Romney: Obama's Do-Nothing Approach to Housing a Failure

In a brief overview of his housing policy, Romney promises action on the nation's housing woes.

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BRIDGEPORT, CT - MARCH 12: A sign is displayed in front of a foreclosed home on March 12, 2010 in Bridgeport, Connecticut. A new report by RealtyTrac Inc. announced that the number of foreclosed homes in Connecticut, one of the nation's wealthiest states, is up 3.4 percent from January to February of this year. Nationwide foreclosures have decreased by two percent from January to February. The report, which was released yesterday, says there were nearly 2,300 foreclosure filings in Connecticut last month, compared with nearly 2,200 in January.

Although often blamed for the economy's unimpressive and fragile recovery, housing has largely stayed out of the presidential race, making only brief appearances on the campaign trail where the brunt of the housing bust's destruction fell.

But amid the ongoing Democratic National Convention, Mitt Romney released his own vision for ending the housing crisis this week, slamming Obama's "government-centric" approach as a failure.

"To address the housing crisis, President Obama rolled out an alphabet soup of more than ten housing finance programs rather than offering a real solution," the campaign website says. "President Obama has hamstrung the economic recovery and slowed the recovery of the housing market."

Whether or not that's true is up for debate, but Romney has a little damage control to do of his own when it comes to housing issues.

"Don't try and stop the foreclosure process," he told the Las Vegas Review-Journal on a campaign stop last fall. "Let it run its course and hit the bottom."

Not exactly what many homeowners struggling to hang on to the roof over their heads want to hear as a solution.

Still, as President Obama and Mitt Romney careen toward election day, the two opponents are returning to the sticky issues, including housing, which could be defining factors for on-the-fence voters.

Here's a closer look at how Romney proposes to fix the housing market:

Sell foreclosures on the government's books. According to the most recent data, Fannie Mae, Freddie Mac, and FHA have about 200,000 foreclosed homes on their hands. Instead of leaving them hanging in housing purgatory, Romney plans to "get the government out of homeownership" and "return vacant homes to productive uses" in the hopes of pumping up home values.

According to some estimates, every 5 percent increase in home values means about 2 million fewer properties underwater, which would also reduce the number of homeowners at risk of foreclosure.

How exactly a Romney administration would handle selling off government-owned properties remains foggy, beyond a promise that they would do so "responsibly."

"There are a number of ways to responsibly get government-owned homes in to private hands," a Romney campaign spokesperson told U.S. News Wednesday. "A Romney Administration will sell the properties in a manner that protects taxpayers, increases area property values, and reduces neighborhood blight."

Find alternatives to foreclosure. The ordeal of losing one's home to foreclosure is not only traumatic for a homeowner, but for the nation's economy as well. Romney's housing plan considers other options for distressed homeowners delinquent on their mortgages—an idea promoted by former House Speaker Newt Gingrich—including short sales, deed-in-lieu transactions, and shared appreciation.

"These alternatives will minimize the instability of communities hard hit by the housing crisis, preserve the credit of homeowners, and help keep families in their homes," the campaign's web site said.

Make lending easier. Time and again, economists have railed on lending institutions for being too tight-fisted with their money and clamping down too hard when it comes to credit standards for home loans. According to Romney, part of the reason banks are so unwilling to lend is the more than 8,000 pages of new rules and regulations levied on the industry since the whole housing mess started.

"The problem is that they are poorly designed and have made it harder for people with good credit to get loans," the campaign's web site said .

Instead, Romney pledges to put in place "smarter regulations," which would reboot the broken marketplace and encourage banks to start lending to creditworthy borrowers again.

"Reform" Fannie and Freddie. The future of government housing giants Fannie Mae and Freddie Mac—the root cause of the housing bust, according to Romney—has long been a bone of contention. Both Obama and Romney have proposed winding down the government's footprint in housing but a clear plan on how to "reform" these entities and attract the private sector back to the battered mortgage market remains elusive.

Tax-payer risk remains at the center of Romney's crusade to pare back Fannie and Freddie's presence in the housing market.

"Mitt Romney will reform these government-sponsored companies to protect taxpayers from additional risk in the future by ensuring taxpayer dollars in the housing market are replaced with private dollars," according to the campaign.

Meg Handley is a reporter for U.S. News & World Report. You can reach her at mhandley@usnews.com and follow her on Twitter at @mmhandley.