Time for another Obama housing plan
posted at 12:36 pm on August 6, 2013 by Guy Benson
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.