Green Room

Time for another Obama housing plan

posted at 12:36 pm on August 6, 2013 by

I’ll leave it to policy wonks to render a verdict on the efficacy of the president’s latest plan, but I can’t say I’m opposed to at least one central element of it:

President Obama will detail on Tuesday a broad plan to bolster the housing market that includes winding down and eventually ending mortgage giants Fannie Mae and Freddie Mac.During a trip to Phoenix — an area in one of the states hardest hit by the housing crash — Obama will lay out a series of steps he thinks will ensure that the sector continues its upward trajectory while expanding home buying and renting opportunities.

The Fannie/Freddie wind-down notwithstanding, Obama critics might be forgiven for clinging to their cynicism about the president’s housing policies.  Thus far, they’ve been a bust.  Kevin Glass outlined the results of an analysis performed by TARP’s inspector general, who concluded that Obama’s costly “Home Affordable Modification Program” (HAMP) has limped along, suffering substantial failure rates along the way:

Way back in 2009, President Obama’s Treasury Department launched the Home Affordable Modification Program, a massive authorization to help homeowners struggling with their mortgages in the wake of the financial crisis. 1.2 milllion people participated in the program at a cost to taxpayers of $4.4 billion. A report [pdf] dropped this week from the Office of the Special Inspector General for TARP (SIGTARP) that HAMP has a stunning failure rate. Of the 1.2 million HAMP participants, 306,000 have re-defaulted on their mortgages, at an additional cost to taxpayers of $815 million. What’s more, another 88,000 homeowners in the HAMP program have missed payments and are at risk to re-default.

In 2010, the New York Times published a devastating evaluation of the administration’s emergency housing programs, determining that federal action was actually “adding to housing woes:”

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.  SincePresident Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.  As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies. Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

“Making Home Affordable” was the government’s subprime mortgage bailout effort that triggered Rick Santelli’s famous on-air rant that galvanized the Tea Party:

As noted above, I’m not prepared to attack the president’s new proposal before it’s even announced.  But in evaluating the likelihood of future success, one’s track record should be a relevant factor — if not the relevant factor.  This administration’s history on housing policy has been lousy, even as the market very slowly but surely extricates itself from its crash-era depths.  This principle also applies to “solutions” on immigration and healthcare.  Good intentions aren’t good enough.  Results matter, and Americans should consider the results vs. promises calculus before committing more tax dollars to another federal scheme.

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I had to listen to Rick Santelli’s famous on-air rant once more! Great stuff, that!

BTW, did anyone notice how… uncomfortable the CNBC on air talking heads were.

CiLH1 on August 6, 2013 at 1:02 PM

Wind down Fannie/Freddie? I’ll believe it when I see it.

Currently government owned/backed mortgages are one of the primary reasons why government revenues are higher than expected and liberals can pretend that we don’t have a debt problem as they erroneous claim that the debt is shrinking (as the government is making a killing in the housing market).

gwelf on August 6, 2013 at 1:40 PM

I can’t believe Obama would wind down Fannie/Freddie. That would go against everything that he believes.

hisfrogness on August 6, 2013 at 5:14 PM

It would be nice if Obama really wanted to wind down Fannie and Freddie. I have to say, though, that it seems more likely that he wants to absorb them fully into the federal government and expand them further.

Count to 10 on August 6, 2013 at 8:20 PM

I’m tired of working putzs like us carrying the load.
Now my health insurance goes way up, a lot with my gas, electric, food, taxes, insurance, tolls, blah blah……
I think I’m move to Merida.

losarkos on August 7, 2013 at 1:20 AM

Guys, he’s only getting rid of Fannie and Freddie because he wants FHA to do direct lending; under HUD guidelines, of course. His problem with Fannie and Freddie are that they are too market-oriented, not that they are insufficiently market-oriented.

alwaysfiredup on August 7, 2013 at 6:18 PM