The GOP platform was approved and released last night, in that order. There have already been so many reports about parts of the platform, I don’t really feel the need to repeat everyone else. However, few words have been formed about the housing plank of the platform. So let me make my stand there.
The housing plank comes in the “Restoring the American Dream – Economy and Jobs” section of the document. It’s five paragraphs long, and much of it is explanatory and flowery. Most of the first paragraph goes on and on about the importance of homeownership. It concludes, “Homeownership is best fostered by a growing economy with low interest rates, as well as prudent regulation, financial education, and targeted assistance to responsible borrowers.” So this does not envision a complete pullout of the housing finance system by the government (the platform even supports housing vouchers for low-income earners and the elderly).
The second paragraph shakes its head at the housing collapse, obviously without mentioning who was in charge when the bubble inflated and then burst. It plausibly points out that “the response of the current Administration has done little to improve, and much to worsen, the situation,” though it claims that the Administration has done so in part by “discouraging private sector investment.” The private sector is actually plenty discouraged and wary of the secondary housing market all on its own, though a failure to fix securitization certainly is part of that. That’s the reason Fannie, Freddie and FHA back nearly all loans these days; it’s not about “crowding out the private sector,” it’s about the private sector running away from a collapsing housing market.
I certainly agree that the White House “has spent billions more on poorly designed and ineffective housing assistance programs,” but of course one of the problems is that they spent billions when they appropriated tens of billions. Somehow Dodd-Frank gets pulled into this as well, though most of its rules relative to mortgages haven’t become operational, and the mortgage piece in Dodd-Frank is about prudential lending, which is what the GOP claims to support (“clear and prudent underwriting standards and guidelines on acceptable lending practices”).
Finally, in the “Rebuilding Homeownership” section, we start to see policy preferences. And here there’s really nothing to offer. The Republicans want to “encourage the private sector to return to housing,” but the platform offers no method to do so. There’s a reference to private mortgage insurance as the way to return private capital to the market, basically with PMI replacing Fannie and Freddie (which they lie about in saying that they were “a primary cause of the housing crisis”). There’s no mention of bank fraud from origination to foreclosure, and the need to overhaul a broken servicing market. It’s like that orgy of fraud never happened.
Then there’s this bit: “Compliance with regulatory standards should provide a legal safe harbor to guard against opportunistic litigation.” The safe harbor would basically make mortgage lenders who follow the regulatory guidelines immune from prosecution. This has bipartisan support, by the way, because Congress loves to bestow immunity on private businesses. Banks want full protection from legal recourses in order to issue loans, their normal course of business. And the GOP platform, and a disturbing number of Democrats, want to give it to them.
Then there is the total lack of policies to benefit those still in the midst of the crisis. “Taxpayer dollars should not be used to bail out borrowers and lenders by funding principal write-downs,” the platform says. And though some of Mitt Romney’s advisors have pushed a mass refinancing scheme in their prior lives as economists, there’s no mention of it at all here.
There’s a passing reference to “prosecuting mortgage fraud and other financial crimes,” but it doesn’t delineate those crimes, nor does it provide a mechanism for that prosecution. The one thing I totally agree with is the part that reads “any settlements received thereby should be directed to individuals harmed by the misconduct, not diverted to pay for unrelated programs.” The problem is that Governors of both parties, Republicans and Democrats, have already diverted hard-dollar funds from the foreclosure fraud settlement, and nobody has said boo.
I also like the statement “Homeownership is an important goal, but public policy must be balanced to reflect the needs of Americans who choose to rent. A comprehensive housing policy should address the demand for apartments and multi-family housing.” This will be construed as support for limiting or ending the mortgage interest deduction, but viewed outside a partisan lens, it’s clearly appropriate. There’s no compelling reason to value homeowners over renters.