The housing market received a largely hands-off treatment from both candidates during Wednesday’s presidential debate, with only a couple of minutes from the hour-and-a-half broadcast devoted to the issue.
Neither candidate mentioned mortgage modification or principal reduction, and the word “foreclosure” was never spoken.
“Housing has begun to rise,” said President Barack Obama during his opening remarks, in the midst of making the case that the economy has begun to improve under his watch.
Many economists would likely agree with that claim, at least, since both home prices and home sales have improved steadily in recent months, and the market appears to be pulling -- albeit slowly -- out of its long slump.
Still, neither candidate addressed the problem of borrowers owing more on their mortgage than their property is worth -- a condition that affects some 15 million households, and has grim implications for the wider economy.
Analysts have suggested that both Obama and Republican challenger Mitt Romney are eager to avoid talking about housing, since neither candidate can point to a particularly strong record on helping struggling homeowners, or to a well-articulated plan for doing so.
There was only one remark during Wednesday's debate that might be construed as a reference to the foreclosure crisis, when Romney mentioned something that happened to his wife Ann in Denver the day before.
“A woman came up to her with a baby in her arms and said, ‘Ann, my husband has had four jobs in three years, part-time jobs. He's lost his most recent job, and we've now just lost our home,’” Romney recalled. “‘Can you help us?’”
Such problems are still not uncommon, even five years after the implosion of the housing market.
While foreclosure activity has dropped off since the peak of the crisis, there are estimated to be about 1.3 million homes still in some stage of the process, and analysts have been saying for months that a new wave of foreclosure activity is due to arrive.
The most direct mention of the housing market and its importance to the overall economy came roughly 51 minutes into the debate, when Obama spoke about the need for strong financial regulation.
“The reason we have been in such a enormous economic crisis was prompted by reckless behavior across the board,” said Obama. “It wasn't just on Wall Street. You had — loan officers were — they were giving loans and mortgages that really shouldn't have been given, because they're — the folks didn't qualify.”
“You had people who were borrowing money to buy a house that they couldn't afford,” the president went on. “You had credit agencies that were stamping these as A-1 (ph) great investments when they weren't.”
When it came his turn to speak, Romney said that while “we have to have regulation of Wall Street,” it was the regulators themselves, along with vagueness in the Dodd-Frank financial regulatory act, that were holding up the housing recovery.
“You say we were giving mortgages to people who weren't qualified,” said Romney. “That's exactly right. It's one of the reasons for the great financial calamity we had. And so Dodd-Frank correctly says we need to have qualified mortgages, and if you give a mortgage that's not qualified, there are big penalties. Except they didn't ever go on to define what a qualified mortgage was.”
“It's been two years,” Romney went on. “We don't know what a qualified mortgage is yet. So banks are reluctant to make loans, mortgages. Try and get a mortgage these days. It's hurt the housing market because Dodd-Frank didn't anticipate putting in place the kinds of regulations you have to have.”
Romney was referring to a passage in Dodd-Frank that would require mortgage lenders to make sure borrowers meet certain standards for creditworthiness, to avoid the problem of people taking out loans they can’t repay.
The group responsible for defining those standards is the Consumer Financial Protection Bureau, a watchdog agency created under the Dodd-Frank act. The CFPB has not yet released its guidelines for what constitutes a qualified borrower, though it has said it plans to do so by January.
In spite of Romney's claim that the lack of clear rules is what's slowing down the housing market, there are other factors likely making it difficult for would-be homeowners to take out loans, including a lack of staffing at lending institutions and a general atmosphere of wariness in the mortgage industry following the housing collapse of 2008.