Housing experts back White House plans to help homeowners

The special unit, which would include federal prosecutors and state attorneys general, would expand investigations “into the abusive lending and packaging of risky mortgages” that contributed to the housing crash. 

The announcement comes amid calls from Democrats to conduct a more thorough investigation into foreclosure practices and delay a proposed settlement of upward of $25 billion with the nation’s five biggest banks — Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial — that was sent to the states for review on Monday. 

But California’s House Democrats said Wednesday that while they welcome the proposal, it won’t come close to solving the nation’s ongoing foreclosure crisis. 

They are asking Obama to move forward without Congress and give bankruptcy judges the power to reduce mortgage principal in the effort. A similar proposal, referred to as “cramdown,” was killed in the Senate in 2009. 

Rep. Brad Miller (D-N.C.) said he “welcomed the president’s promise to hold accountable the people who really were responsible for the financial crisis and the painful recession.”

“The failure to investigate evidence of crimes by the economically powerful has offended the sense of justice of many Americans, including me,” he said. “The same rules have to apply to everybody.”

Miller has teamed up with Sen. Sherrod Brown (D-Ohio) to lead the charge against a settlement between federal and state governments and the banks before an investigation is complete. 

In an email to The Hill, a Brown spokeswoman said he “hopes the mortgage fraud task force will provide a full and thorough investigation of the actions that put our economy on the brink of collapse, and help prevent future financial abuses.”

Rep. Elijah Cummings (D-Md.), ranking member on the House Oversight and Government Reform Committee, said he supports the two-pronged plan to tackle the issue, and took a swipe at Republican efforts to investigate further. 

“The task force is urgently needed since Republicans in Congress have failed to conduct a comprehensive investigation and have placed the interests of mortgage servicers above the interests of American families,” he said. 

Cummings said his panel held 118 hearings last year with 342 witnesses, “but not a single bank executive was called to testify and not a single document was produced relating to wrongful foreclosures or abusive lending practices.”

Rep. Darrell Issa (R-Calif.), chairman of the House Oversight panel, this week expressed a willingness to consider new housing reforms, suggesting that Congress could “find creative ways to get the housing market going again in a stable but positive way.”

“It’s well within the government [authority] to say, ‘You still have to pay your whole amount — you owe it — but we’re willing to have you get the current [interest] rate, which today would lower mortgages, it would make homes more affordable, and it doesn’t require some shirking of the original agreement,” Issa told The Hill Tuesday.

Still, there remains skepticism about whether the efforts will bolster the housing market, which appears to have hit rock bottom and is showing signs of gradual improvement after one of its worst years on record. 

“The NCIS-type investigation unit for mortgages is on top of FBI, state bureaus, Fed and [Office of the Comptroller of the Currency] examiners, [Federal Deposit Insurance Corporation] and [Securities and Exchange Commission] enforcement divisions, Treasury and others,” said Anthony Sanders, a real estate professor at George Mason University. 

“This is such regulatory overkill that it boggles the imagination,” he said. 

“I am surprised that lenders lend at all given the leviathan oversight from the government.”

The National Association of Home Builders (NAHB) expressed support for the Obama administration’s ideas to tamp down foreclosures, and continued to urge policymakers to take additional actions to mend the housing market and boost the economy, especially by improving the flow of lending. 

“President Obama’s refinancing plan offers an opportunity for continued exploration of ways to aid struggling homeowners and tackle the foreclosure crisis,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. 

The group’s main priority is on the lending front — homebuilders are urging Congress and federal regulators to figure out a way to get credit moving again for builders so they can start projects in markets where new housing stock is needed, and for homeowners. 

“President Obama was absolutely right when he said that ‘there has never been a better time to build,’ and the nation’s home builders are eager to do their part to contribute to economic growth and job creation,” Nielsen said. 

Housing accounts for more than 17 percent of the nation’s gross domestic product. Building 100 single-family homes creates more than 300 full-time jobs and $8.9 million in federal, state and local tax revenues, he said.

In a recent NAHB survey, 60 percent said resolving the foreclosure problem is essential to getting the economy back on track and that there is broad support for government policies that encourage homeownership.

More than seven in 10 voters across political parties support tax incentives to promote homeownership, and about 60 percent of voters say the federal government should make it a high priority to restore the nation’s housing market.

Even more telling, the majority of voters believe neither party is doing a good job on housing.

“In this election year, voters will be looking closely at President Obama, the GOP presidential contenders and congressional candidates from both political parties to determine how they plan to put housing and the economy back on track,” Nielsen said. 

“How the candidates respond will decide not only their political fate but the economic prospects of most Americans.”