Mitt Romney often gives off the distinct impression of not being a human being with blood coursing through his veins. That’s a good rationale for this conversation on the foreclosure crisis with the editorial board of the Las Vegas Journal-Review. Here’s a quickie transcript:
ROMNEY: Are there things that you can do to encourage housing. One is, don’t try and stop the foreclosure process. Let it run its course and hit the bottom, allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up. The Obama Administration has slow-walked the foreclosure processes that have long existed, and as a result we still have a foreclosure overhang.
I like the notion that the Obama Administration is the one slow-walking the foreclosure process. Anyone who’s looked at the issue for 10 seconds knows it’s the banks, effectively, who have slow-walked the process, in part by violating the laws governing the process. Courts have stopped foreclosures not because they are operating on high and responding to some Kenyan version of a Bat-Signal; instead judges with some sense of fairly enforcing the laws stopped them, because banks committed fraud by using false affidavits and fabricated or forged documents. So they can’t legally determine ownership of the underlying properties.
In fact, in Nevada, where Romney was sitting when he made this statement, Attorney General Catherine Cortez Masto has sued Bank of America over these illegal foreclosure processes, along with generalized fraud and deceptive practices on loan modifications and fee pyramiding. Nevada is one of the key areas of the country where the foreclosure crisis is at its most acute. And virtually every resident there has been touched by abuse at the hands of their lenders. So more than perhaps anywhere else, Romney using Andrew Mellon’s “Liquidate everything” strategy just isn’t going to fly.
This is actually a standard critique on the right, that foreclosures must be allowed to go through to “clear the market.” Implicit in the critique is the idea that foreclosures are good, that they have benefits to an economy. I think you need only look to recent history to rebut that. Foreclosures cost local communities, the repossessed, homeowners in the surrounding area and the broader economy a great deal of money and suffering, and if they can be avoided, that would be the best outcome.
And that is completely apart from the fact that the banks have consistently – to this day – broken the laws regarding foreclosures, because they don’t have proof of ownership on the underlying properties. So you couldn’t “clear the market” if you wanted to.
Now, the Obama Administration pounced on this, with spokesman Ben LaBolt saying “Mitt Romney’s message to Nevada homeowners struggling to pay their mortgage bills is simple: you’re on your own, so step aside.” But as Ben Smith and Zach Carter noted, they don’t exactly have clean hands here, either.
The foreclosure fraud scandal has festered under the Obama administration’s watch, and the administration has yet to take action to thwart it.
The administration’s signature foreclosure prevention program, the Home Affordable Modification Program, has so-far been a failure and hasn’t sanctioned banks participating in the program for mistreating borrowers. According to a recent federal audit, Ally Financial miscalculated borrowers incomes in more than 80 percent of cases going through HAMP, ProPublica reported.
A total of 870,000 struggling homeowners have been kicked out of HAMP, while just 657,044 remain in permanent modifications. Obama originally promised that the initiative would help 3 to 4 million families stay in their homes.
When the bank bailouts were being negotiated at the end of George W. Bush’s presidency, Obama helped shore up votes for the package by promising Democrats he would push to give borrowers foreclosure relief in bankruptcy court if he was elected president. The bailout passed, but Obama never followed through on that promise.
In addition, the one thing that Romney actually held out as a possible “fix” for the housing market, in the same interview, happens to be… the very thing that the Obama Administration has proposed – a mass refinancing strategy. Another quickie transcript:
I think the idea of helping people refinance homes to stay in them is one that’s worth further consideration. But I’m not signing on until I find out who’s going to pay and who’s going to get bailed out.
So you have an incumbent with a track record that has not helped the number of families needed to stop the foreclosure crisis, and a challenger who thinks the problem is that foreclosures need to go faster, blowing through all the fraud issues and associated legal problems. It’s quite a choice.
UPDATE: Forgot to mention this part:
“Number two, the credit that was given to first-time homebuyers was insufficient and inadequate to turn around the housing market. I think it was an ineffective idea, it was a little bit like the Cash For Clunkers program — throwing government money at something, which was not market-oriented, did not staunch the decline in home values any more than it encouraged the auto industry to take off.”
Romney’s problem with the first-time home buyer’s tax credit, a giveaway to people buying homes anyway, was that… it wasn’t big enough?