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Obama Housing Bailout Under Attack

Criticism of the Obama Administration's mortgage bailout, the Home Affordable Modification Program, is reaching a fever pitch, and I know this because, among other things, the Administration itself appears to be mounting a defense.

Recently, reporters who cover housing were called to the Treasury Department for a "background briefing" by Administration officials, who tried to focus attention on the many, varied Administration efforts to stabilize housing; the message was...it's not all about our modification program.

Yesterday I received several emailed announcements from both HUD and the Treasury. One alerted us to a "Conference on the Future of Housing Finance,"set for quite possibly the slowest news week near the end of August.

“Now is the time to build on the foundation we laid with the historic Wall Street Reform legislation President Obama signed last week and aggressively move forward to improve our nation’s housing finance system," reads the statement from Treasury Secretary Tim Geithner. "The Obama Administration is committed to delivering a comprehensive reform proposal that protects taxpayers, institutes tough oversight, restores the long-term health of our housing market, and strengthens our nation’s economic recovery.”

"Now is the time to build on the foundation we laid with the historic Wall Street Reform legislation President Obama signed last week and aggressively move forward to improve our nation’s housing finance system."" -Treasury Secretary, Timothy Geithner

The conference will include, "leading academic experts, consumer and community organizations, industry groups, market participants, and other stakeholders for an open discussion about housing finance reform."

Moments after that email came in, another flashed: "Treasury's Goldstein Pens White House Blog Post: "Moving Forward on Housing Finance Reform." So obviously here we go with the push to reform Fannie Mae and Freddie Mac, which we all knew was coming after the passage of Fin Reg. In the blog, Goldstein's blog assures that "work is under way" and the "commitment to public engagement will continue."

Goldstein affirms the Administration stance that " the current structure of the government’s role in the housing finance market is unsustainable and unacceptable," but he also defends the lack of action thus far, which "could have destabilized an already fragile housing industry and made it even more difficult for Americans to buy a home or refinance a mortgage."

Barely a few hours after that I received more email announcements from HUD, one touting a new report that shows "states have awarded more than $4 billion in recovery act funds to create jobs, build affordable housing." In another, HUD announced that $79 million in grants is available for housing counseling "to help hundreds of thousands avoid foreclosure or make informed home purchases."

I'm not drawing any particular conclusions, but tomorrow President Obama will be speaking at the Urban League conference at the Washington DC Convention Center. This is the same venue where the NACA 8-Day foreclosure prevention event is still going on. We were there last Friday, as thousands of borrowers lined up overnight to try to get mortgage modifications under the NACA agreement with lenders.

Today NACA's chief, Bruce Marks, announced they would hold a protest as the President arrives at the Convention Center tomorrow. "Over a thousand homeowners will urge President Obama to advocate for homeowners...Homeowners from around the country say that President Obama’s Making Home Affordable plan has not helped the vast majority of homeowners in trouble with their loans and does not go far enough by excluding FHA backed loans."

What's so interesting about this event is that I'm guessing the bulk of the protestors are overall Obama supporters. The majority of NACA employees and volunteers are minorities and largely Democrats. Bruce Marks says he voted for Obama and supported him. This will be the first large-scale, organized protest of the Administration's housing bailout, and given who is protesting, it will be hard for the President to ignore.

Questions? Comments? RealtyCheck@cnbc.com

  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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