Campaign Promises

Departments -> Housing & Urban Dev -> Foreclosures

ItemHousing & Urban Dev
HU-8 The Promise: "I'll put a three-month moratorium on foreclosures so that we give homeowners the breathing room they need to get back on their feet."
When/Where: Campaign Speech, Richmond, VA, 10/22/08.
Status:While some states (i.e. California) voluntarily applied the proposed 90-day moratorium, Obama failed to make the promised moratorium a national commitment.

In 09/10, tens of thousands of eviction applications were issued by "robosigners" without their accuracy being verified. Individual states (Texas, Connecticut, California, Colorado) moved quickly to institute their own foreclosure moratoriums, while the Bank of America announced on 10/07/10 that it would halt foreclosures nationwide due to reports of mortgage document mishandling.

On 10/10/10, White House Senior Advisor David Axelrod announced that the Obama Administration did not favor a national moratorium on foreclosures, stating that foreclosures where documentation was neither inaccurate nor fraudulent should proceed.

This promise was not fulfilled.
HU-9 The Promise: "...Chapter 13 law prohibits bankruptcy judges from modifying the original terms of home mortgages for ordinary families, regardless of whether the loan was predatory or unfair or is otherwise unaffordable...will repeal this provision so that ordinary families can also get relief that bankruptcy laws were intended to provide."
When/Where: Obama-Biden Plan: "Supporting Urban Prosperity", dated 09/11/08.
Status:Bankruptcy Law is contained in Title 11 of the United States Code. Congress passed the Bankruptcy Code under its constitutional grant of authority to "establish... uniform laws on the subject of bankruptcy throughout the United States." Its codification occurred with the enactment of the "Bankruptcy Law of 1800."

Chapter 13 of the Bankruptcy Law permits the discharge of some debts, as well as the repayment of others over a period of three to five years. It may also permit either a reduction in principal owed on secured debts or the elimination of these debts altogether. It can also be used to structure a repayment plan for debts that cannot be settled in bankruptcy.

On 05/20/09, President Obama signed the "Helping Families Save Their Homes Act of 2009" (S. 896). One of the original intents of this law was to allow bankruptcy judges to modify mortgages on primary residences. However, the Democrat-controlled Senate deleted this "cram down" provision from the above law.

On 12/11/09, the Democrat-controlled House voted against Amendment #534 to H.R. 4173 (188 for, 241 against) that would have permitted foreclosure-prone house owners to extend repayment periods, reduce excessive interest rates and fees, and adjust the principal balance of the mortgage to a home's fair market value as necessary to prevent foreclosure. It would further have permitted the Veterans Administration (VA) and Federal Housing Administration (FHA) and others to take steps to facilitate mortgage modifications.

On 02/01/12, President Obama called on Congress to support a new mortgage refinancing plan that would make it easier for homeowners whose mortgages are higher than their homes are worth to refinance their mortgages at lower interest rates. The Home Affordable Refinance Program (HARP 2.0) went into effect on 03/17/12 and permits homeowners to refinance their mortgages without paying down principal.

To improve upon HARP 2.0, which lacked sustainability, President Obama proposed HARP 3.0 on 01/24/12 which would have further expanded the mortgage refinancing process to homeowners whose mortgages were non-Fannie Mae or non-Freddie Mac and other eligibility criteria. The "Responsible Homeowners Refinancing Act of 2012" (S.3085) introduced by Senator Robert Menendez (D-NJ) on 05/10/12, could have codified provisions of HARP 3.0, but this bill died with the 112th Congress at the end of CY2012. This bill was reintroduced by Senator Menendez on 02/17/13 as the "Responsible Homeowner Refinancing Act of 2013" (S. 249). It died with the 113th Congress at the end of CY2014.

The expiration date for HARP 2.0 was 09/30/17. If HARP 3.0 had been signed into law by that date, the new program would have had no cutoff date and would not have limited borrowers to a single use. However, HARP 3.0 would have only serviced loans held by Fannie Mae and Freddie Mac. Underwater homeowners with non-Government-Sponsored Enterprise (GSE) held loans would still have lacked an alternative to refinance out of their high interest loans.

Chapter 13 of the "Bankruptcy Law of 1800" has not been repealed, nor has it been amended since 04/05.

This promise was not fulfilled.
HU-10 The Promise: "Obama will create a Foreclosure Prevention Fund to help people facing foreclosure stay in their homes and renegotiate with their lenders or sell their homes."
When/Where: Obama-Biden Plan: Protecting Homeownership and Cracking Down on Mortgage Fraud, dated 01/13/08.
Status:Created under President George W. Bush on 10/03/08, the "Troubled Assets Relief Program" (TARP) could have served to fulfill this promise. TARP was originally authorized at the $700B level but was reduced under President Obama to $475B by Congress under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 07/21/10, against which $426.4B was disbursed. TARP funding expired on 10/01/10 reportedly because the fund failed to live up to expectations, one of which was to mitigate foreclosures in the wake of the CY2008 financial crisis.

During the Obama Administration, the nation continued to experience high foreclosure filings. A breakout of the number of filings by year follows, with improvements noted in CY2012 and subsequent years:

A "Foreclosure Prevention Fund" at the national level was not created under President Obama.

This promise was not fulfilled.
HU-11 The Promise: "...will make stabilizing our housing crisis a top priority..."
When/Where: Obama-Biden Plan: "Supporting Urban Prosperity," dated 09/11/08.
Status:Housing prices peaked in early CY2006 and started to decline in late CY2006 and CY2007. It simply became more difficult for borrowers to refinance their loans. As adjustable-rate mortgages began to reset at higher interest rates (causing higher monthly payments), mortgage delinquencies soared, peaking by CY2012. Securities backed with mortgages, including subprime mortgages, lost most of their value. Global investors reduced purchases of mortgage-backed debt and other securities as part of a decline in the capacity of the private financial system to support lending. A tightening of credit around the world and slowing economic growth in the USA and Europe ensued. The credit crisis resulting from this bursting of the housing bubble was a major cause of the credit default swap bubble of the CY2008 recession.

From the outset, the Obama Administration accorded top priority to stabilize the housing market and provide security for homeowners. To achieve these goals, the Administration developed a broad approach implementing state and local housing agency initiatives, tax credits for homebuyers, neighborhood stabilization and community development programs, mortgage modifications and refinancing, housing counseling, continued Federal Housing Administration (FHA) engagement, support for Fannie Mae and Freddie Max and increased consumer protections. In addition, Federal Reserve and Department of Treasury mortgage-backed securities purchase programs helped to keep mortgage interest rates at record lows.

This promise was fulfilled.