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Released: December 02, 2012

The mortgage challenge

Source: New York Times Editorial (Free Registration)

The biggest economic policy error of President Obama’s first term was the failure to effectively address foreclosures. The administration’s efforts were far too limited for far too long. By favoring the voluntary cooperation of banks in reducing monthly payments for hard-pressed borrowers, they did more to shield the banks from losses than to help homeowners and stabilize the market.

Last year, as the campaign drew near, the administration began to reshape its flagging strategy by promoting more refinancings and principal reductions. But it is unclear whether the new efforts will pan out — and, even if they do, they still will not match the scale of the problem.

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