ThernAdministration is currently working on rules to require originators andrnsecuritizers to keep greater “skin in the game” and to align incentives acrossrnthe securitization chain.  Dodd-Frank charged the SEC with settingrnstricter disclosure requirements so that investors can more easily understandrnthe underlying risks of securities, and establishing an Office of CreditrnRatings to more effectively regulate the credit rating agencies. </p

The Administrationrnsupports stronger capital standards to help ensure that banks can betterrnwithstand future downturns, declines in home prices and other sudden shocks,rnwithout jeopardizing the health of the economy.  Additionally, therncomprehensive reforms undertaken pursuant to the Dodd-Frank Act to constrainrnexcessive risk in the financial system, including strengthened and coordinatedrnoversight through the Financial Stability Oversight Council (FSOC), will helprnbuild a healthier and more stable mortgage market for the long term.</p

Romney on Reformrnof the Mortgage Markets and the GSEs</p

Website: Any serious plan for ending the housing crisis mustrnaddress its root cause.  Two government-sponsored companies known asrnFannie Mae and Freddie Mac were at the center of the housing crisis.  MittrnRomney will reform these government-sponsored companies to protect taxpayersrnfrom additional risk in the future by ensuring taxpayer dollars in the housingrnmarket are replaced with private dollars.</p

White Paper from September 21: “End “Too-Big-To-Fail” and Reform Fannie Mae andrnFreddie Mac:  A Romney-RyanrnAdministration will protect taxpayers from additional risk in the future byrnreforming Fannie Mae and Freddie Mac and provide a long-term, sustainablernsolution for the future of housing finance reform in our country.</p

“We have now passed the four-year anniversary of therngovernment takeover of Fannie Mae and Freddie Mac, and the Obama Administrationrnhas failed to come up with anything more than noncommittal options to reform theserninstitutions.”</p

“The end result of the last four years is that thernfederal government now has a dominant role in our nation’s $16 trillion housingrnmarket, the private sector has been forced to the sidelines, taxpayers are onrnthe hook for even more than when the financial crisis ended, and there is nornclear plan for the future of housing.”</p

Republican Party Platform: Fannie Mae and FreddiernMac were a primary cause of the housing crisis because their implicitrngovernment guarantee allowed them to avoid market discipline and make riskyrninvestments. Their favored political status enriched their politicallyrnconnected executives and their shareholders at the expense of the nation. BothrnFannie Mae and Freddie Mac should be wound down in size and scope, and theirrnofficials should be held to account.</p<hr /

Obamarnon Ending the Current Housing Crisis</p

The Obama Administration initiated twornmajor programs in response to the crisis (Home Affordable Modification Programrn(HAMP), Home Affordable Refinancing Program (HARP) and several smaller borernprograms such as the UP program for unemployed, the Hardest Hit program forrncommunities with high levels of foreclosures. rnObama has also submitted requests to Congress to expand the HARP programrnto all borrowers not just those with Freddie and Fannie loans.   The Department of Housing and UrbanrnDevelopment has recently initiated a pilot program to bulk sell severalrnthousand foreclosed homes with the requirement that purchasing investorsrnmaintain the homes as rentals for a period of time.</p

From the Obama February 2011 Report tornCongress: The Administration supports severalrnimmediate and near-term reforms to correct problems in mortgage servicing andrnforeclosure processing to better serve both homeowners and investors. rnThese include putting in place national standards for mortgage servicing;rnreforming servicing compensation to introduce proper incentives to invest therntime and effort necessary to work with borrowers to avoid default orrnforeclosure; requiring that mortgage documents disclose the presence of secondrnliens, define processes for modifying them when a first lien becomesrndelinquent; and considering options to restrict adding debt secured by the samernproperty.”</p

Romney on Ending the Current Housing Crisis</p

 One can infer that Romney would end some of the programs in this area that currently exist.  In the White Paper he says of HAMP, HARP,rn2MP, H2H and EHLP, “These programs have been poorlyrnadministered with constantly changing terms and overstated goals that havernnever been met.  In the case of onernprogram, when the goals were not being met the Administration’s solution was tornexpand it, creating ‘HARP 2.0’.  In hisrnState of the Union Address this year…the President proposed expanding thernprogram further.”  </p

It is unclear whether Romney still supports a statement he made in Las Vegasrnin October 2011:    </p

“As to what to do for the housing industryrnspecifically and are their things that you can do to encourage housing. One is,rndon’t try to stop the foreclosure process. Let it run its course and hit thernbottom. Allow investors to buy homes, put renters in them, fix the homes up andrnlet it turn around and come back up. The Obama administration has slow walkedrnthe foreclosure process [inaudible] that has long existed and as a result wernstill have a foreclosure overhang.” [Las Vegas Review-Journal]</p

Website: Under President Obama, home prices have fallen,rnhomeowners have received more than 8.5 million foreclosure notices, and 11rnmillion Americans owe more on their mortgages than their homes are worth.rnPresident Obama’s only plan to address the housing crisis was the same plan hernused to try to fix the economy: spend more taxpayer money on big-governmentrnprograms.  To address the housing crisis, President Obama rolled out anrnalphabet soup of more than ten housing finance programs rather than offering arnreal solution.  Meanwhile, credit-worthy borrowers are struggling to get arnloan as a result of the uncertainty caused by the President’s policies.</p

White Paper: “Vacant properties reduce thernproperty values of neighboring homes and contribute to neighborhoodrnblight.  Many foreclosed homes are clusteredrnin low-and middle-income neighborhoods, and the more than 200,000 propertiesrnowned by the federal government represent more than half of all vacant,rnforeclosed properties in the United States. The Romney-Ryan plan will get thernfederal government out of the landlord business by responsibly selling 200,000+rnvacant foreclosed homes in a way that will enhance communities rather thanrncontribute to neighborhood blight.  Returningrnthese homes to private hands and renting them out will benefit millions ofrnneighboring homes and reward the taxpayer, including via reduced police costs.</p

“A Romney-Ryan Administrationrnwill make it easier for homeowners to get alternatives to foreclosure, such asrnshort sales, deed-in-lieu-of-foreclosure and shared appreciation.”</p<hr /

Obama on Efforts to Insure no Repeat of the Housing Crisis</p

In the case of both candidates this area gets conflated with reformingrnFreddie Mac and Fannie Mae and other issues but we have sorted them out as bestrnwe can.</p

Report to Congress:</p<ul class="unIndentedList"<liRequirements for larger down paymentsrnwill be phased in so that any mortgage qualifying for a GSE guarantee will havernat least a 10 percent down payment.</li<liFundamental flaws in the mortgage marketrnwill be remedied starting with those in the Dodd-Frank and Consumer ProtectionrnAct. </li<liContinued implementation of Dodd-Frank'srnconsumer protection reforms including anti-predatory lending protections,rnimproved underwriting standards, verification of ability to pay, and increasedrnmortgage disclosures for consumers.</li<liStronger capital standards to ensurernbanks can better withstand future downturns, price declines and other suddenrnshocks without jeopardizing the economy.</li<liIncreased accountability and transparencyrnin the securitization projects including rules for skin in the game and alignedrnincentives across the securitization chain.</li</ul

Romney on Efforts to Insure no Repeat of the Housing Crisis</p

Website:  “Since the housing crisis, the government has produced more thanrn8,000 pages of new rules and regulations.  The problem is that they arernpoorly designed, and have made it harder for people with good credit to getrnloans.  Mitt Romney will put in place smarter regulations to restore arnfunctioning marketplace that holds banks accountable and restart lending torncreditworthy borrowers. </p

“Any serious plan for endingrnthe housing crisis must address its root cause.  Two government-sponsoredrncompanies known as Fannie Mae and Freddie Mac were at the center of the housingrncrisis.  Mitt Romney will reform these government-sponsored companies tornprotect taxpayers from additional risk in the future by ensuring taxpayerrndollars in the housing market are replaced”</p

“We believe that when a family can no longer berntricked into signing a mortgage they can’t afford, that family is protected,rnbut so is the value of other people’s homes, and so is the entire economy.” </p

White Paper: (The Dodd-Frank) regulationsrnare not without costs and the burden falls disproportionately on smaller banksrnthat don’t have the same level of resources as larger banks that don’t have thernsame level of resources as large banks. rnThe consequence is that they are forced to use more of their resourcesrnhiring lawyers rather than lending to consumers and small businesses orrnapproving new mortgages.</p

“More than two years since thernpassage of Dodd-Frank, regulators still haven’t been able to define what therncharacteristics of these ‘qualified mortgages’ should be, and the lack ofrncertainty has paralyzed lenders.  The endrnresult is that credit-worthy borrowers are being rejected when they apply for arnmortgage, and the housing recovery is being further delayed.”</p<hr /

Obama and Romney on the Future of the Homeowner Mortgage Interest Deduction</p

President Obama stated clearly during his acceptance speech last week inrnCharlotte that he would not touch the mortgage tax deduction for middle-classrnfamilies while leaving open the subject for higher wage earners who would morernreadily be affected if the deduction were limited, as some have suggested, tornthe first $500,000 of the outstanding mortgage balance.</p

It is more difficult to determine what Romney’s stance is on thisrndeduction.  Under his budget proposal herntalks about lowering tax rates across the board while at the same timerneliminating many of the deductions now available for both individuals and businesses.  Many analysts who have looked at his budgetrnproposal have concluded that the mortgage deduction would be among those thatrnwould have to be eliminated.</p<hr /

Obama Regarding Dodd-Frank</p

ThernPresident signed Dodd-Frank into law and has strongly endorsed it and thernConsumer Financial Protection Bureau it created.</p

Romney Regarding Dodd-Frank</p

Romney has made repeal of Dodd-Frank arnkeystone of his campaign but lately his message has softened.  His staff has told reporters on backgroundrnthat they think Dodd-Frank’s implementation is too far along for repeal andrnmany of Romney’s Wall Street donors aren’t totally unhappy with the bill.  In recent weeks he has said “some of thernconcepts” in the legislation ‘have a place.'”  rnHe still campaigns on repealing the law but says as president, he wouldrnwork to replace it with a mostly unspecified but “streamlined regulatoryrnframework.”  Bloomberg recently said “Romney’s comments (regarding Dodd-Frank)rndon’t rule out an option less than full appeal.”  </p<hr /

Obama on Refinancing</p

Obama has asked Congress to extend thernHARP 2.0 program to homeowners who do not currently have loans owned orrnguaranteed by Fannie Mae or Freddie Mac. rnAn estimated 11 million homeowners would be able to refinance under suchrna change.</p

Democratic Platform: Too many people still owe more on their homes than they are worth.rnThat is why Democrats are fighting to give every responsible homeowner thernchance to refinance their home, spurring investment in communities that havernbeen hit hardest by foreclosure, and taking whatever steps we can to avoid morernforeclosures. The President remains committed to creating an economy that’srnbuilt to last, where home ownership is an achievable dream for all Americans.</p

Romneyrnon Refinancing</p

It is a little hard to determine Romney’s stance on refinancing.  As seen above, he has been critical of HARP,rnbut its expansion late last year was based in part on a plan by Romney’srneconomic advisor Glenn Hubbard.  Aroundrnthat time Romney said, “I think the idea of helpingrnpeople refinance homes to stay in them is one that’s worth furtherrnconsideration but I’m not signing on until I find out who’s going to pay andrnwho’s going to get bailed out and that’s not something which we know all thernanswers to yet.”  In an interview with Larry Kudlow in January,rnright after Obama announced an expansion of the program Romney seemed to be inrnfavor of HARP as long as it was limited to GSE loans, the version of HARP putrnforth by Hubbard.</p<hr /

Obama on Encouraging Homeownershiprnand Affordable Housing</p

Report to Congress: We should make sure opportunities are availablernfor all Americans who have the credit history, financial capacity and desire tornown a home have the opportunity to take that step but should also ensure thatrnthere are a range of affordable options for the millions of Americans who rent whetherrnby choice or necessity.  We must designrnaccess and affordability policies that are better targeted and focused onrnproviding support that is financial sustainable for families andrncommunities.  </p<ul class="unIndentedList"<liWe need to reformrnand strengthen FHA by considering options such as lowering the maximumrnloan-to-value ratios and adjusting pricing.</li<liRebalancing housingrnpolicy to provide additional support for rental housing,</li<liEnsuring capital isrnavailable to credit-worthy borrowers in all communities through greaterrntransparency in the secondary market regarding credit, geographic andrndemographic characteristics;</li<liDeveloping arndedicated funding source for targeted access and affordability initiatives</li</ul

Romney on Encouraging Homeownership and Affordable Housing</p

White Paper: “The best way to help the housing market is to getrnthe economy going and get America back to work. rnThe Romney-Ryan jobs plan will crease 12 million jobs in the next fourrnyears.</p

Platform:  Homeownership is best fostered by a growing economyrnwith low interest rates, as well as prudent regulation, financial education,rnand targeted assistance to responsible borrowers.</p

The FHA, tripled inrnsize to more than $1 trillion under the current Administration, has crowded outrnthe private sector and is at risk of requiring a taxpayer bailout. It must berndownsized and limited to helping first-time homebuyers and low- and moderaternincome borrowers.</p

The federal governmentrnhas a role in housing by enforcing non-discrimination laws and assisting lowrnincome families and the elderly with safe and adequate shelter, especiallyrnthrough the use of housing vouchers.  Homeownershiprnis an important goal, but public policy must be balanced to reflect the needsrnof Americans who choose to rent.  Arncomprehensive housing policy should address the demand for apartments andrnmulti-family housing.  Any assistancernshould be subject to stringent oversight to ensure that funds are spent wisely.

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