LAS VEGAS -- On Monday, President Barack Obama drove up to a quiet neighborhood on the eastern edge of Las Vegas to talk to residents, who stood out on their sidewalks. The homes here are all nearly identical two-story, light stucco. The neighborhood, like all of Las Vegas, has suffered its share of foreclosures.
Thus far, government programs aimed at helping struggling homeowners stay in their homes have been criticized by housing experts as insufficient. The situation is particularly bleak in Las Vegas, where the foreclosure rate is five-times the national average, and the unemployment rate hovers around 14 percent, the highest of any major city in the country.
Democratic strategists are well aware that in these conditions, Nevada voters who supported Obama in 2008 may not turn out for the president again, unless they are offered some relief.
“Now today, what I want to focus on is housing, which is something obviously on the minds of a lot of folks here in Nevada,” the president said n his remarks.
In particular, Obama voiced his concern for underwater homeowners.
“There are still millions of Americans who have worked hard and acted responsibly, paying their mortgage payments on time,” Obama said. “But now that their homes are worth less than they owe on their mortgage, they are having trouble getting refinancing even though levels are at record lows. Soon, that will change.“
Obama said at his urging, federal regulators are making it easier for underwater homeowners to refinance and stay in their homes. That translates to changes in the existing federal Home Affordable Refinance Program (HARP). Obama admitted it was just a step, and that ideally Congress will pass the American Jobs Act, his $447 billion dollar proposed legislation.
“We can’t wait for an increasingly dysfunctional Congress to do its job,” the president said. “Where they won’t act, I will.”
Selena Rabago lives just next door to where Obama spoke. She guessed the president came to her neighborhood because it is a good spot to talk about the housing crisis.
“Maybe because of the fact that every other house is vacant,” Rabago said. “We have seen some people foreclosed on. It is a nice area, but the houses aren't full.”
She said the president was right to focus on housing and jobs in his speech.
“I am unemployed right now,” Rabago said. “I worked in construction, so we got hit hard.”
A few blocks away, Ben Montano waited for his daughter outside a convenience store. He didn’t hear Obama speak, but said the neighborhood is buzzing about it.
“I understood that he plans to help us out on the housing part,” Montano said.
It’s an important topic for him. He’s one of those underwater homeowners. He said a program that could help him refinance at lower interest rates would help.
“One of the things it would do for me personally is a little extra cash for my grand kids for instance, and help out my children,” Montano said.
But the changes in mortgage policy announced Monday will only help a small fraction of underwater homeowners, according to housing experts.
“Every little bit helps,” said Peter Dreier, a professor at Occidental College who specializes in housing and urban policy. “But the bottom line really is: This is really a drop in the bucket.”
“You have somewhere around 12 million people who are underwater in their mortgages,” Baker said. “So it is certainly helpful to help 800,000, but that is not most of them.”
Baker said ideally Congress would pass federal legislation that would force banks to reduce the principle on loans. But that isn’t likely in this political climate. He says the Obama administration should have done more earlier on.
“Even when they had majorities in Congress, they really didn’t try to push anything that was that aggressive,” Baker said. “So I think they have really kind of failed homeowners.”
The Republicans running to replace the president have taken a completely different stand on how to solve the housing crisis.
Former Massachusetts Governor Mitt Romney has said government intervention to help people avoid foreclosure has only made the problem worse, and it is better to let the housing market “hit the bottom” so it can then recover. In the last Republican primary debate, Herman Cain also advocated for a hands-off, free market approach to the housing crisis.
On Tuesday, President Obama will travel to Colorado, where he is expected to discuss reforms to help college graduates to pay back their student loans.