Obama brags on under-performing housing program to below-capacity crowd

Kyle Gillis

LAS VEGAS — President Barack Obama claimed his housing policies helped over 1 million Americans refinance their homes and saved Americans $3,000 a year during a Wednesday evening rally at the Cashman Center in downtown Las Vegas.

The picture painted by the president, however, contrasts sharply with data released by his own Treasury Department and analyzed with respect to Silver State mortgage holders by Nevada Journal.

“Grandparents in Reno were able to refinance their home,” said Obama in an anecdote to the estimated 8,000-strong crowd in a venue with a seating capacity of 10,000. “We kept our promises. Now I’m asking you to help me build on these promises.”

Actually, the president’s February 2009 speech announcing the home-refinance program had promised help to “between 7 and 9 million families.”

His exact words were:

And we will pursue the housing plan I’m outlining today.  And through this plan, we will help between 7 and 9 million families restructure or refinance their mortgages so they can afford — avoid foreclosure. 

Moreover, while the Treasury Department now speaks of “over 1.2 million homeowner assistance actions,” the great bulk of those “actions” — the million-plus so-called “permanent modifications” through the Home Affordable Modification Program (HAMP) — are actually temporary payment-modification plans, under which the sum owed remains as before and payments revert to the original higher level after five years.

Treasury Department data also shows that the Obama administration’s mortgage-fix program rejected almost 80 percent of Nevadans who applied and damaged many.

One key close observer — Neil Barofsky, for three and a half years the Special Inspector General for the Troubled Asset Relief Program (TARP) — identified political panic as the source of much of the damage HAMP did to households that tried to enter the program:

The initial low [HAMP] participation numbers caused Treasury officials to panic, making things even worse. They threatened the servicers with public denunciation if they didn’t increase their numbers dramatically and called them to Washington over the summer for a very public scolding. They then set a goal of 500,000 preliminary or ‘trial’ modifications by November 1, 2009. To meet that goal, Treasury pressured the servicers to dispense entirely with [paperwork rules] and turn to the exact same tactic used by the banks in the lead-up to the financial crisis: undocumented ‘verbal’ trial modifications. . .

As we would later discover, that would create a tidal wave of misery for struggling borrowers. (Bailout, page 134.)

“The servicers’ performance was abysmal: they routinely “lost” or misplaced borrowers’ documents, with one servicer telling us that a subcontractor had lost an entire trove of HAMP materials,” wrote Barofsky. His book Bailout was published in July.

Obama criticized Republican nominee Mitt Romney’s comments to the Las Vegas Review-Journal that Nevada’s housing market needed to “bottom out” and said his administration “wasn’t kicking anyone on the street.”

“[Kicking people out of their house] doesn’t move America forward. It moves us backward,” Obama said.

In addition to addressing Nevada’s housing crisis, something he barely mentioned during his previous campaign visit in August, the president also criticized Romney’s tax plan, reciting his familiar campaign lines about Romney “giving more tax breaks to millionaires who don’t need them.”

“I don’t believe another round of tax breaks will bring back your jobs,” Obama said. “I don’t think anyone thinks rolling back regulations on Wall Street will help small businesses.”

“President Obama’s revisionist history on housing is laughable,” a Romney spokesman shot back.

“As Nevadans have faced foreclosure, declining home values and seen their hard-earned wealth wiped away, they will not buy the president’s spin and will hold him to account for his failed record.”

Romney spokesman Mason Harrison noted that the new book by Bob Woodward, The Price of Politics, quotes Obama telling U.S. Senate Majority Whip Dick Durbin the administration would do nothing of significance on the housing crisis:

‘What about the thousands of homeowners who owed more on their mortgages than their homes were worth?’ asked Durbin. ‘We will not roll out an aggressive housing plan,’ Obama said, and it would not be part of the stimulus bill.  The housing problem was massive and baffling, and none of them had solid ideas for fixing it.  (The Price Of Politics, p. 8)

President Obama also touted Wall Street regulations, but didn’t mention the regulatory burden his signature Patient Protection and Affordable Care Act — commonly called Obamacare — places on small businesses. Nevada small-business owners, for example, have noted Obamacare could cost them $80,000 a year and force them to cut the number of their employees.

“We would have to conclude that rather than taking a $70,000 to $80,000 penalty, which would ultimately lead to the closing of both locations, we merely close down one location and continue to operate,” Jeff Ecker, a Las Vegas restaurant owner, told Nevada Journal in June.

The president announced a “goal” of creating 1 million manufacturing jobs in the next four years, and called for increased investments in renewable energy in Nevada.

“Thousands of Americans are buildings wind turbines, solar panels,” Obama said. “We’ve doubled the amount of renewable energy usage across the country.”

Obama didn’t acknowledge that the majority of renewable-energy plants rely on heavy taxpayer subsidies and only produce a small number of full-time jobs. Last month, a Nevada Journal investigation discovered $1.3 billion in taxpayer subsidies and loans to green-energy companies netted only 288 full-time jobs in Nevada.

The buzzword of Obama’s speech was “forward,” his campaign slogan, and several times he invoked former president Bill Clinton, while claiming higher tax rates during the Clinton administration and increased regulation “created 23 million jobs and turned our deficit into a surplus.”

President Clinton, however, actually decreased regulations during his tenure, repealing the Glass-Steagall Act, for example. Clinton-era revenues also benefited from the Internet boom.

The president’s appearance was delayed by over an hour due to meetings related to the Libya attacks, and his campaign said his speech was politically “toned down” in the wake of the attacks.

Obama’s visit came a day after Romney addressed the National Guard Association convention in Reno. This was the president’s second official campaign visit to Nevada following a visit last month at Canyon Springs High School in North Las Vegas.

Kyle Gillis is a reporter for Nevada Journal, a publication of the Nevada Policy Research Institute. For more in-depth reporting, visit http://nevadajournal.com/ and http://npri.org/.