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With Obama win, mortgage write-downs next?

Posted by Scott Van Voorhis November 7, 2012 10:19 AM

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OK, it's not exactly a secret President Obama and Mitt Romney ran for cover anytime the battered housing market came up for discussion.

It should rank as one of the biggest failures of the 2012 campaign. After all, the meltdown in the housing market is at the core of the economic crisis we are so slowly digging out of.

Here's Nobel Prize-winning economist Joseph Stiglitz giving a tongue lashing to both candidates in the waning days of the campaign.

But reading between the lines, Obama and Romney really did have two distinct approaches to dealing with the housing mess, and in particular, the massive backlog of foreclosures that has been such a perpetual drag on the real estate recovery.

True to form, Romney talked of the need to let foreclosures run their course and letting banks get on with the ugly business of disposing of distressed properties.

But now that Romney is gliding into a gilded retirement, all that matters now is what Obama will do.

And one clue can be found in this recent Financial Times piece that predicts our newly reelected president will give walking papers to Edward DeMarco, acting head of the Federal Housing Finance Agency.

DeMarco has been a prominent opponent of forcing banks to write-down troubled loans. That means more than just lowering the interest rate, but taking a haircut and writing down the amount owed.

There's a local connection here - U.S. Rep. John Tierney, (D-Salem), the North Shore congressman who, barring a recount, appears to have beat back a spirited challenge from Republican challenge Richard Tisei. Tierney, whose brother-in-law's illegal gambling business almost sunk his campaign, has emerged as a vocal advocate down in Washington for mortgage write-downs.

Something needs to be done, and, given the lending industry's role in ginning up the housing bubble, why not have banks pay the penalty here?

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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