President Obama in Phoenix Tuesday will tout his administration's housing fixes as the tonic that saved a real-estate market in free fall.
In his latest economic speech, Obama also will outline his plan to lessen the influence of government-owned mortgage buyers Fannie Mae and Freddie Mac, break stagnant lending practices and make home ownership more obtainable for Americans being excluded from the slowly rebounding housing market.
What he likely won't mention, however, is that home ownership has dropped to an 18-year low -- 65 percent -- as lenders remain wary of opening up their purse strings and more Americans are forced to rent rather than buy.
Some analysts say that the president's blueprint for housing has exacerbated the crisis.
"Every time they do something they make it worse," said Anthony Sanders, a professor of finance at George Mason University. "We pushed housing until we had a hernia -- and here's where we sit today: It's a direct wealth transfer from American citizens to foreign investors because they get to buy all these foreclosed properties at reduced rates."
Sanders and other critics say that such developments have hardly improved the economy, leaving aspiring homebuyers in the same predicament they faced during the height of the recession.
Obama's situation is not all that different from the years during the housing bubble, with consumer groups pointing to rising home values and calling for more flexible mortgage rules. The key now is to not make them so flexible -- the home ownership rate peaked at an artificially inflated 69 percent -- that they replicate the root cause of the financial crisis.
Here are some issues he will highlight Tuesday, which must be rectified to clear the uncertainty surrounding the housing market.
• What to do with Fannie Mae and Freddie Mac: Government-owned mortgage buyers Fannie and Freddie and other federal agencies are now responsible for nearly 90 percent of all new housing loans. The administration floated the idea of eliminating Fannie and Freddie in a document released last year, but the suggestion was put on the back burner ahead of the presidential election.
Now the White House is again calling for the winding down of the government-backed mortgage titans -- but not at the pace that critics would like.
"We have to end Fannie Mae and Freddie Mac going forward and replace it with the notion that private capital must be wiped out before the government pays out on catastrophic guarantees," a senior administration official said, previewing Obama's housing speech.
Obama's push mirrors a bill written by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., which says the federal government should play a role in catastrophic situations -- but not eliminate the federal safety net for mortgages altogether.
Obama would like to shrink Fannie Mae's and Freddie Mac's investment portfolios by at least 15 percent a year, which the administration says would reduce the companies' risky mortgages to a "manageable balance by 2018."
Analysts are skeptical, however, that Washington is serious about lessening the grip of Fannie and Freddie on the housing market.
"Nobody really wants to do anything other than some Democrats want to make it a Super HUD and some Republicans want to replace it with a housing guarantee under a different name," Sanders lamented. "There really is no consensus."
• Move the focus from refinancing to new lending: For much of his time in office, Obama has focused on easing refinancing options, looking to aid so-called underwater homeowners who owe more than their houses are actually worth.
In Arizona, the president will again trumpet a series of administrative solutions that streamline refinancing and save the average family $3,000, according to the White House.
However, critics complain that the Obama administration's refinancing rules so far have been so complex that wide swaths of people don't even know if they're eligible for the benefit.
But the president also will note that from 2007 to 2012, mortgage lending to borrowers with sterling credit scores above 780 fell by a third, while lending to borrowers with solid credit scores between 620-680 plummeted about 90 percent.
"The key now is to encourage homeownership that isn't based on bubbles, but is instead based on a solid foundation where buyers and lenders play by the same set of rules, rules that are clear, transparent and fair," Obama said recently, alluding to his housing speech.
The president will call for "brighter-line rules," outlining more clearly when the federal government will rescind its guarantees, which the White House believes will motivate lenders to give money to creditworthy borrowers.
At least according to Republicans, though, the president's own Consumer Financial Protection Bureau, created under the Dodd-Frank Act, has created a regulatory environment so complex that it has stifled the incentives to provide loans.
"He puts in all these rigid new rules, creates this cloud of uncertainty" one GOP Senate aide complained, "then wonders why credit is still so tight."
• Get his Federal Housing Finance Agency nominee out of confirmation limbo: Speaking of uncertainty, Obama's nominee to lead Fannie and Freddie regulator FHFA, Rep. Mel Watt, D-N.C., did not receive a confirmation vote before the summer recess.
Senate Majority Leader Harry Reid, D-Nev., wants a confirmation vote in September, but Republicans are in no way bound by the recent d?tente they struck with Democrats to ensure Reid didn't use the so-called nuclear option to push through Obama's nominees.
Just one Republican in the upper chamber, Sen. Richard Burr, of North Carolina, has endorsed Watt's nomination. GOP lawmakers have said they want somebody with less of a political background in the regulatory post.
The White House counters that Republicans, like in other areas of the economy, are hindering growth.
"Yeah, it makes it more difficult to put out a concrete game plan," said one White House official. "He deserves an up-or-down vote."