President Obama visited Phoenix, Ariz., on Tuesday to tout his administration’s alleged progress on housing policy. Unfortunately, the housing sector’s modest recovery is due almost entirely to the cheap money policies of the Federal Reserve. By contrast, Obama’s housing policy interventions have been disastrous. Recall, for example, that in February 2009, Obama spoke in Mesa, Ariz., on the housing crisis, promising that his then-forthcoming Home Affordable Mortgage Program would help “between seven and nine million families” stay in their homes.
A little over four years later, HAMP was exposed as a flop by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). Just 1.6 million households had actually received HAMP assistance, seven million fewer than Obama promised in February 2009. Worse, many of the HAMP-assisted households ended up defaulting again. As of March 31, according to SIGTARP, 46 percent of the oldest HAMP modifications re-defaulted, compared to 37 percent of the more recent beneficiaries. Many homeowners would have been better off without HAMP, according to SIGTARP: “Re-defaulted HAMP modifications often inflict great harm on already struggling homeowners when any amounts previously modified suddenly come due.”
