Housing policy has always gotten short shrift from the Mitt Romney campaign. It was, for instance, notably absent from its 59-point economic plan. To make matters worse, the candidate himself seemed to be having trouble choosing a direction. First he said: "Don't try to stop the foreclosure process. Let it run its course and hit the bottom." Then he argued that "the idea that somehow this is going to cure itself by itself is probably not real."
Now Romney has released some details. But not many. His campaign's new housing policy consists largely of generalities that are in line with the Obama administration's policies to fix the housing market.
Romney's housing plan has four parts: 1) To "responsibly sell 200,000, government-owned vacant foreclosed homes owned by the government 2) To use "foreclosure alternatives" for those unable to pay their mortgages themselves; 3) To swap out complex financial rules with "smart regulation"; and 4) to reform Fannie Mae and Freddie Mac to "protect taxpayers from additional risk."
At the same time, Romney has also launched a new attack against Obama's handling of the housing crisis. "President Obama’s only plan to address the housing crisis was the same plan he used to try to fix the economy: spend more taxpayer money on big-government programs," his campaign Web site says. "President Obama rolled out an alphabet soup of more than ten housing finance programs rather than offering a real solution."
But aside from the call to roll back and repeal financial regulations, the ideas that Romney has proposed aren't terribly different from what the Obama administration has done and said on housing so far.
"Romney's housing policy as articulated in the four policy prescriptions below is a subset of Obama's housing policy," said Mark Zandi, chief economist at Moody's Analytics. "The Administration could reasonably say that it is pursuing each of these policy prescriptions and then some."
"It's not a huge departure from what we're seeing now, which has had mixed results, mixed success," said Guy Cecala, CEO of Inside Mortgage Finance.
The Obama administration has been working to reduce its government-owned foreclosure inventories since 2009, explained Cristian deRitis, a senior director at Moody's Analytics.
While simply selling the homes off is appealing in theory, the government could have troubling offloading them without offering a huge discount that could attract speculators without an interest in actually investing in the community, Cecala said. "They would sell the property if they could."
So while it hasn't moved to sell off the 200,000 vacant homes all at once, the White House has begun trying to convert them to privately rental properties through a pilot program that launched this year, calculating that there was more demand for home rentals than for purchases.
What's more, the Obama administration has also supported foreclosure alternatives to "minimize the instability of communities hard hit by the housing crisis, preserve the credit of homeowners, and...help keep families in their homes," as Romney prescribes. For example, the administration has tried to facilitate loan modification and refinancing and created incentives for short sales to help avoid foreclosure. Some of the programs' results have fallen below initial expectations, but the administration has tried to alter them this year in hopes of broadening their impact.
There are other foreclosure alternatives that Romney could pursue — tax breaks, accelerated depreciation, fire sales and so forth — but his plan doesn't give any specifics, and those options carry their own risks, explained deRitis. As such, it's "not clear what foreclosure alternatives Romney would propose that would differ from the administration's focus on modifications and short sales," he said. Mass refinancing — an idea proposed by Romney campaign adviser Glenn Hubbard — also doesn't get a mention in Romney's housing policy plan.
Finally, Romney and the Obama administration agree that Fannie and Freddie eventually need be wound down and privatized. The main difference is not if, but when: Edward DeMarco, head of the Federal Housing Finance Agency, laid out a strategy for doing so that most agree would take years. Republicans generally want it to happen sooner rather than later. Romney, however, doesn't explain how, exactly, he'd go about reforming the government housing giants, or how long the process would take.