Is Obama even going to talk about housing reform tonight?
Don't get your hopes up ...
Whenever President Obama gives a major speech – such as tonight’s State of the Union address – housing analysts wonder if this will be the year when the president finally puts housing and mortgage finance issues center stage, declaring bold and brave new initiatives on the housing front.
Is more HARP on the way, Fannie and Freddie reform ... a push for more lending? What exactly is on the president's mind? After all, Obama's own Treasury Secretary back in 2011 started the whole 'let's bring private capital back into housing march.'
Is now the time for the president to publicly sign on to that deal, explaining what plan he favors for private capital entry?
Don't get your hopes up, analysts say, the president is more constrained on housing issues than he’s given credit for.
Even with Obama now benefiting from an active Consumer Financial Protection Bureau and the strategic placement of housing advocate Rep. Mel Watt, D-N.C, at the Federal Housing Finance Agency, he may be limited by a general lack of political capital and time.
"I think there is maybe a bit of a divide between what they would like to get addressed, and what is likely to be addressed given the environment we have," said Brian O’Reilly, president of The Collingwood Group. "We have been having this discussion, wondering what and how housing might be addressed in the State of the Union. I think our expectations are fairly modest," he added.
O’Reilly also says the nation is nearing mid-term elections, which means "the window of opportunity to get much done from a legislative perspective is closing."
He explains, "The closer we get to the mid-terms, the less likely we are going to see meaningful legislative achievements."
A sense of urgency about GSE reform and bringing back private capital – the most stated housing goal of administration officials – also is gone with home prices rising and foreclosures dropping.
Congress usually needs a sense of exigency to act, and a stabilizing housing market is hardly the best motivator for bold actions, according to O’Reilly.
Rather than specific housing reform measures, O’Reilly expects bold generalized statements about upward mobility and opportunity tonight. How much housing plays into those narratives is unknown.
If the president does cover housing tonight, analysts with Compass Point Research & Trading Group say areas of possible coverage include an extension of the Mortgage Forgiveness Debt Relief Act – which allows homeowners to escape taxes on forgiven loan amounts after a modification or short sale – and potentially another call to expand mortgage refinancing opportunities for borrowers in private-label residential mortgage-backed securities.
The other outlier is whether he will mention GSE reform efforts, which were first laid out by the administration back in 2011. Student debt issues and their impact on housing also could come up.
But all of this is just a guess. In past speeches, discussions around housing usually come up short.
O’Reilly says it's feasible the president could mention the Home Affordable Refinance Program and some of the bolder initiatives outlined by a key Treasury official last week. But overall, any mention of housing is likely to be centered around "big-ticket items."
Even if bold moves are on the president’s mind, America’s frustration with Washington, D.C., may change how the president uses his bully pulpit.
"We find ourselves in a unique moment in time," O’Reilly said. "You have a Congress and an administration seeing popularity levels at historic lows."
In this environment, the president may steer away from contentious issues and stick with larger macro-issues that he can encourage Congress to accept.