Now that the presidential campaign is entering the home stretch, President Barack Obama and Mitt Romney need to address home opportunity — the cluster of issues from foreclosures to fair lending to affordable housing. The housing crisis has harmed millions of American voters and their families. They deserve to know what solutions both candidates are offering.
Together with a good job and a decent education, a home of your own is a cornerstone of the American dream and a crucial determinant of whether the economy falters or prospers.
Together with unemployment and under-employment, the more than 2 million foreclosure filings this year — and millions more families who are underwater on their mortgages or at risk of losing their homes — represent a drag on the economy. In addition to depleting families' savings, the housing opportunity crisis dampens consumer demand, distresses the financial sector and depresses the construction industry.
Moreover, the housing opportunity crisis causes social as well as economic problems. When millions of senior citizens lose their economic security, children and families are uprooted and neighborhoods are blighted with vacant properties, the social fabric is frayed throughout our communities and our country.
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As with many other social and economic problems, the housing opportunity crisis hits hardest in communities of color. After suffering so long from housing discrimination, African-Americans and Latinos have been disproportionately targeted by unscrupulous brokers and lenders.
Major discrimination settlements by the Justice Department against Countrywide, Wells Fargo and other leading lenders reveal that Americans of color are especially unlikely to get a fair deal from the banks. This widens the wealth gap between Americans of color and non-Hispanic whites and causes a loss of community assets and family savings that hurts all Americans.
In addition to its social and economic consequences, the issue of housing opportunity packs a political punch, particularly in the swing states. In Florida, with 25,534 new foreclosure filings in July alone, and Nevada, with 26,498 filings, foreclosures loom about as large as layoffs.
Nonetheless, neither nominee's homepage includes housing, homeownership or foreclosures among the featured issues. So how can the candidates better address this urgent national challenge?
Early in his campaign, Romney famously told the Las Vegas Review Journal: "Don't try to stop the foreclosure process. Let it run its course and hit the bottom." Months later, he shifted, saying in Florida: "The idea that somehow this is going to cure itself by itself is probably not real. There's going to have to be a much more concerted effort to work with the lending institutions and help them take action."
In a Republican debate, Romney also said that government sponsored enterprises Fannie Mae and Freddie Mac — the historic guarantors of the 30-year fixed mortgage for generations of middle class Americans — "were a big part of why we have the housing crisis in the nation that we have." But he has not offered solutions other than eliminating the Consumer Financial Protection Bureau and the Dodd-Frank legislation that created it.
For his part, Obama has created the Consumer Financial Protection Bureau, initiated the Making Home Affordable program, expanded housing counseling, and joined 49 state attorneys general in a national mortgage settlement with five major banks. Still, Making Home Affordable has fallen short of its goals, and the national mortgage settlement does not reach the majority of homeowners who could benefit from it.
The president can also do more to extend principal reduction — shrinking the principal owed on mortgages to reflect homes' fair market value — to mortgages backed by Fannie and Freddie. The Justice Department has been aggressive in settling discrimination suits against major lenders, but President Obama has not discussed how discrimination played a part in creating the housing crisis or how equal opportunity efforts can help to solve it.
Both candidates still must answer these questions. How did lender misconduct and inadequate rules lead to the current crisis? How to ensure that families with the resources to be successful homeowners are not thwarted by future misconduct, arbitrary restrictions, or a lack of sound information? How to rejuvenate neighborhoods devastated by predatory lending and mass foreclosures? And how to ensure that people of all races, ethnicities, and communities have an equal opportunity to pursue the American Dream?
Make no mistake: This is one issue that really hits home.