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What Do Republican Presidential Candidates Say on Foreclosure Crisis? Not Much.

Our guide to how the candidates say they would approach the housing crisis — when they speak about it at all.

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Republican presidential hopefuls Rick Santorum, Mitt Romney, Newt Gingrich and Ron Paul take part in a debate on Jan. 23, 2012, in Tampa, Fla. (Emmanuel Dunand/AFP/Getty Images)

As we've detailed, President Obama's plans to help homeowners have come up short time and again. We recently looked at Obama's latest proposals, most of which are unlikely to make a major dent in the crisis.

So, how about the Republican presidential candidates: What do they say should be done about the foreclosure crisis?

They don't say much. As newspapers in hard-hit states like Florida, Nevada, California and Ohio have been quick to point out, none of the candidates has made the foreclosure crisis a policy priority.

Mostly, the candidates have argued that the housing market needs to heal on its own, without government interference. Rick Santorum and Congressman Ron Paul have suggested tax breaks for some homeowners.

Here's our in-depth guide to how Santorum, Mitt Romney, Paul and Newt Gingrich say they would approach the issue as president, as well as an evaluation of their claims.

Think we missed an important statement? Let us know.

 

Rick Santorum: 'Let capitalism work,' but let homeowners write off home losses on their taxes.

Former Pennsylvania Sen. Rick Santorum has proposed allowing people who owe more on their mortgages than their homes are worth to sell their houses and deduct their losses from their taxes.

The details of Santorum's plan aren't clear, and the campaign did not respond to our multiple requests for comment.

One tax law expert, James Maule of Villanova University School of Law, said a tax write-off "would not do much for the majority of people who are in financial trouble."

Right now, taxpayers who sell their primary residences at a loss can't deduct that loss from their income when they do their taxes. Changing the tax law wouldn't do much good, Maule said, because people who are struggling with their mortgages often have little or no income, so giving them a tax deduction actually wouldn't help.

Other than that, Santorum says we just need to "let capitalism work," as he put it in a Republican debate in Tampa, Fla., on Jan. 23. "Allow these banks to realize their losses. And create an opportunity for folks who have houses to realize their losses and at least help them out.”

Santorum also has said his plan would help the housing market "find its bottom."

"This is something I think is important temporarily to put in place to allow people the freedom to be able to go out and get out from underneath these houses that they're holding onto and at least get some relief from the federal government for doing so,” he said at the Jan. 23 debate.

But according to some experts, housing prices might be close to hitting bottom already — and thus on their way to rebounding already.

It's also worth noting that a 2007 law provides a tax exemption for homeowners who negotiate debt relief on their mortgages, including through short sales. It's unclear whether this law and Santorum's plan might overlap.

Earlier, in Nevada, one of the states where the foreclosure crisis has been most severe, Santorum emphasized "free-market solutions” and cautioned citizens against looking to the government for help. According to CNN, Santorum compared the housing crisis to health care and suggested that, given the opportunity, liberals in government would implement a housing solution like "Obamacare.”

When Santorum and others call for private-sector solutions, they're largely sidestepping a reality: The mortgage market already relies deeply on government support.

Government-owned Fannie Mae and Freddie Mac own or guarantee roughly half of all mortgages in the United States. And while both the Obama administration and Republicans want to scale back government involvement, it's actually been growing. Fannie and Freddie now guarantee three out of every four new mortgages. Factor in the Federal Housing Administration mortgages guaranteed by Ginnie Mae, and the percentage of mortgages backed by the government is even higher.

 

Mitt Romney: May be open to some homeowner aid programs but won't talk specifics.

In a videotaped interview with the Las Vegas Review-Journal's editorial board in October 2011, former Massachusetts Gov. Mitt Romney said his approach to addressing the housing market would be: "Don't try to stop the foreclosure process. Let it run its course and hit the bottom."

He said the Obama administration had "slow-walked the foreclosure process," and that the housing market would "turn around and come back up" only when foreclosures go through and those houses are put on the market, sold to investors and then rented.

Romney also has said that repealing the Dodd-Frank financial reform law, which introduced new regulations to the mortgage market, would help ease the crisis.

Economist Elliott Parker of the University of Nevada, Reno, told us that while he is not "enamored” with the Dodd-Frank regulation itself, "it is absurd to pretend that repealing Dodd-Frank would work some magic in turning around Nevada's housing catastrophe.”

"Any time you establish a set of regulations there are unintended consequences,” Parker told the Las Vegas Sun in October. "There may be banks that can't lend now or some people who can't get loans. But to offer that as a solution is pretty empty, and it completely ignores the magnitude of the problem that we have today.”

Mark Calabria, the director of financial regulation studies at the Cato Institute, pointed out that while he agrees with Romney that the housing market needs to heal on its own, the Obama administration's general approach to the foreclosure crisis was first developed and instituted by President George W. Bush, so it's not fair to characterize the administration's programs to help homeowners as a purely Democratic strategy.

"Both Obama and Bush's housing policies have had relatively small impact. They certainly have not stopped the price decline. They've slowed the rate at which this happened,” Calabria said.

Contacted for comment, a Romney campaign spokeswoman emailed a statement saying, "The only real solution to the housing crisis is to get the economy growing again at a healthy rate.” The spokeswoman did not offer details about what plans Romney endorses or opposes.

Despite his "hit the bottom” rhetoric and focus on "private-sector solutions” between banks and homeowners,” some of Romney's statements suggest that he might actually be open to providing government assistance to homeowners.

As Forbes pointed out recently, Romney was very supportive of Bush's attempts to aid homeowners in 2008.

"Helping reverse the housing crisis is critical,” he said in 2008, praising Bush's programs to help homeowners through the Federal Housing Administration. "Loosening those requirements and expanding the ability of FHA to help out homeowners would make a big difference.”

One of Romney's top economic advisers, economist Glenn Hubbard, released a plan in September suggesting that every homeowner with a Fannie Mae or Freddie Mac government-backed mortgage who is current on mortgage payments should be allowed to refinance his or her mortgage at a low rate.

Romney didn't endorse the plan but didn't reject it, either.

"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,” Romney said in October.

In January, when Romney met with a preselected group of struggling Florida homeowners in Tampa, he called their situations "tragic” and said "the banks ought to show greater flexibility in being able to renegotiate with those people who have circumstances that would justify that renegotiation.”

But at the same event, he defended banks that foreclose on homeowners. "The banks are scared to death, of course, because they think they're going to go out of business,” Romney said. "They're afraid that if they write all these loans off, they're going to go broke. And so they're feeling the same thing you're feeling. They just want to pretend all of this is going to get paid someday so they don't have to write it off and potentially go out of business themselves.”

Many investors suspect that Romney is right: While banks continue to list mortgage investments on their balance sheets at their face values, investors worry that because of the struggling housing market and high rates of foreclosure, the actual value of what the banks own is actually far less. If true, banks could face big losses.

Other elements of Romney's defense of the banks' role in the foreclosure crisis have been more questionable.

"Now, the banks aren't bad people. They're just overwhelmed right now,” Romney said at another event in Florida, according to the Los Angeles Times. "They're overwhelmed with a lot of things. One is a lot of homes coming in, that are in foreclosure or in trouble, and the other is a massive new pile of regulations.”

Banks may be overwhelmed, but they also recently agreed to a $25 billion settlement over robo-signing and other fraudulent foreclosure practices. We've done extensive reporting on how homeowners have suffered from the banks' deeply dysfunctional loan servicing practices, which continued years after the foreclosure crisis began in 2007 and long before the Dodd-Frank financial regulations became law in 2010.

 

Ron Paul: Hands-off policy except for tax benefits for those who lose their homes.

Like other Republican candidates, Texas Congressman Ron Paul has advocated a hands-off approach to the foreclosure crisis.

"The best thing you can do is get out of the way, because you want the prices to come down so that people will start buying them again,” he said at the Tampa debate in January.

"Any further federal programs designed to fix prices by pumping credit into the housing market will only compound the damage done by prior interventions,” he said in an interview with the Las Vegas Review-Journal.

But Paul also laid out a series of tax benefits that he said would help the residents of Nevada, which is among the states hardest-hit by the foreclosure crisis.

Among these were "providing tax credits to those who have suffered foreclosure” in order to provide an easier path to "new, more affordable housing,” and allowing homeowners "to take a capital-loss deduction if they sell a home for less than they paid for it.”

Paul's campaign did not respond to a request for comment, making it difficult to compare Paul's and Santorum's tax-deduction plans.

It's worth noting that Paul, unlike Santorum, did warn about the dangers of the mortgage bubble years before it burst. "Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss," Paul told the House of Representatives in 2002, introducing his "Free Market Enhancement Act,” which would have repealed special privileges granted to Fannie Mae and Freddie Mac.

Paul also warned that taxpayers would ultimately be forced to bail out investors. Fannie and Freddie are still more than $150 billion in the red after a taxpayer bailout.

 

Newt Gingrich: ‘Repeal Dodd-Frank.'

Like Romney, former Speaker of the House Newt Gingrich has advocated removing new regulations on the mortgage industry as a way to address the foreclosure crisis.

"If you could repeal Dodd-Frank tomorrow morning, you would see the economy start to improve overnight,” Gingrich said at the January debate in Tampa.

He has not offered much beyond that point. His 21st Century Contract with America mentions the housing crisis only in the context of his goals for repealing Dodd-Frank and reforming the Federal Reserve. In a January interview with the Las Vegas Review-Journal, he repeated his debate comments almost word for word, adding, "The No. 1 thing that we can do to help the housing market is to strengthen the overall economy.”

Determining what a Republican will do is relatively simple:  Examine the set of individuals or entities comprising in the problem set and isolate the wealthiest individuals or entities.

The Republican will do that which benefits the smaller result set.

We americans must be so stupid to believe what the republican candidates are feeding us and yet end the deficit. Be the world savers and let the forclosures continue, and oh heck, on and on.
I don’t care what incredible dream they may have “or not”, but just how and who is going to pay for it and in what time frame.
I keep asking myself over and over, Do we really want to start all over? and will we?
thanks for reading

The right way and the way it will end is when prices come down to where they were   ( in 2001 ) prior to the appraisers jacking up the value of houses to appease the builders, bankers and realtors. After allowing for the normal price increases ( 1 1/2- 2 pct.yr )  Bankers and borrowers should have to take their losses without taxpayer money. Lenders, appraisers, builders and realtors should be properly investigated and punished accordingly.  I believe most of the home buyers prior to 2005 that are underwater are there due to their refinancing and getting cash out for new cars, big screen tv’s vacations etc.more than once.

Walter D. Shutter, Jr.

Feb. 27, 2012, 4:18 p.m.

I don’t understand what it means when the big “tax expert” says that people who sell their homes at a loss cannot take a tax loss writeoff.  A home is defined in the tax code as a capital asset-unless you are in the business of building and/or selling houses for a living, and then it is defined as an ordinary asset-like finished inventory, for example. 
Here is how you incur a capital loss:  You pay $100,000 for a capital asset. Later you sell the same asset for $50,000.  You now have a $50,000 capital loss that you can use to offset any capital gains you might have, or even offset ordinary income to the tune of $3,000 each tax year, until the loss is used up.

Oh, wait! I think I see the problem.  Those folks whose houses are “under water” or “upside down” DIDN’T ACTUALLY PAY FOR THEM.  Instead, they gave a mortgage( a promise to pay secured by real estate) to someone else and THAT PERSON actually paid for the house.  Maybe the person who actually paid for the house should get the capital loss deduction or tax credit.

Golden West Financial, founded by Herbert and Marion Sandler,  made billions of dollars on adjustable rate mortgages (ARM’s) made to borrowers who had absolutely no way to pay them off. GWF sold billions in bundled subprime mortgages to investors all around the globe. Fortunately for them, the Sandlers were able to unload Golden West Financial, pocketing a cool $2.4 billion, just before the mortgage crisis hit (what timing).

Considering Propublica has done so much investigative reporting on the subprime crisis, you would think that the Sandler’s and GWF would be the topic of an article or two but considering the Sandler’s donated tens of millions to Propublica, Propublica has been notoriously silent on GWF’s role in the subprime crisis. Instead, they continually run hit pieces like the one above.

I can speak to this first hand. I applied to my bank (Wells Fargo) as I have had a large loss in income, to the HAMP(home affordable modification program). After several months of paper shuffling I was told that even though, I should qualify for it, they (the bank) wanted to put me in a Wells Fargo program which is more expensive then what I would have in the HAMP program. Just another run around government program with the fox (bank) running the hen house.

Dan’s right on, here.  The “solution” is to let the market crash so people can afford to buy houses again, instead of propping it up so that banks can triple their profits by keeping mortgage payments, getting an insurance payout, and then reselling the house.

Republicans are soul-less - period. These are the men and women who look “right” so the majority will mindlessly elected them to make decisions vitally important to the average person. Voting someone into office based on the way they look or what their handlers train them to say, and it is guaranteed that greed, arrogance, incompetence and corruption - not to mention “good ole boy” politics will continue to destroy this country - it nearly did during the Bush years. Does anyone ever wonder why and how politicians lie so easily - how those blatant lies change from day to day, audience to audience - and why they are soooo desperate to win elections - it is because they don’t give a dam about “America” - only what’s in it for them. They are trained cons willing to say and do whatever it takes - be it division/racism, ignorance, mindlessness or apathy - whatever - as long as they are elected and gain the power to sell themselves and their “votes” to the highest bidders - the rich, banks and corporations. The American people have completely lost the ability to judge character or the right to have a say in governing their own country decades ago. The American people are only pawns in the greed/power game - regardless of the moral or mighty grizzled convictions about “Constitutional rights” - we lost those rights and we’ve nearly lost this country to corruption and greed because of “politics”. If you don’t agree it’s because you refuse to accept or see the way “Congress” played power games that flat out harmed this country - and deliberately turn us against each other by reinforcing the “us” and “them” rhetoric - while the country was falling apart, millions lost and continue to lose homes, banks commiting outright fraud even the lowest of criminals would be afraid to engage in. Only a very, very precious few Congress people put this country or the American people before their own arrogance and greed greed - but politicians are elected to by us to do what is best for US and the U.S. - not sell themselves to special interests or play power games at our expense. Any who do so we should have the right to fire their azz immediately - but we don’t. Where is it written we have to take this ugly, dysfunctional crap?

People can say what they mindlessly want to about Romney or Santorum, Obama or whoever - they are all the same - they are NOT public servants so in love with the U.S. they want to give it their all “for the good of the country” -they are soul-less cons banking on our ignorance, apathy and hate to get a golden ticket that leads to the White House - then will do the exact opposite of those campaign “promises” made to get them elected, and completely ignore the interests of those voting them into office and especially what’s best for the country - but coddle, pacify and further enrich the banks and corporations that pimp them behind doors that lock us out of our own country.

Wall Street and the banks had no fear they would ever pay for the massive fraud committed when the economy collapsed, and every single attempt to help Main Street was ignored by Wall Street - and no one in Congress or the White House questioned or did anything about it - not one congress person or Obamae. What the H*((&* kind of country is this now - it’s a lie and people just choose to pretend it works because they don’t know what elese to do.

What we already have is lame enough - putting a Republican back in the White House after their corruption and policies destroyed everything -  then they snarled, sabotaged and fought every cohesive attempt to re-build is not only sickeningly filthy - it makes voting Americans the responsible and pathetic blind fools who deserve everything we get. Voting for a candidate because of the way they look on stage or the way they “answer” questions from a moderator is the worst way to determine character or elect the most powerful people in this country - it might work for grade-school elections - but it is a downright ridiculously immature and dangerous way to elect the people responsible for running a country.

It is always, always about right and wrong - not haircuts, dyed-blonde wives, grinning lies directed at the mindless who fall for anything and everything so long as it “looks” or “sounds” right. Devils always mixe lies with the truth.

Clinton and Obama did this. It is ignorant not to know that. The government is not supposed to help with the foreclosure crisis even though it caused it. It is supposed to fine and incarcerate the bankers who have defrauded the public. During it’s illegal intervention, the government told the bankers (Obama) to make loans available in areas that didn’t have the money to pay for them. So the bankers and the government members who did this should be incarcerated and fined. That is the only thing that the government can legally do.

@Emmett Smith:  The only Americans who are going to believe that propaganda puff piece you just emitted are those who don’t know about this:

http://archives.hud.gov/remarks/martinez/speeches/presremarks.cfm

Wallis Parnelle

Feb. 27, 2012, 7:18 p.m.

Well the big push by Conservatives over the last 20 years, was antigovernment, privitize evrything. Well that worked out wonderfully for the 1%, while the 99%, gets stuck with the costs of the destruction. Knew this would always end badly, just hoped people would stop buying into the privitation, and wake up, but ZZZZZZZZ, and we are screwed. I am an Independent, voting 100% Democratic, this election. It all we can do to prop up any future, and get rid of the parasites. And yes, I know there are bad democrats also, yet, they are better, bad, than bad, bad of the GOP.

So Santorum and Paul want to drive up the deficit even more?  According to independent budget analysis, everything these GOP candidates have been proposing will drive up the deficit far higher than anything President Obama has proposed.  These GOP candidates are getting away with saying “the deficit is a disaster” out of one side of their mouth, and saying “I want to double-down on the Bush tax breaks that haven’t worked” out of the other side of their mouth.

How about we find something to make these “tax breaks for lost home value” budget neutral.  Hey, I know!!!  Let’s take away the tax breaks banks and other corporations get for the losses they incurred when gambling in the housing market.

Republicans say many of those who lost their homes never should have had one in the first place, and others should buck up and move on - so it’s no big deal.  The solution is to give more tax breaks to upper earners and more loopholes and subsidies to corporations (especially oil companies) so that money will trickle down into the economy and create jobs.

Keith,

While I don’t think people facing foreclosure should get a tax break at all at least Paul does have plans to cut overseas military spending that would more than make up for his suggested tax cuts.

Government needs to get out of housing period. Prices need to return to levels that are in line with salaries. Goverment continues to subsidize both bank and irresponsible decisions on the middle class tax payer.

They say this is all Palin’s fault and they’re right.

In the past, people have not been allowed to deduct capital losses on their homes, even though the home is capital asset.  A recent change in tax law is that money that was lent to people, but never paid back to the bank, and eventually written off by the bank, was formerly taxed as INCOME to the borrower, but that is no longer the case.
  It makes a lot of sense to propose a further change that would allow persons to take a capital-loss writeoff on money that was ACTUALLY paid by them, but lost in the housing bust.  E.g., a person made a 10% or 20% down payment in 2005, and eventually lost all of the down payment when the house was either sold or foreclosed.  The author of the article is NOT making sense by arguing that this “would do them no good because they have no income.”  It is well known that you can write off only $3,000 of capital loss per year.  The rest is carried over.  So a person of modest means who lost big bucks in the housing bust would possibly have a $3,000/year tax deduction for many years to come.  And I hasten to add that the $3,000 is taken directly off income, you don’t have to “itemize” deductions to claim this loss.
  I hate it when poorly-informed people write critical articles.  I’m no Santorum fan (!), but the measure he proposes is good in this case.

I thought Democrats were for the middle and working classes? Then why do they want to prevent foreclosures when they reduce prices for working people? Un -affordability was at a all time high during the bubble. I guess Dems think that’s a good thing since they don’t want prices “to hit bottom”.

lolllll…getting desperate there on the right, Lou?  Trying to spin, spin, spin so the right can salvage something out of the Republican ro-de-o that was the mortgage-backed securities pyramid scam?

I’m not a Republican.

So housing shouldn’t reach bottom? I live in Los Angeles and houses in working class
neighborhoods got up to over $500,000. Now we need to prevent foreclosures and having home prices go down according to the left meaning that those homes in working class
neighborhoods should stay at inflated values (and they are still inflated in CA btw).

Now considering that housing is the #1 cost for all Americans, how is preventing foreclosures and keeping home prices from falling beneficial to working and middle class Americans especially the ones who rented and didn’t buy into the obvious housing bubble? Saying home prices going down is bad isthe same as saying lower gas prices is bad.

I doubt I’ll get a response. Just more partisan BS.

Would we get mad if food and energy prices came down? Of course not.

But for some reason people believe another essential item (housing) should be high as possible and never go down and “hit bottom”?

Warped logic.

In regard to Mimi’s question about capital losses:

One of the things that’s actually still unclear in regard to Santorum and Paul’s plans is whether they’re suggesting that losses on a primary residence should be counted as a capital losses.

Mimi is right to point out that counting home losses as capital losses could allow taxpayers who lost money on their homes to subtract $3,000 a year from their income for many years, since taxpayers are allowed to carry over capital losses. (The IRS has a helpful primer on capital gains and losses here: http://www.irs.gov/newsroom/article/0,,id=106799,00.html)

But as James Maule, the tax law professor, told me, it’s unclear whether this kind of small, delayed tax benefit would provide much immediate help to families who are struggling financially and have just sold their homes at a loss—or whether it would do much for the current housing crisis.

@Lou:  First, re:  “I doubt I’ll get a response. Just more partisan BS.”  Your comment had three sentences; two of them referenced the Democrats.  Pot calling the kettle black ring any bells?

And secondly I’ll be happy to see housing prices come down - as long as the government is smart enough to use the tax structure to prevent the wealthy from gobbling up those houses that are coming on the market as the result of the Republican mortgage-backed securities pyramid scam.

The Republicans and neoliberal Democrats may have killed “the American Dream” by making pay raises and job security - and so the wisdom of assuming a 30-year mortgage - ghosts from a murdered past, but the American people don’t need a bunch of slumlords squeezing what little money they have left over after paying the private taxes levied by Big Oil and the speculators out of them.

@ibsteve2u if this was about gay marriage or abortion, I’d be bashing Republicans. Is just the Dems are wrong on this issue.

You say you’d gladly see prices down. So you are against the line of the Democrats who view “housing hitting bottom” as cruel and cold hearted? 

And what’s your opinion of Obama’s plan of selling Fannie foreclosures in discounted bulk to investors so they can rent them out.  Seems to me he’s doing exactly what you are against. Making the richer rich. After all the only people who can buy foreclosures in bulk are private equity firms like Bain Capital.

He should sell them to working class people at
at today’s discounted prices but that will hurt home prices God forbid.  I guess protectin fake wealth is the mantra of both parties.

@Lou:  I don’t think current homeowners should be penalized for the practices of the Republicans, so I’m all for not letting the housing market “bottom out”.  Too many of those homeowners will need to rely upon the equity their homes represent for their retirements unless they are fortunate enough to retire (and cash out) in an off-cycle in the periodic plundering of the 401Ks of the American middle class…especially if the Republicans are able to put the Social Security Trust Fund within reach of Wall Street, too.

That opinion does notpreclude a “soft bottom” wherein policy is shaped to reduce both principle owed and monthly payments to reflect the reality of life in an inequitable free trade-ravaged America.

And as far as selling those homes to working class people…not possible unless the government seizes them from the banks (you’d have the Republicans demanding civil war) or tax policy is changed to make it more profitable for the banks to unload them at discounted prices rather than letting those homes rot in situ and writing them off.  Those are impossible goals unless the American people wise up and vote Republicans out of office en masse…I mean seriously, do you see the Republicans authorizing spending that kind of money to benefit the many?  The Republicans work for the few.

Blaming Obama is…erroneous….there are some things you just can’t do even with a Presidential “Executive Order”.

Its funny. The only thing I thought of the headline when I read it was that the Repubs could give a shit!

@ibsteve2u-Good comments. The right-wing extremists(the modern day GOP) has there own little world controlled by Fox and Hate Radio…and the Koch Bros. types. They don’t need reality. Their rigid ideology is all they need. It’s like a cult of sociopaths.

Good for you in combating their lies.

Seems like the Republicans would be all over the fact that the Democratic appointee Attorney General Eric Holder, and his top criminal prosecutor, both came from Covington & Burling.  This firm represented/represents a good number of the banks possibly implicated in the whole criminal robosigning fraud.  Big surprise nobody is getting prosecuted for this massive criminal activity.

@James B:  Don’t you think you should flesh out your insinuation some?  Like, maybe mention how federal conflict of interest rules require that Holder and whoever recuse themselves from any decisions affecting people they have interacted with in the past?

The more telling point is - regardless of your insinuation - there must not be any evidence of improper behavior by Holder and whoever, for you know the Republicans would be all over even a poorly-constructed frame-up.  lolll…if there were any way to link any form of impropriety to Holder then Darrel Issa, for one, would have already been busting windows all over Washington with his screeching. 

If there is anything these modern Republicans have made obvious, it is that they would way rather waste a $100 million dollars and months attacking a Democrat than spend 15 minutes and the price of a cup of coffee working on legislation to benefit the American people and the United States of America.

@ Louis Beckett, I think James Maule is missing a few broader points:
-Many current homeowners can afford their current mortgage, but can’t afford to move/sell their house. This cuts down on job and housing mobility.
-Currently, you either bite the bullet and sell your house at a loss or you cutback on spending in order to save enough to be able to sell your house and absorb the loss down the road. Both of these options pull money out of the economy slowing down the recovery. I’m living through option one having sold our house in order to take a better job across the country. Our HH income is well above norm and we’re living check to check in order to pay our 401K back. The notion that it’s the buyers fault they are stuck with these mortgages is inherently flawed. The housing market was artificially bloated throughout the entire housing market, if you wanted to buy a house in the last 10 years, you paid WAY too much for it compared to current/real value. That’s true for EVERYONE.
-The fastest way to “find the bottom” is to provide incentive for homeowners to sell at “fair” market price.
-An easy solve to “$3K not being enough incentive/help” issue is to raise the cap on capital losses for house sales for a 3-5 year window until we’re back to equilibrium. Raise it to a yearly cap amount that can make a difference.

Non-market issues caused the bubble, so non-market actions need to be taken in order to return the housing market to a true market once again.

@quinn:  “Non-market issues caused the bubble…”

“Non-market issues”...that may be the nicest thing you can call Bush, Cheney, the Republicans, & PNAC, LLP.  Certainly it is the nicest thing I would call them.

archives.hud.gov/remarks/martinez/speeches/presremarks.cfm

The banks should be required to give a right of first rufusal to the defaulted and/or foreclosed customer to repurchase the home at any short sale price the bank would accept from another.  The owner gets a home he is already occupying; the bank loses no more than it was already willing to lose; and the process is ultimately market driven.  Win, Win, Win.

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

More »

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