Securing the American Dream and The Future of Housing Policy

Below is a portion of the Securing the American Dream and The Future of Housing Policy written by the Romney-Ryan campaign.     Click here to see the whole article.

Over the past four years, the Obama Administration has never offered a clear vision for the future of housing finance policy. At best, the President’s policy response to the housingcrisis can be described as confused and reactive. Early in his term, the President stated,according to Washington Post reporter Bob Woodward that “[w]e will not roll out an aggressivehousing plan,” and it was not included in his 2009 stimulus.After the President reversed course and did roll out a housing plan, what followed was aseries of confusing new government programs with names like HAMP, HARP, 2MP, H2H andEHLP. These programs have been poorly administered with constantly changing terms andoverstated goals that have never been met. In the case of one program, when the goals were not being met the Administration’s solution was to expand it, creating “HARP 2.0.” In his State of the Union Address this year — nearly three years after the program was first launched — thePresident proposed expanding the program further.While Wall Street needs effective regulation, the President’s solution was the Dodd-Frank Act. The 2,319 page law has produced more than 9,000 pages of new regulations to date,and regulators are only one-third of the way done. These regulations are not without costs andthe burden falls disproportionately on smaller banks that don’t have the same level of resourcesas large banks. The consequence is that they are forced to use more of their resources hiringlawyers rather than lending to consumers and small businesses, or approving new mortgages. In one new mortgage rule, 1,100 pages of guidelines were issued by regulators for the purpose of developing a simplified three-page mortgage form. This regulatory burden is significant enoughthat there are even some cases where small banks have more compliance officers than loanofficers.As an example of the type of burden Dodd-Frank has imposed, regulators are required towrite new rules for mortgage originations to ensure borrowers have a reasonable chance of repaying their mortgages. If banks fail to meet these standards when approving a mortgage, theywould be subjected to fines and other legal liabilities. More than two years since the passage of Dodd-Frank, regulators still haven’t been able to define what the characteristics of these“qualified mortgages” should be, and the lack of certainty has paralyzed lenders. The end resultis that credit-worthy borrowers are being rejected when they apply for a mortgage, and thehousing recovery is being further delayed.Perhaps the greatest failure in housing policy is the failure of this Administration toreform two of the greatest contributors to the financial crisis. The President has boasted thatDodd-Frank ended “too-big-to-fail” institutions, yet the legislation did nothing to reform FannieMae and Freddie Mac, whose bailouts currently represent the biggest taxpayer losses of thefinancial crisis at more than $140 billion. We have now passed the four-year anniversary of thegovernment takeover of Fannie Mae and Freddie Mac, and the Obama Administration has failedto come up with anything more than noncommittal options to reform these institutions.The consequence of the Obama Administration’s policy response has been anunprecedented intervention in the housing market by the federal government. Government-Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac, and government agencies likethe Federal Housing Administration (FHA) now guarantee 90 percent of all new home loans. The failed economic policies of the Obama Administration recently led the Federal Reserve toannounce a new program where they will purchase more than half of all mortgage-backedsecurity products issued each month by the GSEs.The end result of the last four years is that the federal government now has a dominantrole in our nation’s $16 trillion housing market, the private sector has been forced to thesidelines, taxpayers are on the hook for even more than when the financial crisis ended, and thereis no clear plan for the future of housing finance.