New radio ads attacking the Romney-Ryan ticket hit the airwaves in swing states a few days ago, and the one specially crafted for Nevada uses Mitt Romney’s own words: “Don’t try and stop the foreclosure process. Let it run its course and hit the bottom.”
The statement is plenty familiar to Las Vegans. Romney said them 10 months ago, during an Oct. 17 meeting with the Review-Journal’s editorial board. And as soon as the comments were published, Democrats began assailing the Republican candidate for president as a mean, heartless, bank-loving slumlord who had no sympathy for Nevadans and their worst-in-the-nation housing woes. With Senate Majority Leader Harry Reid, D-Nev., leading those cries, the comment quickly went national.
Because the housing market is still deep underwater in Nevada – and plenty of other places around the country – we can expect to hear that sound bite a lot over the next 10 weeks, and to hear Mitt Romney answer for it.
It might be the most profoundly misunderstood position of the presidential campaign, and the persistence of Romney’s critics and questioners says more about them than it does about him.
Just last week, Romney gave an exclusive interview to Reno’s KRNV-TV in advance of President Obama’s visit there. Karen Griffin asked him about housing and the “hit the bottom” comment, all but suggesting he was an idiot for making the remark in hard-hit Nevada: “Do you still believe that?”
Romney criticized the president’s housing policies for further distorting the market and not allowing the market to hit bottom, saying hundreds of thousands of foreclosed homes held by federal agencies should be sold to investors rather than left empty, and that alternatives to foreclosure must be “more readily available to people who want to take advantage” of those programs.
Griffin was dumbfounded. “But what do you really plan to do?” she asked. Romney essentially repeated himself, just as he did in a July 25 interview with KRNV’s Joe Hart when Hart clearly didn’t see in Romney’s answer the massive new federal intervention he was looking for.
The “market” will fix it? What’s that?
The Associated Press then filed a story based on Romney’s interview with Griffin, that read, in part: “His comments are in contrast to earlier remarks, when he said the foreclosure process in Nevada should be allowed to ‘run its course and hit the bottom.’ ”
The Associated Press all but called Romney a flip-flopper.
Romney supports initiatives to prevent foreclosure. But he rightly believes that once a house is foreclosed – when a lender acts to reclaim a home because a mortgage has gone unpaid for many months, and perhaps more than a year – whatever entity holds the deed must be allowed to take ownership of the property and sell it to minimize losses, before it falls into disrepair.
Here’s what Romney told the Review-Journal back in October, unedited:
“There are things you can do to encourage housing. One is, don’t try and stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up. The Obama administration has slow-walked the foreclosure process that has long existed, and as a result, we still have a foreclosure overhang.
“Number two, the credit that was given to first-time home buyers (in President Obama’s stimulus) was insufficient and inadequate to turn around the housing market and was an ineffective idea. It was a bit like the ‘Cash for Clunkers’ program, throwing government money at something which was not market-oriented, did not staunch the decline in home values any more than it (‘Cash for Clunkers’) encouraged the auto industry to take off.
“I think the idea of helping people refinance homes to stay in them is one that’s worth further consideration, but I’m not signing on until I find out who’s going to pay and who’s going to get bailed out, and that’s not something which we know all the answers to yet.”
Romney subsequently supported Obama’s government-backed program that allows underwater homeowners who are current on their mortgages to refinance to lower interest rates. Romney wants the program to be easier to navigate to increase participation.
However, Romney understands that the country’s “shadow inventory” – more than 3 million homes that are in foreclosure or at risk of default – could very well send home prices plummeting again. The “robo-signing” controversy stalled foreclosure filings almost everywhere, creating the overhang Romney cited. In Nevada, that overhang is especially large because a tough new borrower-protection law has made it almost impossible for banks to foreclose, even on someone who hasn’t paid their mortgage in years. Until this inventory finds its way to market, we’ll never hit a true bottom and see steady, sustainable appreciation in home values. In fact, housing markets that lack such onerous foreclosure requirements are well into recovery, according to the U.S. Federal Reserve.
There’s irony in Obama ripping Romney-Ryan on housing. Just before that new radio ad was first broadcast, The New York Times published a lengthy report in which economists and political allies labeled Obama’s housing policy “the administration’s most significant mistake.” The left actually wanted him to do more – harder crackdowns on banks and costly, direct bailouts of homeowners.
Obama for America wouldn’t grant me an interview, but sent me a statement via email criticizing Romney for having no plan. The statement touted Obama initiatives, such as the $7 billion “hardest-hit” fund, mortgage modifications and refinancings, and the $25 billion shakedown of banks that expanded the shadow inventory – and delayed the market hitting bottom.
Everyone is paying for the housing collapse. And government can’t fix it. Government is making it worse.
Obama won’t say that. Romney did.
Glenn Cook (email@example.com) is a Review-Journal editorial writer. Follow him on Twitter: @Glenn_CookNV.