President Obama has acknowledged that his housing policies have been ineffective, an assertion vividly illustrated by the many half-built developments and large inventory of financially distressed properties that dot the Florida landscape.
That might sound like a political opportunity for the GOP candidates, particularly in Florida, which is seen as pivotal to their party’s chances to capture the White House. But so far, the candidates have not been specific on how they would address the housing problem.
Visiting the state Monday in advance of the Jan. 31 primary, former Massachusetts governor Mitt Romney staged a housing roundtable with eight Floridians who are struggling with the housing market — either their homes are in foreclosure or their insurance or realty companies are floundering.
Romney listened to their tales of woe, taking notes on a yellow legal pad and interjecting at points to express empathy. “It’s tragic,” he said, adding: “It will not always be like this.”
But he has offered no new proposals. Instead, Romney criticized his top rival, former House speaker Newt Gingrich, for his work as a consultant for mortgage giant Freddie Mac, which netted his firm at least $1.6 million between 1999 and 2008. Gingrich has responded by dismissing his GOP rival as a desperate candidate.
In the years since the crisis took hold, leading GOP economists have proposed that the government back a massive mortgage refinancing program or principal write-downs to help homeowners. But those ideas present a conundrum for Republican candidates who want a smaller government role in the economy. For every voter who might be helped and won over by government help with their mortgages, many other homeowners who struggle to pay their bills are likely to be turned off, analysts say.
“This is truly a no-win situation if you are a Republican candidate,” said Jaret Seiberg, a senior policy analyst with Guggenheim Partners’ Washington Research Group. “Every answer requires more government help. There is no cheap or easy way to fix housing. So from their perspective, you are better off ignoring the problem than trying to put a plan forward.”
Romney’s top economic adviser, R. Glenn Hubbard, has proposed using the government mortgage giants Freddie Mac and Fannie Mae to initiate a large wave of refinancings to help homeowners reduce their mortgage payments.
Hubbard estimates that more than 75 percent of the homeowners with 30-year mortgages backed by Fannie Mae or Freddie Mac are paying interest rates higher than 5 percent, even as prevailing rates have been at or below that level for the past two years. He has said the proposal could bolster the economy by saving homeowners a cumulative $36 billion in mortgage payments, while helping as many as 14 million people.