Housing Policy at the Party Conventions-What Did We Learn?
Fulmer, Ann, Mortgage Banking
Considering how critical the housing sector is to the economic well being of the nation, you might think housing policy would have been an important issue at the recent national Republican and Democratic conventions--but you'd be wrong. What's the basis for that conclusion? Both candidates ignored the issue in their acceptance speeches.
With the candidates' failure to discuss the issue, those wishing to get insight into both contenders' respective post-election agendas should look to their parties' platforms, and to what was heard on the convention floors.
The Democratic platform, under the heading "Stabilizing the Housing Market and Hard-Hit Communities," begins with the assertion that "[f]or more than a decade, irresponsible lenders tricked buyers into signing subprime loans while too many homeowners got in over their heads by buying homes they couldn't afford."
It continues with a pledge that Democrats will fight "to give every responsible homeowner the chance to refinance their home, [to spur] investment in communities that have been hit hardest by foreclosure, and [to take] whatever steps we can to avoid more foreclosures. The president remains committed to creating an economy ... where homeownership is an achievable dream for all Americans." And that's it. There are no details given on how any of these objectives would be accomplished.
The Republican platform contains a lot more specifics. Under the heading "Ending the Housing Crisis and Expanding Opportunities for Homeownership" is the assertion that "[h]omeownership is best fostered by a growing economy with low interest rates, as well as prudent regulation, financial education and targeted assistance to responsible borrowers."
In the section entitled "Rebuilding Homeownership," the platform calls for a mortgage finance system "based on competition and free enterprise that is transparent, encourages the private sector to return to housing land] promotes personal responsibility on the part of borrowers."
It notes that "reliance on private capital, like private mortgage insurance, will be critical to scaling back the federal role in the housing market and avoiding future taxpayer bailouts." It continues with a call for "[r]eforms [that] provide clear and prudent underwriting standards and guidelines on acceptable lending practices, ... a legal safe harbor to guard against opportunistic litigation," and the winding down of Fannie Mae and Freddie Mac.
As to the Federal Housing Administration (FHA), the Republican platform states that it "must be downsized and limited to helping first-time homebuyers and low- and moderate-income borrowers."
The platform rejects the use of federal funds to bail out borrowers and principal write-downs, calls for financial crime settlements to be directed to the individuals who were harmed by the misconduct, and for better capitalization of banks "in order to insure against future taxpayer bailouts and to correct for the moral hazard created by [Federal Deposit Insurance Corporation (FDIC)] insurance."
Finally, the platform acknowledges that [t]he federal government has a role in housing by enforcing non-discrimination laws and assisting low-income families and the elderly with safe and adequate shelter, especially through the use of housing vouchers," that " [h]omeown-ership is an important goal, but public policy must be balanced to reflect the needs of Americans who choose to rent," and calling for "[a] comprehensive housing policy [that addresses] the demand for apartments and multifamily housing" coupled with "stringent oversight to ensure that funds are spent wisely."
Because party platforms are non-binding statements of ideological principles that are often designed to appeal to special interest groups or factions within the party, I spoke with friends who attended the conventions to see what the delegates were saying on the floor. …