Rising Foreclosures in Iowa Put Pressure on Candidates

[question everything]

The Wall Street Journal

Rising Foreclosures in Iowa Put Pressure on Candidates
By ALEX FRANGOS
December 22, 2007; Page A6

DES MOINES, Iowa -- The home-mortgage crisis is gaining prominence on the campaign trail, as Democrats and Republicans alike scramble to present new plans to voters, who are increasingly raising the issue in the run-up to the Jan. 3 Iowa caucus. New federal-court data in Iowa this week showed personal-bankruptcy filings were up sharply from last year. Iowa home foreclosures were up 50% in November from last year, and up 11% from October, according to RealtyTrac, a real-estate research company.

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Republican candidates have generally avoided the issue, but this past week, two leading contenders weighed in, albeit gingerly. At an event in Georgia on Tuesday, former Massachusetts Gov. Mitt Romney suggested the creation of "cooperatives" of companies that hold delinquent mortgages to pool troubled loans into one entity. That would make it easier for the industry and homeowners to negotiate new terms on the loans.

He said the idea wouldn't be a government-mandated solution. "This would all be done on a voluntary basis," he said. The Romney idea seems to be a variation on the plan Treasury Secretary Henry Paulson has created to get loan servicers and investors to ease the terms on some troubled mortgages. Aides say Mr. Romney has also talked about expanding an existing government-chartered, affordable-housing organization called NeighborWorks America. Arizona Sen. John McCain, meantime, said his economic team was preparing a plan to combat the problem, though he didn't give specifics. "I believe that government action is the last resort and not the first resort," he told CNBC. A campaign aide indicated a new plan would come out after Christmas.

Democrats, meanwhile, have become increasingly vocal on the issue, making it more and more a staple of stump speeches. Two second-tier Democrats, Connecticut Sen. Dodd and Delaware Sen. Joe Biden, made housing a focus of Iowa events Friday. Mr. Dodd, chairman of the Senate Banking Committee, called the mortgage crisis a "dominating economic event." New York Sen. Hillary Clinton emphasized her plan early in the week to stop the mortgage mess.

All of the leading Democrats are united around addressing the mortgage crisis with government infusions of cash and regulation. Their ideas include interest-rate freezes, and making it mandatory for loan servicers to renegotiate loan terms with homeowners. Several Democratic candidates have called for the creation of a federal fund to help homeowners refinance onerous mortgages. Illinois Sen. Barack Obama's fund would be partially paid for by penalties on lenders who committed mortgage fraud. Former North Carolina Sen. John Edwards would create a similar "Home Rescue Fund" to move distressed homeowners into more affordable mortgages. Mrs. Clinton's calls for a $5 billion fund to be used in distressed communities.

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[Frustratedlady]

1. I don't think anyone can argue that this time around, there is not a lack

of issues for the candidates in either party to expound on. If Bush did nothing else, he certainly provided fodder.

[K Gardner]

3. Truer words have ne'er been spoken !!! n/t

[BearSquirrel2]

2. Democrats bring up the bankruptcy law ...

Ahh, if you got upside down and saw your rate skyrocket due to forces beyond your control you WOULD have been able to declare bankruptcy and walk away. Uh oh ... not now. Now you will owe your real estate debt forever for a home that you don't live in!!!! It's almost like some people saw this coming and didn't want to lose an investment. Now the investors own both the houses AND the debt!!!

[NewYorkerfromMass]

4. a lot of fiddling while Rome burns

surprised that bush even suggested the govt. address the problem, but that's just how bad it really is.