July 2012

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COVER STORY tango, and the Dems have proven that when it comes to bald parti- san stunts, they're pretty darned nimble. The next time you're on- line, try this: Do a Google search for the current GOP presidential candidate's housing proposals. Chances are the first thing that comes up is romneyhousingplan. com—an attack-ad site planted by the Democrats. But of course, it takes two to House of Cards: Congress' Inability to Act I in the hard-hit Las Vegas metro area, Obama called on Congress to extend existing relief programs and consider new ones, like principal reductions and refi's. The House "could make every homeowner in America who is underwater right now eligible to be able to refinance their homes if they're making their payments, if they're responsible," he said. The visit was part of a n mid-May, on a trip to talk with distressed homeowners "We're creating another housing bubble, which will hurt the American people." — Mitt Romney larger push on housing and the economy by the White House; in recent months, Obama has signaled that he wants action on the future of Fannie Mae and Freddie Mac; continuing foreclosure volumes; and mortgage refis. That latter issue is particularly salient. As HUD Secretary Shaun Donovan pointed out in mid-May testimony to Congress, struggling homeowners had a golden opportunity to take advantage of all-time lows on mortgage interest rates—but only if legislators could pass legislation making refinances easier. "There's a real urgency here because interest rates today are at the lowest level they have ever been for a 30-year mortgage," Donovan told the lawmakers. "But as the economy continues to improve, the expectations are this window of record-low 24 | THE M REPORT Mortgage Equity Act of 2011. Of 150 housing-related bills introduced in this Congress since it was seated last year, none has become law—and only four have even managed to pass the House. That spring, congressional Republicans pushed through four different bills to stop new assistance to distressed homeowners, aimed at terminating the Home Affordable Mortgage Program and the Neighborhood Stabilization Program, as well as FHA refinances and emergency mortgage relief. All four sailed through the lower chamber on a straight party vote—and promptly died in the Democratic-led Senate. At the same time, Democrats introduced three bills in though the bill was sponsored by a Democrat and a Republican. Was there some controversy to the CSH's "mission of preventing and ending homelessness in the United States"? Not likely. But all this goes a long way to explaining how, since this Congress convened, the legislature's approval ratings have hit historic lows. "2011 will be remembered as the year in which the American public lost much of any remaining faith in the men and women they elect and send off to Washington to represent them," Gallup pollster Frank Newport said last December. He later added: "Divided government no doubt helps explain these uniformly low ratings." interest rates may not last for a long time." Two Democratic senators immediately filed the Responsible Homeowner Refinancing Act. The response from their colleagues in Congress was crickets. ("How many times have we done this?" Boehner asked, frustratedly.) But that's no surprise. After all, those Democratic senators had tried the same thing the year before, yielding the same results, with their Housing Opportunity and the Senate to ease mortgage restrictions on rural hospitals, expand protections for distressed borrowers, and impose new limits on servicers of mortgage-backed securities. All three fell stillborn. Heck, things are so acrimonious that our pols can't even agree on purely symbolic gestures. Last October, the Senate couldn't muster enough votes for a resolution to congratulate the Corporation for Supportive Housing (CSH) on its 20th anniversary, even Yes, He Can: Executive Power S and housing? House leaders insist that they've passed nearly 30 job-creating bills that now languish in the Senate, and they appear to have resigned them- selves to not getting any laws passed—at least not until the next Congress is sworn in. President Obama made housing reform a priority in his January State of the Union speech—and he made it clear that he'd use every last drop of power to do it himself. "We can't wait for an increasingly dysfunctional Congress to do its job," the president said. "Where they won't act, I will." The question is just how o what is possible, in terms of leadership on mortgages much executive action alone can accomplish. Some of the admin- istration's recent successes—the $20-plus-billion mortgage servicer settlement, for example—required delicate collaboration between most of the state attorneys general, and even there, partisan bickering weakened the govern- ment position. That means some of Obama's tration might see progress is on principal reductions, which it top priorities—like refinancing private mortgages through the FHA—are probably dead on arrival. Congress would need to approve a new round of fund- ing, and that's not happening. Another White House priority— a homeowner's bill of rights, including standard disclosures of fees and fiduciary responsibili- ties—is a good news-bad news issue for Obama and Democrats: It appears several agencies, in- cluding the Consumer Financial Protection Bureau (CFPB) and Treasury, are moving forward with bill-of-rights-style guide- lines. But so far, there's been no streamlining between the bu- reaucracies, and there aren't any punishments for breaking these homeowner's rights. One area where the adminis-

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