By Sam Youngman - 10/25/11 12:42 AM EDT
President Obama announced new refinancing tools for the nation’s beleaguered homeowners on Monday as the White House sought to turn what has been a political negative for the president into a positive.
Obama is facing strong headwinds in his reelection bid because of the economy, which continues to struggle in large part because of the housing crisis.
Rep. Dennis Cardoza (D-Calif.), one of Obama’s more vociferous critics, said Monday that the latest administration proposals were “just baby steps” that showed the White House is “still not getting it” when it comes to housing.
But Obama’s reelection campaign thinks it can turn the matter of housing to its advantage, and that GOP presidential front-runner Mitt Romney is vulnerable on the issue. The White House has taken pains to paint him as being out of touch with the problems of millions of U.S. homeowners.
Obama did not attack Romney in remarks Monday in Nevada, a swing state that is essentially ground zero for the housing crisis.
Instead, he saved his vitriol for Republicans in Congress as he argued his latest initiatives will make it easier for borrowers whose homes are worth less than their mortgages to refinance so that they can stay in their homes.
“There are important steps that will help more homeowners refinance at lower rates, save consumers money and help get folks spending again,” said Obama, who called the housing bubble the single greatest cause of the financial crisis and recession.
Obama’s aides, however, were out in full force attacking the GOP candidate.
They pointed on Monday to the GOP front-runner’s comments last week to the Las Vegas Review-Journal that the answer to the foreclosure crisis is to let it “hit the bottom.”
“As to what to do for the housing industry specifically, and are there things that you can do to encourage housing: One is, don’t try to stop the foreclosure process,” Romney said. “Let it run its course and hit the bottom.”
White House press secretary Jay Carney and Obama’s reelection spokesman, Ben LaBolt, both took shots at those comments on Monday.
Carney, speaking to reporters on Air Force One as Obama traveled to Nevada, said letting the housing market bottom out so that private investors could come in and “fix the problem” was no solution.
“That’s a solution that basically says to middle-class Americans who have been responsibly paying their mortgage and who, through no fault of their own, have seen their economic situation get quite desperate because of the prices in the housing market … ‘You’re on your own — tough luck, I’m not going to help you.’ That’s not this president’s approach,” Carney said.
LaBolt, in a message on Twitter, said the president’s efforts had helped homeowners begin 5 million mortgage modifications, while Romney’s solution would have been to let them “hit the bottom.”
Obama’s campaign advisers have long acknowledged that they need 2012 to be a “choice” election — between Obama and his Republican challenger — instead of a referendum on the president and his handling of the economy.
They hope to cast Romney as out of touch, beholden to Wall Street and corporate interests — and both the president and the campaign have begun trying to draw that contrast in the last few weeks.
The belief among Democrats is that what Romney is offering is economic theory that might sound reasonable to economists but infuriate or offend voters who are struggling with real-world economic problems.
“More foreclosures is not what people want to hear,” said one Democratic strategist.
Romney’s campaign appeared to be welcoming the battle on Monday, releasing a Web ad with Nevadans blasting Obama’s policies. The ad, titled “Welcome to Nevada, President Obama,” lays out the state’s economic troubles and features residents of the state saying things like: “I’ve seen things continue to get worse since Barack Obama took office.”
“We’re just struggling; everybody’s struggling,” one woman says in the spot.
Separately, Romney’s campaign released a statement slamming Obama’s policies on housing.
“Under President Obama, American homeowners have dealt with falling home prices, rising foreclosure rates, and one of the worst housing markets in recorded history,” Andrea Saul, a spokeswoman for Romney, said in the statement.
“Twenty five million Americans are out of work, underemployed, or have just quit looking. President Obama and his campaign will continue to try and distract Americans from his disaster of an economic record over the next year but it’s not going to work.”
Housing statistics in Nevada illustrate the tough climb Obama faces in seeking reelection and the state’s six electoral votes.
Six in 10 Nevada homeowners are under water — as pointed out by the Romney campaign — and the state’s unemployment rate is 13.4 percent, the highest in the country.
Under the changes proposed by the administration on Monday, the Federal Housing Finance Agency would reduce the 125 percent loan-to-value ratio cap that previously was part of the program to 80 percent, opening the door to more underwater borrowers.
In addition, homeowners will no longer be required to obtain a property appraisal to refinance under a government program set up by Obama, so long as Fannie Mae or Freddie Mac has an automated valuation of the property.
To qualify for the program, homeowners must also have a mortgage that was sold to Fannie Mae or Freddie Mac by May 31, 2009.
FHFA Acting Director Edward DeMarco said homeowners also must “have been faithful to their financial commitments” with no delinquent payments, and only one late payment in the last year and zero in the last six months. The mortgage cannot have been previously refinanced under the Home Affordable Refinance Program.
— Peter Schroeder and Mike Lillis contributed to this report.