Obama bets on private market in housing recovery

Updated
US President Barack Obama and Housing Secretary Shaun Donovan tour Erickson Construction on August 6, 2013 in Chandler, Arizona.
US President Barack Obama and Housing Secretary Shaun Donovan tour Erickson Construction on August 6, 2013 in Chandler, Arizona.
Mandel Ngan/AFP/Getty

The day after he unveiled his plan for promoting American homeownership, President Obama emphasized the importance of the broader economy to his housing policy in a Wednesday virtual roundtable.

“Keeping the overall economy in the right direction means there’s a stronger market for homes,” he told Zillow.com CEO Spencer Rascoff, who moderated the online discussion with the president on Wednesday. Members of the public submitted questions to the president via the online real estate company.

Lowering unemployment, keeping interest rates low, reforming immigration policy and reducing student debt would all help the housing market, said Obama. Broadly speaking, he described “improving middle class security” as the theme of his second term.

One question came from a woman who described herself as a struggling school teacher, asking how she could find affordable housing when her rent increases annually and her salary only goes up once every few years. Obama began his answer by saying that “teachers need to get paid more, and I mean that.”

When another participant asked what “fills the gap” if Fannie Mae and Freddie Mac, the government’s mortgage finance companies, are eliminated as proposed, the president endorsed the Corker-Warner plan, a proposal he obliquely referenced in his Tuesday housing speech. Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., have proposed that Fannie and Freddie be replaced by a new institution called the Federal Mortgage Insurance Corp., which is intended to provide a guarantee against massive losses in the mortgage-backed securities, but play a more a more limited role in the overall housing market.

“We’re confident that the private market can step in, do a good job, and the government can be a backstop … but it’s not the dominant player,” said Obama.

While the virtual roundtable covered a wide range of topics, there was no reference to the Justice Department’s announcement, made just the day before, that it had filed a lawsuit against Bank of America over alleged mortgage-backed securities fraud.

Obama bets on private market in housing recovery

Updated