President Obama came into office in the midst of the most profound housing crisis since the Great Depression, made worse by two years of inaction by the Bush administration. In response to the crisis:
- In 2009 the Obama administration allocated more than $50 billion in Troubled Asset Relief Program (TARP) funds to help families facing foreclosure.
- In 2011, during the prolonged jobs crisis, the administration worked with the labor movement and the civil rights movement to offer a minimum of 12 months’ forbearance on mortgage payments for unemployed homeowners.
- In his 2012 State of the Union address, President Obama committed the resources of the federal government in the form of a multi-agency task force to work with state attorneys general to pursue illegal conduct by the banks and Wall Street in the housing markets during the housing bubble and the financial crisis that followed.
- Finally, at the end of January 2012, the Obama administration announced a civil settlement with the major banks over illegal bank conduct involving mortgage servicing. Under the agreement, for the first time there would be large-scale reductions in principal of the mortgages of homeowners facing foreclosure.
Housing remains in crisis, and much more widespread reduction in mortgage principal will be necessary if our economy is going to recover, but the administration’s encouragement of principal reduction points the way toward a fair resolution of the crisis.