Barack Obama visited Las Vegas, one of the hardest hit housing markets in the nation, and used it as a backdrop to unveil his fix for the mortgage mess. Obama says he wants to create a $10 billion government-financed fund to help restructure bad mortgage loans as well as offer tax credits good for 10% of their mortgage interest payments to troubled borrowers. He said he supports legislation proposed by Senator Dodd and Congressman Frank that would have the Federal Housing Administration guarantee new loans if lenders agree to forgo part of the principal and lower the interest rates. Obama also said he wants to increase the level of disclosure of loan terms to borrowers, increase penalties for predatory lending and eliminate income taxes for senior citizens making under $50,000 a year.
Taking a page from Ronald Reagan, Obama trotted out Felicitas Rosel and Francisco Cano, a maid and a porter at the Bellagio hotel on the Strip who are now in danger of losing their home of many years. “Because a lender went for the easy buck, they are left struggling with ballooning interest rates and monthly mortgage payments,” Obama said.
Hilary Clinton quickly reiterated her own housing policy, including a moratorium on subprime loan foreclosures and a freeze on subprime adjustable loan rates. She also supports the Dodd/Frank legislation and a $30 billion mortgage bailout fund. She used the occasion to slam President Bush’s housing policies.
Largely absent from the debate has been John McCain. He briefly took a stand in April, saying he would have his own $10 billion mortgage restructuring fund. That was after several months of saying the government shouldn’t prevent market forces from working. His campaign Web site has almost nothing to say regarding a housing program, at least as far as I could find. Strange given that his home state of Arizona is another place struggling with the housing bust.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.