10/04/2012 01:17 pm ET Updated Oct 25, 2012

In Presidential Debate, A Missed Opportunity For Romney To Press Obama On Foreclosure Policy

He name-checked Big Bird, but didn't once mention foreclosures.

In an hour-and-a-half debate on an economy still shell-shocked by the housing crisis, Republican presidential nominee Mitt Romney's sole critique of President Barack Obama's policy was that regulators are taking too long to write new mortgage guidelines, and that this is holding back a full recovery of the market.

"It's been two years," Romney said. "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."

Obama, who decided to adopt his tedious law professor persona during the first presidential debate of the 2012 election, held Wednesday night in Denver, has taken the most flak from pundits for failing to press the attack against his rival. But Romney's choice to focus on the speed at which regulators are writing new rules instead of hammering Obama for his disappointing foreclosure prevention programs also seems to be a missed opportunity.

The president's signature housing rescue plan, the Home Affordable Modification Program, has helped just over 1 million borrowers lower their payments, not the 3 to 4 million that the president and his Treasury Department predicted. The program has also been dogged by complaints that the mortgage companies essentially left to run it have botched the job, making life miserable for millions of borrowers and pushing many into wrongful foreclosure.

Had Obama's housing plan helped as many people as he said it would when it was first rolled out in 2009, the foreclosure crisis "would be history," said Mark Zandi, the chief economist at Moody's Analytics. The housing recovery that began earlier this year would have begun in earnest in early 2011, and by now default rates would be back to historical norms, he said.

Though housing prices have begun to recover, more than 1.5 million homes remain in some stage of default or foreclosure, according to RealtyTrac.

But Romney did not talk about any of that. Instead, in an exchange about the Dodd-Frank financial regulation law, the former Massachusetts governor said that lenders face “big penalties” if they make an unqualified mortgage, and that this is holding back the housing market.

The qualified mortgage rule Romney was referencing, as proposed by the Consumer Financial Protection Bureau, would set new standards for how a mortgage company determines a borrower’s ability to repay.

One of the big debates about the new standards, and part of the reason why it is taking so long to implement them, is disagreement about what kind of legal protection mortgage companies would get for agreeing to not offer the harmful products, such as the no-documentation “liar’s loans" that led to the housing crash.

Companies that violate these rules will face penalties, but there is an important caveat: since the rules haven’t been written, no penalties are yet in place. It's not completely clear from the context of the speech, but Romney appeared to suggest he thinks mortgage companies might be facing these penalties right now.

In an interview with HuffPost Wednesday night, Rep. Barney Frank (D-Mass.), who co-authored the reform bill, rebutted that assertion. He said the policy as of now “has no effect.”

Romney was correct when he said that taking out a home mortgage is difficult, though it is unclear whether the lack of certainty about this rule has much to do with it. Most housing experts have said other factors are to blame.

For starters, banks have been reluctant to hire new staff to handle the wave of applicants for mortgages. And while interest rates are very low, banks haven’t reduced them in lockstep with how much they are paying to borrow the money to lend – a discrepancy that is good for their bottom line but is making loans a bit more costly than they would be otherwise.

As HuffPost previously reported, the biggest roadblock is likely the bailed-out mortgage companies Fannie Mae and Freddie Mac, which now bundle up most new home loans made in the U.S for sale on the secondary market.

Under the control of their regulator-conservator the Federal Housing Finance Agency, the companies have set strict rules about what kinds of mortgages they will purchase, and have forced banks to buy back billions of dollars of defaulted loans. There are signs that the agency may relax these rules, but this fear has held back lending.

“No one wants to be the next Countrywide,” said Larry Sweeney, a mortgage broker in St. Petersburg, Fla., referring to the mortgage giant that collapsed under the weight of bad loans (and was bought by Bank of America).

A loosening of Fannie and Freddie guidelines would “slingshot” sales ahead by 20 to 25 percent, Sweeney predicted.

Neither candidate has shown much interest in talking about foreclosures or housing policy during the campaign. Obama has likely kept quiet on the issue because his policies haven't done what he said they would do, and Romney perhaps won't speak up because he doesn't have any better ideas. A housing recovery plan the Romney campaign recently released on its website includes no details. "The right choice is to let the markets work," Romney said at a debate last year in Las Vegas.

Fannie and Freddie still owe taxpayers about $140 billion and pretty much prop up the entire U.S. housing market. But they are stuck in legal and political limbo. What happens to them next will set the course for the state of home ownership for the next 30 years.

So what did Romney and Obama say they would do about the companies during their debate?

It didn't come up.