Behind the scenes of last night’s debate – well behind – is a foreclosure crisis that has entered its sixth straight year. This is another fire that has not been put out. The only approach in the debate to even talking about this fire was a brief discussion by Gov. Romney about qualified residential mortgages, and his belief that not determining the rules for a QRM has hurt the housing market because of the resulting uncertainty. To the extent that there’s been a delay on deciding the contours of the qualified residential mortgage, it’s because bankers – sadly helped by affordable housing groups – have endlessly lobbied on the issue. And members of Congress of both parties have waded into this as well, to try and graft a safe harbor for mortgage brokers onto the rule. Dodd-Frank wasn’t a law but a plan to write a law later, and the delays result directly from that.
But this is a completely tangential issue to the crisis in housing. And it’s another area where the candidates, and the political class, didn’t show an interest in talking about it.
I’ve actually talked about this with a couple people this week, trying to figure out where the foreclosure crisis is headed. Professor Alan White has a very good exigesis. Since 2007, 4.5 million foreclosures have been executed, and between 4-5 million more are either delinquent or in foreclosure currently. That means that we’re no more than halfway through the crisis. Serious defaults, more than 90 days, are below peak, but defaults still represent 10% of all mortgages.