Given that the housing collapse was the catalyst of the greatest U.S. economic downturn since the Depression, it's not surprising that it would be a major campaign theme in this presidential election.
So how do President Barack Obama and Republican challenger Mitt Romney propose to move the housing sector into economic stability?
Voters don't really know yet because details of both their plans are sketchy. As president, Obama implemented government programs to make it easier to refinance and to encourage banks to write down mortgage principals. Both came under criticism for not addressing the root of the problem for lenders and not reaching enough distressed homeowners. Nearly 1 in 5 homeowners still owes more on their home than it is worth, preventing many from selling and improving their economic situation. Other critics charge that the housing market should have been left to correct itself, without government intervention.
Obama has also announced he will unwind government-owned Fannie Mae and Freddie Mac, the two largest mortgage companies, which don't lend directly to consumers, but guarantee or own more than half of all loans.
On Friday, Romney released a white paper called "Securing the American Dream and the Future of the Housing Policy" (see it at MittRomney.com) that announced he seeks to reform the two mortgage companies for the long term, but provides no details in the document about how he will achieve that. He also states that he wants to sell the homes that Fannie and Freddie inherited from owners who defaulted to private owners who can rent them out. That train has already left the station; hedge funds and private equity companies are currently buying up swaths of homes and turning them into rentals.
Romney does address the problems of lenders by proposing new and "sensible" regulations to replace the Dodd-Frank Act. Dodd-Frank was signed into law by President Obama in 2010 with the goal of promoting financial accountability and transparency by creating 243 rules. Romney wants to unclog the lending pipeline with new regulations, but once again, no details are provided.
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