Florida Primary Voters Want Housing Crisis Solutions
Update: Results of Florida Primary: Mitt Romney wins Florida; Gingrich takes second, Santorum third, and Paul fourth.
The road to the Republican primary in Florida has been littered with tales of housing woes as Sunshine State voters — many of them underwater or facing foreclosure — want to identify the candidate who’s not only the least culpable in the burst real estate bubble, but the man who can deliver real solutions.
That’s no small subject. Forty-four percent of Florida homeowners owe more on their mortgages than their homes are worth and more than 19 percent are seriously behind on payments, according to the Mortgage Bankers Association.
Couple that bald statistic with a 10-percent unemployment rate, and it’s clear that Florida is ground zero for serious debate about how to address the debt burden that has yoked the stagnant economy to the housing crisis.
“Candidates are going to have to walk a tight-rope on housing issues this election,” said Zillow Chief Economist Dr. Stan Humphries. “Voters care intensely about these issues, but there are real limits to what national public policy can achieve. This is particularly true since a lot of the issues involving foreclosures are state, not federal, issues. For Republicans, this tight-rope is even harder to walk because their latitude for policy innovation is limited by their base’s low appetite for government intervention.”
So far, frontrunners Mitt Romney and Newt Gingrich have happily used the housing crisis and the economic downturn to bash each other, hoping the tactic will bring them the healthy chunk of delegates up for grab’s in Tuesday’s vote.
But that doesn’t mean either candidate, nor former Pennsylvania Sen. Rick Santorum or Congressman Ron Paul, have been consistent or straight-shooters about the kinds of remedies necessary to address the massive loss of equity that has undermined not only the Florida economy, but most housing markets across the country.
“The root of the problem, massive rates of negative equity, is difficult to deal with because it’s expensive – it would cost more than $750 billion to write down everybody’s mortgage to current value – and writing down everybody’s mortgage raises fundamental issues of fairness and potential moral hazard in the future,” continued Humphries.
A December report from the Center for Housing Policy and other groups found that the eight metropolitan areas with the highest foreclosure rates in June were all in Florida. One of out of every 360 homes in Florida was foreclosed on in December, according to Carrie Blanchard, director of research and public policy at the Florida Chamber Foundation. According to the National Journal, that was far worse than the national rate of one in every 579 homes.
Negative Equity (Q3 2011)
Miami- Fort Lauderdale metro: 46.7%
Destin metro: 41.3%
Fort Myers metro: 57.7%
Jacksonville metro: 59.8%
Ocala metro: 47%
Tampa metro: 56.5%
While Floridians look for answers, the campaigns are taking swings. Romney continues to bash Gingrich for his role as “historian” for Freddie Mac, the giant government-backed mortgage agency that Republicans say played a central role in the 2008 housing bust and Wall Street collapse. Gingrich has refused to call himself a lobbyist, despite collecting upwards of $1.8 million from the federal agency.
Gingrich, meanwhile, has keyed on the fact some of Romney’s potential $250 million net worth comes as a result of Romney’s profits off foreclosures through a Goldman Sachs investment fund.
“He owns a Goldman Sachs subsidiary that forecloses on Floridians. He is surrounded by lobbyists who are paid by Fannie Mae and Freddie Mac to stop reform,” Gingrich said last week.
However, in between heaving barbs, Romney was caught speaking about the core problem of the housing crisis. At a forum in Florida last week about foreclosures, Romney made the rare admission about what he said is a solution:
We’re just so over-leveraged, so much debt in our society, and some of the institutions that hold it aren’t willing to write it off and say they made a mistake, they loaned too much, we’re overextended, write those down and start over. They keep on trying to harangue and pretend what they have on their books is still what it’s worth.
In some cases, if the debt is not in something you can service, it’s like you have to move on and start over away from those debts. It’s helpful if you get an institution that’s willing to work with you, but if you don’t you have no other option.
Romney, with a nod to his statement that corporations are people, said banks are unwilling to address mortgage shortfalls because they want to operate business as usual.
In this case, it’s because of the banks. Well, the banks aren’t bad people. They’re just overwhelmed right now.
The banks are scared to death, of course. They’re feeling the same thing that you’re feeling. And so they just want to pretend that all this is just going to get paid some day.
Florida has been a major beneficiary of President Barack Obama administration’s multibillion-dollar foreclosure prevention programs, with nearly 90,000 Floridians making lower monthly mortgage payments because of the federal Making Home Affordable Program. According to the Palm Beach Post, another 10,709 were on trial modifications as of November.
Also, the $1 billion in federal mortgage aid given to Florida through the Hardest Hit Fund is helping 3,182 homeowners pay their loans for six months while they find work or higher-paying jobs. More than 1,100 await final approval, and applications are still coming in.
But as much as any other state in the country, Florida is not warm and fuzzy for presidential hopefuls and policy makers who can’t come up with a way out of the housing mess. The Palm Beach Post summed up the battle being waged in the Sunshine State.
Experts say neither President Barack Obama nor any of the Republicans who want to challenge him in November have solutions for falling prices, depressed construction and waves of foreclosures.
Obama said this week that he wants to help struggling homeowners refinance their mortgages. His GOP opponents generally say the government should not interfere in the housing market. But a growing number of experts are advocating a bolder approach to provide relief to the 11 million homeowners in the United States who owe more on their mortgages than their houses are worth.
> See where candidates stand on housing issues
> See Romney’s 6 Homes
> See Gingrich’s Home
> See homes of GOP candidates