Obama Mortgage Policy Key to Election Narrative
NEW YORK (TheStreet) -- Housing has been among the top priorities for the Obama administration heading into the election year, with the government announcing a slew of measures aimed at providing relief to troubled borrowers in the past few months.
Many of the recent proposals are just tweaks to existing programs and the jury is still out on whether they will provide enough relief to borrowers to prevent them from defaulting and losing their home to foreclosure.
But the announcements of such measures play an important part in framing the narrative for the Obama re-election campaign.
"Most of these measures are aimed at the middle class. It is a calculated strategy of appealing to those most likely to vote," said David Johnson, CEO, of political consulting agency Strategic Vision and a senior Republican consultant who worked on Bob Dole's1988 Presidential campaign.
Through these mortgage relief programs, the administration is advancing its claim that it is "fighting for the middle class" and that Republicans, who are against further government intervention in housing, are " out of touch," with the plight of average American, says Johnson.
Housing remains among the few macro-economic indicators that is yet to show any sign of improvement in a slowly recovering economy.
While not as critical an issue as, say, job growth when it comes to determining who wins the election, housing policy has always been a political hot potato and there is nothing quite like stories of people losing homes to stir politicians into "doing something."
""I'm not one of those people who believe that we just sit by and wait for the housing market to hit bottom," Obama said at a news conference, in an obvious shot at Governor Mitt Romney, who previously suggested that foreclosures be allowed to run their course. "There are real things we can do right now that would make a substantial difference in the lives of innocent, responsible homeowners."
Yet early efforts to bring relief to mortgage borrowers and boost the housing market through programs such as the Home Affordable Refinance Program(HARP) and Home Affordable Modification Program (HAMP) have fallen woefully short of the government's own estimates.
"To the extent you believe the government can stabilize the mortgage market, they have been timid," said Brian Gardner, senior vice president of Washington Research at KBW.
The Obama administration's approach to housing policy has been to "dip its toes in the water, but never fully plunge into the pool," according to Gardner. That has constrained the effectiveness of the programs.
Responding to criticism that such programs are too restrictive in their eligibility criteria, the administration announced changes to the HARP program last fall, removing a cap that prevented "underwater borrowers" who owed more than 125% of their home's value from availing of the refinancing program.