Housing has clearly moved to the center of the political debate over the next President of the United States. Democratic Presidential hopeful Sen. Barack Obama on Tuesday outlined a plan to reform the mortgage lending and banking industry, saying that “the real victims in the subprime mortgage crisis are not the lenders, but the millions of borrowers who followed the rules and whose only crime was taking out mortgages that lenders told them they could afford.” Clearly taking aim at presidential hopeful Sen. Hillary Clinton (D-NY), who recently proposed freezing all adjustable rate mortgages at their current rate for five years, Obama’s first remarks on the Texas primary campaign trail were about housing and the nation’s current mortgage crisis. “Senator Clinton and I don’t totally agree on the best way to solve this problem,â€? Obama said. “She says we need to freeze the monthly rate on existing adjustable rate mortgages for at least five years. But here’s the problem. That will reward folks who made this problem worse and it will also reward folks who are wealthy and don’t need it – but it won’t just target the struggling homeowners who need help most. And on top of that, a blanket freeze like this will drive rates through the roof on people who are trying to get new mortgages to buy or refinance a home.” Obama said he wants to appropriate federal funds to cover a number of initiatives, including a $10 billion Foreclosure Prevention Fund that would — among other proposals — cover short-sale gaps on behalf of low-income borrowers. The presidential hopeful also pushed for the STOP FRAUD Act, a bill he introduced into the Senate in 2006 and again in 2007. The bill would, among other provisions, force the use of judicial foreclosures whenever a mortgage was underwritten without consideration of a borrower’s ability to repay, involved reduced-doc or no-documentation, established a prepayment penalty or did not include proper disclosures. It would also establish “fraud and deception” as an affirmative defense against foreclosure for any such mortgages. Obama also said he supports legislation to reform federal bankruptcy law to allow for so-called ‘cram-downs’ of principal on a borrower’s principal residence, an issue that has been hotly contested between consumer and industry representatives as of late. For a full summary of the proposed housing support measures backed by the Obama camp, click here.

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