Bush vs. Kerry on housing, mortgage issues

By Holden Lewis • Bankrate.com

On issues of housing and mortgages, there are clear differences between George W. Bush and John Kerry. Bush pushes homeownership, especially among minorities. Kerry emphasizes providing decent and affordable rental housing.

In terms of campaign contributions, Bush is overwhelmingly the favorite candidate of real estate agents, mortgage bankers and brokers, and home builders.

The centerpiece of Bush's housing policy is an effort to increase homeownership among minorities. In June 2002 he announced a plan to increase minority homeownership by 5.5 million families by 2010. Since then, the number of minority homeowners has increased by 1.6 million, according to Alphonso Jackson, housing secretary.

This year the homeownership rate among African Americans is expected to reach 50 percent for the first time, up from 46.5 percent in the second quarter of 2002, when Bush announced the policy. In that time, the Hispanic homeownership rate has risen from 46.1 percent to 47.4 percent.

Bush talks about this in his stump speech. "In changing times, ownership can bring stability to your lives," he said Sept. 13 in Holland, Mich. "One of the great statistics of the last couple of years is the homeownership rate is at an all-time high in America. We got a plan to continue homeownership in America. I love the fact when people from all walks of life can open up the door where they're living and say, 'Welcome to my home. Welcome to my piece of property.'"

The Bush administration has pursued this housing goal in two ways: by making it easier to buy a home with a low down payment, and by threatening to punish FHA lenders that foreclose too eagerly.

In December, Bush signed the American Dream Downpayment Initiative, a program that provides grants to low-income home buyers to pay their down payments and closing costs. This year he proposed the Zero Downpayment Initiative, which would allow the Federal Housing Administration to insure mortgages with no down payments; current law requires a down payment of at least 3 percent. That bill didn't get out of its House committee because congressional leaders didn't have time to resolve conflicting estimates of the cost before election season got into full swing.

The Bush administration has tried to cut down on foreclosures by requiring lenders of FHA-insured loans to try to work things out with borrowers who fall behind on their payments. If lenders don't make enough of an effort, they can be cut off from the FHA program.

The administration tried, but failed, to reform the mortgage-lending process when it proposed broad changes in the way it would enforce the Real Estate Settlement Procedures Act, or RESPA. The reform proposal would have forced mortgage lenders and brokers to simplify the mortgage loan process and guarantee closing costs. It would have benefited borrowers at the expense of some lenders and settlement service providers. Under pressure from the mortgage, title insurance, real estate and settlement services industries, the Department of Housing and Urban Development withdrew the proposal last spring. Jackson, the head of HUD, says he plans to reintroduce a modified RESPA reform proposal after consulting industry groups.

While Bush's policy proposals have been friendly to people who can afford monthly mortgage payments, they haven't been so generous to the poor. Bush wants to cut the Section 8 housing voucher program, which provides help to 2 million renters, by $1 billion at a time when it would need to be increased by $600 million to maintain its caseload. Kerry calls it a "cost-cutting gimmick that will hurt American families."

Whereas Bush cultivates support among homeowners while spurning those who need rental vouchers, Kerry does the opposite. Kerry doesn't mention housing in his stump speech. On the Kerry campaign Web site, the page that highlights his housing record focuses mostly on programs for low-income renters, with little mention of policies to help middle-class homeowners.

Kerry boasts of helping to craft and pass the Multifamily Assisted Housing Restructuring and Reform Act of 1997, "which helped save the government billions of dollars in rental assistance payments, preserved thousands of affordable rental apartments, and helped finance the rehabilitation of those apartments," the campaign says.

It adds that Kerry helped reform the public and manufactured housing programs, as well as co-sponsoring or offering amendments to other affordable-housing legislation while he sat on the Senate's housing subcommittee. One unpassed bill would have funded development of affordable rental housing; another would have encouraged construction and rehabilitation of houses in economically distressed areas so low- and moderate-income families could own them; another would have let home buyers borrow, tax free, from individual retirement accounts to make down payments.

The Kerry campaign calls for federal laws to ban predatory mortgage lending: limiting high prepayment penalties, restricting balloon payments, capping points and fees on subprime mortgages, and banning single-premium mortgage insurance.

When it comes to contributions from employees of housing-related corporations, Bush is the hands-down winner. According to information compiled by the Center for Responsive Politics, Bush has raised $10.9 million from employees and political action committees of the real estate, home building, and mortgage industries. Kerry has raised $2.9 million from those industries.

The disparity is especially great among home builders, from whom Bush holds more than an 11-to-1 fund-raising edge over Kerry. Thirteen of the top 20 contributors from the home-building industry gave 100 percent of their political contributions to Republicans.

Among the all-Republican contributors are employees of Perry Homes, whose chief executive, Bob J. Perry, was the main source of money for Swift Boat Veterans for the Truth. His $100,000 contribution to that group doesn't count among his donations to Republican politicians, including $2,000 to Bush. His wife, Doylene, also gave $2,000 to Bush.

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