But experts said the government’s options are limited. There isn’t likely to be the money or political will to push through any significant legislation to address the problem, they said. And the evolution of the housing crisis may have pushed it beyond quick policy fixes.
Yet housing remains one of the biggest drags on the economic recovery and threatens to loom over the 2012 election. Millions of borrowers are facing foreclosure, while others are stuck in homes worth less than they owe, leaving them feeling cash-strapped at a time when consumer spending is needed to fuel economic growth.
“There is no money and, to some degree, we have run out of ideas. I have seen them all,” said Mark Zandi, chief economist of Moody’s Analytics. “I don’t think there is something grand that could make a big difference.”
Obama set off the speculation about another large housing program earlier this month during a Twitter town hall when he said that dealing with the aftermath of the housing bubble had been one of his chief challenges. The administration had made progress, he said, but “it’s not enough. And so we’re going back to the drawing board.”
The administration is keeping an eye on how the market is evolving and what is driving distress, said an administration official, who spoke on condition of anonymity to discuss internal deliberations. An inter-agency group that includes senior Department of Housing and Treasury officials continues to collect input from outside groups and members of Congress, the official said.
The administration is not preparing to launch a large new program, but is considering several options including expanding existing efforts, the official said.
The administration already has poured billions into programs to help homeowners avoid foreclosure, injected millions into teetering state housing finance agencies and made it easier for borrowers to refinance their loans even if they owe more than their homes are worth.
But most of those efforts have fallen short of expectations. Despite historically low interest rates, home prices remain near historic lows, sales are weak and a backlog of homes headed to foreclosure could prolong the crisis for years.
“I think the administration has put out quite a number of initiatives over the last couple of years to soften the blow of the [housing] crisis. Those measures did soften the blow,” said Michael S. Barr, a former assistant Treasury secretary in the Obama administration.
But most foreclosures are now caused by economic factors like unemployment rather than subprime loans, said Barr, a law professor at the University of Michigan. “I don’t think any housing specific answer is likely to make a significant difference right now. The larger macro issues are more important.”