(The Root) — Between now and the inauguration on Jan. 21, The Root will be taking a daily look at the president’s record on a number of policy issues, including his first-term accomplishments and what many Americans hope to see him accomplish in a second term. Today: the mortgage crisis. See previous postings in this series here.
Background: The country set a record for foreclosures in 2008, the year that saw President Obama’s election and during which America fell into one of its worst economic crises. More than 3 million home loans foreclosed that year, representing an 81 percent increase over foreclosures in 2007 and a 225 percent increase over 2006. The crisis had a particularly devastating affect on racial minorities. Between 2007 and 2009, blacks and Latinos were more than 70 percent more likely than whites to lose their homes to foreclosure.
First-term accomplishments: President Obama pledged to make addressing the foreclosure crisis a priority of his first term. Upon taking office, he issued a temporary moratorium on foreclosures in 2009. But according to CNN, “a promised $10 billion foreclosure-prevention fund never materialized.”
Via TARP (Troubled Asset Relief Program) funds, however, various programs were established to help struggling homeowners, among them HAMP (the Home Affordable Modication Program) and HARP (the Home Affordable Refinance Program), to help homeowners restructure their loans and get lower interest rates. As of May 2012, however, three years after the launch of such programs, independent analysis found that only 2 million homeowners had received adequate assistance, not the up to 9 million the president had previously predicted.
Just before the 2012 presidential election, the Huffington Post reported, “President Barack Obama said in 2009 that a new program to fight foreclosures would help as many as 4 million struggling homeowners obtain mortgage modifications that would reduce their monthly payments. The administration will not reach that goal, but data released Thursday show that it has achieved a much sadder statistic: More than 1 million homeowners have been bounced out of the program.”
One of President Obama’s major first-term accomplishments included the passage and signing into law of the Fraud and Enforcement Recovery Act of 2009. One of the most significant aspects of the law is it changes the definition of “financial institution” in a criminal context to include mortgage lenders, which is particularly noteworthy because such institutions are widely perceived as the real culprits in the subprime-lending collapse. In addition, the law makes it a crime to make a false statement on a mortgage application or overvalue a property in an attempt to unduly influence a mortgage.
Second-term hopes: In 2011 Sen. Jeff Merkley (D-Ore.) sent the president a letter to asking him to prioritize addressing the foreclosure crisis in any upcoming jobs plans. “We can and should adopt an aggressive strategy to reduce foreclosures nationally. There are as many as 5 million foreclosures anticipated to come; this is a huge tragedy for individual families, but it is also a drag on our communities and our economy.” Merkley is among many Democratic and progressive critics displeased with the administration’s progress on this issue so far.
As progressive blogger Matthew Yglesias recently wrote for Slate: “Binyamin Appelbaum has a very helpful rundown of the Obama administration’s consistently cautious approach toward delivering some kind of bailout to underwater homeowners, a sharp contrast to the forceful approach toward injecting capital into the banking system and restructuring General Motors and Ford.” The upshot is that where Obama pushed hard policywise, he’s had success, but on housing we’ve seen only a modest, recent uptick as programs have belatedly become a tad more aggressive.
Many hope that in his second term, the president will become more forceful still.