn’t own a home during his residency at the White House. Born and raised in Arkansas, the former president and his wife, Secretary of State Hillary Clinton, chose to stay on the East Coast and purchased a home in Chappaqua, N.Y. at the end of his second term in office. By several accounts, the Clintons are quite popular in the small Westchester County town. Built in 1889, the Clintons’ home is situated on a cul-de-sac lot and has 5,232 square feet of living space, five beds and four baths.

Before Ronald Reagan lived at the White House, he lived among the star-studded hills of Pacific Palisades and Bel Air. His former Pacific Palisades property was home base for Reagan and his wife, Nancy, until Reagan was elected president in 1981. After two terms as the 40th president of the U.S., “The Gipper” and his wife returned to Los Angeles, picking up a prime slice of real estate in the posh Bel Air neighborhood. The property remains Nancy Reagan’s home today.

Not one, but two of former President Gerald Ford’s homes are currently for sale — one listed in California and one in Colorado. Ford’s Vail home, pictured above, is a testament to his love of skiing and the outdoors. Listed for $9.85 million, the ski-in/ski-out home has been on and off the market starting in 2008, with a hefty price tag of $14.9 million. Gerald Ford’s other home is listed on the Rancho Mirage real estate market for significantly less. The $1.699 million listing is a midcentury ranch-style desert home located on the Thunderbird Country golf course and contains some presidential memorabilia, including a large portrait of Betty Ford hanging in the living room.

One of America’s most famous families holds one of America’s most storied properties. The Kennedy Compound consists of 6 acres of waterfront property on Nantucket Sound in Hyannis Port, Mass., a small village in the town of Barnstable. John F. Kennedy’s father, Joseph P. Kennedy, rented a summer cottage in Hyannis Port in 1926 and purchased the cottage two years later. The home, which Joseph Kennedy enlarged and remodeled, became a summer getaway for his family, who enjoyed sailing on the sound. In 1956, after his marriage to Jacqueline Bouvier, JFK bought a smaller home nearby, and his brother Robert later purchased an adjacent home. Following the recent death of another sibling, Massachusetts Sen. Ted Kennedy, the compound was donated to the Edward M. Kennedy Institute.

While we don’t have the first president’s childhood home -- the one where he purportedly chopped down a cherry tree -- we do have a home where George Washington reportedly slept. It is believed that the general hung up his wig at this 1739 homestead, named the “Fowler House.” The number of nights that Washington slept here is up for debate, but if you believe the historic marker on the home, he often stayed here on his way from West Point to Connecticut. The New York home is 5,800 square feet and has five bedrooms and two baths and was recently listed on the Brewster real estate market for $500,000.

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