Of all the issues being kicked around in this presidential campaign, one that seems to have taken a back seat is how to deal with the still huge problem of foreclosures and underwater mortgages. President Obama, at the start of his term, pledged to revive the crippled housing market as part of his overall strategy to lift the economy out of recession. But his efforts have yielded only lackluster results. ideastream's Bill Rice reports.
Mr. Obama said in 2009 that he'd devise a plan that could help as many as 9 million homeowners who were at risk of foreclosure or trapped in mortgages far higher than their homes are worth. As of last October only 1.7 million had been helped, according to the Washington Post. Sam Crawford of Perry Ohio is among the millions more who have found no relief at all.
SAM CRAWFORD: "My loans been sold four times by the way. I'm now down to a place called Veracrest, who happens to be wholly owned by Wells Fargo, who got the bailout. I've called them 172 times and never got the same extension in four years. They don't know who you are, and they don't give a damn. "
Crawford and many others who've been disappointed by banks and federal assistance programs spoke in Akron last week at a forum on the continuing mortgage.
There are several reasons analysts and housing advocates cite for why things didn't turn out so well. One is that mortgage companies were only encouraged to help troubled homeowners…not required to. They had resources to improve reduce the principle owed by borrowers, but instead took far more modest steps to reduce the interest rate or lengthen the term of the loan…if they did anything at all.
Mark Seifer says the government should have forced the big banks…the main owners of mortgage companies…to act. Seifert is Executive Director of ESOP, a non-profit that helps people navigate the federal programs.
SEIFERT 3: "The home owners probably have been helped by some federal programs, but when it comes to principal they have absolutely no help. And in fact the federal government is taking a pretty strong stance against doing any form of principal correction."
In fact, the President left unspent hundreds of billions of dollars that Congress had allocated to buy mortgage loans. Mr. Obama was betting on a different approach…that by shoring up the banks and providing hundreds of other billions in stimulus spending the economy would recover and the housing sector would come along with it. But critics now say the Obama Administration got it backward; that without first solving the mortgage crisis, the economy wasn't' going to fully right itself.
It's not a policy the White House cares to bring up as the President campaigns. The record hurts the President…says Tom Sutton, political scientist at Baldwin Wallace College.
SUTTON 1: "President Obama, tried some policies that clearly didn't work, so nobody likes to run on failed policies to try to get re-elected.
But Sutton says the foreclosure assistance failure really doesn't help Mitt Romney and the Republicans since they have repeatedly said that the government should not intervene in the housing market, that the market should be left alone to hit bottom and right itself.
The shortcomings of foreclosure assistance programs have been well known for quite a while now but nothing much has changed in the approach…and, it's not likely to going forward…no matter who wins the Presidential election.