We can, however, look for the president to say something about the current expansion of the government’s refinance program for underwater borrowers, and we’re eager to hear how he thinks it’s going, given that it has fallen under harsh criticism for helping too few borrowers. Perhaps he might want to change/expand that program, but then again details are not exactly popular in State of the Union addresses historically.
President Obama will likely mention the settlement talks going on between states attorneys general and the big banks over the so-called “robo-signing” foreclosure paperwork scandal, which involves administration officials as well. In fact HUD Secretary Shaun Donovan and U.S. Associate Attorney General Thomas Perrelli were in Chicago yesterday meeting with state AGs. They made it clear there is no deal, and talks have been ongoing for a year now, but yesterday’s meeting kind of sets up the opportunity for the president to mention its progress.
From what we know of that deal, it could involve principal write down for some borrowers in trouble on their mortgages. That would be the banks’ punishment, but of course you have to ask if that’s entirely fair to everyone else who did pay their mortgages on time and in full and would like to see some forgiveness for their financial pain as well.
The one potential housing fix that does seem fair is the REO to rental program being hashed out among federal regulators and the FHFA. This would be for Fannie, Freddie and the FHA to sell their REO’s (foreclosed properties they now own) in bulk to investors. There would likely be some tax incentives offered, but this is the fastest way to get rid of distress in the housing market, thereby stabilizing overall home prices. It would also put more rental inventory on the market, as demand has been high, pushing up rents higher. The trouble is this isn’t particularly politically popular, as it runs contrary to the American Dream of home ownership, not to mention it helps investors, who are largely blamed for the housing mess in the first place. And there’s that pesky fairness thing again.
Questions? Comments? RealtyCheck@cnbc.comAnd follow me on Twitter @Diana_Olick