Amid a Friday afternoon focused squarely on the details of Mitt Romney’s 2011 tax returns, the Republican candidate also quietly released a white paper on the candidate’s housing policy. As I’ve written before, the campaigns have remained quite silent on housing and foreclosures, even though the housing market’s struggles are arguably the biggest impediment to a broader recovery and more than one in five homeowners owe more than their houses are worth. The new Romney plan document is all of seven pages long—one of those pages is the cover, and three pages lay out the current situation and bash Obama’s policies. That leaves a one-page executive summary that recaps the two pages that actually outline the “plan.”
That part of the plan is, shall we say, light on details. So much so that Business Insider’s Joe Weisenthal wrote (in his headline no less) that the paper “has got to be a joke.” He pointed to how Romney addressed Fannie Mae and Freddie Mac, the government sponsored enterprises that guarantee mortgages and got a nearly $190 billion bailout. The white paper says: “The Romney-Ryan plan will completely end ‘too-big-to-fail’ by reforming the GSEs. … Rather than just talk about reform, a Romney-Ryan Administration will protect taxpayers from additional risk in the future by reforming Fannie Mae and Freddie Mac and provide a long-term, sustainable solution for the future of housing finance reform in our country.” Got that? So Romney will reform them and do something new. How Romney will “reform” them and what will replace them isn’t specified. Republicans typically talk about ending the GSEs, so if reforming them involves something different, it could be a departure from the views of many in the party.
Other parts of the Romney plan look an awful lot like what Obama’s plan has done—much of which has had only a limited impact. Romney wants to “responsibly” sell the 200,000 vacant homes that the GSEs picked up when borrowers defaulted and faced foreclosure. He explains that the government can do this by “returning these homes to private hands and renting them out.” The GSEs already began in February with a pilot to sell 2,500 homes and recently sold the first part of that portfolio.
Romney also wants to make it easier for struggling borrowers to get foreclosure alternatives such as short sales, deeds in lieu of foreclosure, and modifications. As we’ve reported before, promoting these alternatives has been the Obama administration’s primary anti foreclosure tool—and that approach has had limited success. For example, a recent academic analysis found the administrations’ efforts will increase the number of loan modifications that banks make by only about 0.7 percent. That’s because the big banks that service mortgages have done a lousy job of implementing the program. Interestingly, the Romney plan briefly mentions support for “shared appreciation” modifications, in which servicers write down the principal of a mortgage and then get a cut of any price increase when a homeowner eventually sells the home. The Obama administration started supporting principal reduction this summer, but this would be quite a departure from the stance of many Republicans, who say that principal reduction encourages people to default purposely on their loans.
In perhaps the most marked difference from Obama, Romney calls for the repeal of Dodd-Frank and to replace it with “sensible” regulation that will “eliminate the regulatory uncertainty that is paralyzing lenders.” What those regulations will be, or how they’ll protect consumers while opening up more private lending, isn’t clear.
Taken together, perhaps it’s not surprising Romney buried the release on a Friday afternoon after posting the headline-grabbing tax documents.