President Obama has begun embracing housing policies that administration officials earlier thought unwise or unworkable as he embarks on his most aggressive push to address the nation’s foreclosure crisis and depressed real estate market since the first months of his tenure.
Obama has unveiled more than half a dozen plans in recent months to help millions more Americans refinance their mortgages at low rates, to reduce the debts owed by struggling homeowners and to expand existing programs to broaden the pool of borrowers eligible for government aid. The latest initiatives, announced this week, seek to help members of the military and Americans who have government-insured mortgages.
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The administration had previously rejected some of these efforts on the grounds that they were wrong on the merits, risky for taxpayers or could not be done. For instance, administration officials in the past had said they didn’t want to bail out speculators or people who had taken on far too much debt. Now, under certain circumstances, the administration is willing to do both.
What’s more, in recent months Obama has used his bully pulpit to discuss housing far more than earlier in his term. After rarely mentioning the nation’s housing problems for several years, the president is directly confronting the issue, which he has called the “most stubborn” of his presidency.
The new actions come after waves of criticism from Democratic groups, community activists, lawmakers and economists, who have argued that the administration was far too slow to deal with the worst housing crisis since the Great Depression.
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By addressing housing with such force lately, Obama has been able to draw a contrast with his Republican presidential rivals, who generally have favored a hands-off approach to the foreclosure crisis. He has also been able to salve wounds in his relationship with liberals.
“They have really started to step up and recognize that economic progress is going to be much slower unless you address the housing crisis,” said John Taylor, head of the National Community Reinvestment Coalition, an activist group, and a frequent critic of the administration.
(Related: Why it could be a good sign if foreclosures rise in 2012)
Obama’s aides say the president has urged his staff to release the new proposals as fast as possible. This aggressive push reflects a heightened concern that weakness in the housing market, with millions of people owing more than their properties are worth, remains one of the preeminent drags on the fledging economic recovery, aides say.
They say the recent proposals represent a natural outgrowth of a policy reexamination that has been continuous throughout the president’s tenure.
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Shaun Donovan, secretary of Housing and Urban Development, said the administration first tried to save homeowners who were in danger of losing their homes because they had taken out mortgages that turned out to be risky. But as housing problems spread to a broader group of homeowners, who were losing their jobs amid high unemployment, the administration had to transform its strategy.
“We made changes based on what we were seeing out in the real world and what we were learning about the nature of the crisis as we moved forward,” Donovan said.
But Rep. Scott Garrett (R-N.J.), a senior member of the House Financial Services Committee, criticized Obama’s new push, saying the hodgepodge of policies is causing confusion and delaying economic recovery.
“Part of the problem in the housing market and in the financial markets in general is the continued volatility that comes out of Washington,” he said in an interview Thursday. “As long as the administration just continues to vacillate with one new proposal after another and doesn’t really solve the problem, that is only going to exacerbate the problem and not help it.”
Republican presidential front-runner Mitt Romney has also criticized the Obama administration, accusing it of adopting policies that undermine the housing market by keeping the foreclosure crisis from running its course.
“The only real solution to the housing crisis is to get the economy growing again at a healthy rate,” the Romney campaign said in a statement Thursday.
Susan Wachter, a real estate professor at the University of Pennsylvania, said no individual proposal by Obama is likely to dramatically help the housing market but, taken together, the plans could begin to make a significant difference.