Homeowners need help avoiding foreclosures, Fannie Mae and Freddie Mac need reform, and complex rules need to be replaced with smart ones.
This, without much elaboration, is Republican presidential nominee Mitt Romney's plan to fix the housing problem in the United States, according to an agenda released on his website. Implementing these changes will create 12 million jobs, his campaign website says, citing "independent economists."
But the plan is almost completely lacking in detail about how Romney would accomplish these goals, which also include divesting 200,000 vacant foreclosed homes owned by the government.
"Its not a plan," said Roy Oppenheim, a South Florida foreclosure attorney. "What I find fascinating and ironic is that he wants less government, but also wants to use government to rein in the banks and rein in Fannie and Freddie."
Romney does, in broad strokes, acknowledge the depth of the problem.
Homeowners in the past four years have received more than 8 million foreclosure notices, the campaign website notes, and 11 million homeowners currently owe more on their mortgages than their home is worth.
"Owning a home is oftentimes the most significant investment a family makes during their lifetime," the website says. "The housing crisis of the last few years has reduced the value of this investment at a time when middle-class families already continue to struggle in an economy stuck in first gear."
Romney also identifies the biggest obstacles to a recovery, which include persistently high foreclosure rates and large swaths of underwater homes across the country. The agenda does not identify how Romney's policy would diverge from that of President Barack Obama, who he blames for the continued turmoil.
"President Obama’s only plan to address the housing crisis was the same plan he used to try to fix the economy: spend more taxpayer money on big-government programs," the campaign website says.
The statement echoes a sentiment that Romney expressed last year during a Republican debate in Las Vegas.
“The right course is to let the markets work,” he said in response to a question about how to resolve the housing crisis.
But Romney would also "facilitate foreclosure alternatives for those who cannot afford to pay their mortgage," according to his plan, and "replace complex rules with smart regulation to hold banks accountable."
Both of these goals would seem to require government involvement in the market. Short of details, it is not clear how these aims would differ from the Making Home Affordable program, which the Obama administration credits with nearly 1 million successful home loan modifications. The Making Home Affordable program has also been dogged by complaints that the banks charged with implementing it are not particularly motivated to do so, resulting in modification nightmares for many borrowers.
Nor is it clear what kind of smart regulations Romney would promote. The Consumer Financial Protection Bureau, an agency born out of the Dodd-Frank Wall Street financial regulation law -- which Romney has said he would fight to repeal -- is currently drafting what many homeowner advocates hope are lasting changes to rules on how banks manage the accounts of struggling borrowers.
The toughest challenge, for Romney or for President Obama, should he get reelected, is to figure out what to do with the taxpayer-supported mortgage giants Fannie Mae and Freddie Mac.
There's broad agreement from all political quarters that the current situation is untenable. The companies have swallowed up $160 billion in taxpayer aid, and now guarantee 90 percent of all new mortgages.
Romney's solution: "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."
Earlier this year, the Federal Housing Finance Agency, under Acting Director Edward DeMarco, submitted a proposal that would begin the process of slowly unwinding the two companies from the federal government, but it was mostly ignored due to broad fears that a decoupling will effectively shut down the housing market.
"Stop that support today and you will cause a depression," Oppenheim said.
Obama also hasn't offered a clear way out of the government's investment in Fannie and Freddie, nor has he yet said what he would do differently with regards to the housing crisis during a second term.