By Michele Francis Builder & Remodeler June 2007

Have you noticed that President Bush has been fairly quiet about the crisis spurred by the subprime mortgage market? (And yes, it is a crisis – it is not a “correction”). Outside of a bland presidential proclamation that turns June into National Homeownership Month, President Bush has, as of this writing avoided making a public comments on the state of the subprime mortgage market.

The issue has not been completely ignored by the Executive Branch of the federal government, though a disconnect between reality and fantasy seems rather obvious.  Ben Bernanke, the Bush-appointed Federal Reserve Bank chairman, initially viewed the situation by saying: “Our assessment is that there’s not much indication that subprime mortgage issues have spread into other mortgage markets.”  In late March, after weeks of negative headline news on the subprime issue, he re-emerged from his self-imposed quite and told a Congressional panel; “The impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.”

Not to be rude, but I seem to have problems connecting the concept of a “manageable” situation with the possibility that upwards of two million families can face the future of being forced out of their homes due to foreclosure.  And I believe the subprime mortgage “issues” have spread far and beyond “other mortgage markets” into the general economy and even the global economy. 

So what can be done to address this situation?
There is an interesting proposal recently raised by the Center for American Progress, which describes itself as a “progressive think tank”.  This organization released a report on March 12 entitled “From Boon to Bust: Helping Families Prepare for the Rise in Subprime Mortgage Foreclosures.”  Among the proposals floated in this report are:

• Federal grants to expand and enhance current mortgage assistance and foreclosure prevention programs and low-interest mortgage assistance to eligible borrowers.
• Federal funds to target key cities and states facing the highest risk of mass foreclosure.
• Provisions to ensure federal agencies assess the effectiveness of each program every three years.
• Strengthen programs that aid families while their mortgage contracts are renegotiated or the property is sold on the market so that the homeowner’s credit ratings are salvaged, allowing for the possibility of future homeownership.

Admittedly a nice idea, however the Congressional leadership already had their hearings, but meaningful legislation from Capitol Hill seems to be asking too much.  If reality isn’t welcome in Washington at this point in time, at least it has a “home” in Ohio.  An effort made by the Ohio Housing Finance Agency to issue a $100 million municipal bond to help 1000 families with the refinancing of their toxic mortgages is gallant in an obvious attempt to prevent the appearance of neighborhood blight.

The conspicuous absence of a serious federal response to this toxic situation is emetic.

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