For the first time since the housing crisis began, a group of Republicans and Democrats are in agreement that fostering a true economic recovery is inextricably linked to the health of the housing market, and they are vowing to create a bipartisan solution.
Their aim is to launch a housing commission through the Bipartisan Policy Coalition. But the group, to be made up of former lawmakers and housing officials, does not plan to offer a proposal until early 2013, meaning they are unlikely to recommend immediate solutions to deal with millions of struggling borrowers who are under water or headed toward foreclosure.
“We need to have a comprehensive solution,” said former Sen. Kit Bond, R-Mo., at a news conference. He will serve on the commission of 18, which is still being formed but includes former Sens. George Mitchell, D-Maine, and Mel Martinez, R-Fla., who is also a former Housing and Urban Development Department secretary, and Henry Cisneros, another former HUD secretary under President Clinton.
“We are not going to come out with a Band-Aid within just a couple of months because, as what’s been described (as) one Band-Aid here, may cause a wound to open up over there,” Bond said.
He added that Congress is unlikely to act on housing before then anyway so there is no point in rushing to find piecemeal solutions. “If the Senate is still anything like it was before I left, the chances of them getting anything done on housing in 2012 are somewhere between slim and none,” Bond said.
The members resisted sharing their personal views on the topics they plan to address, such as the proper role for the government in the mortgage market, how to better balance HUD’s budget, and reducing homelessness.
Cisneros told National Journal that he supports the administration’s efforts to enhance refinancings for underwater borrowers, turning GSE-owned properties into rentals, and the effort by state attorneys general to reach a global mortgage-servicing settlement. But he added that principal reductions should play a role.
“I think it has to be done at some level,” he said. “My own personal opinion is that you can’t get to dealing with the overhang of potential foreclosure without some movement down that road.”
Given the time element, the new housing commission is more likely to play a constructive role in helping Congress figure out how to restructure the housing-finance system, than it is to influence policies for foreclosure remedies. The mortgage market relies heavily on government support through the government-sponsored enterprises Fannie Mae and Freddie Mac, which were taken over by the government in a conservatorship in 2008 to prevent their collapse. They remain in limbo and have cost taxpayers $169 billion and counting.
Some Republicans have called for creating a purely private mortgage market, and Rep. Scott Garrett, R-N.J., plans to unveil legislation on Thursday with more details on how to develop a functioning market without any government support.
But Bond told National Journal that any housing reform plan must reach a consensus to move, and most Democrats and even some Republicans are wary about eliminating government support altogether. “I’m a great free-marketer, but I have worked for years on what I think is a legitimate role for the federal government in ensuring housing for those who really are in great need, like the homeless and veterans and others,” he said. “We want to put something forward on a bipartisan basis that will keep a few people on either side sullen but not rebellious and that’s the best we can hope.”