December 11, 2020 Graham Wood
While President-elect Joe Biden likely will make housing policy a higher priority than the Trump administration has, the effectiveness of Biden’s agenda hinges on which party controls the U.S. Senate, Jim Parrott, a housing adviser to former President Barack Obama, said Thursday during the National Association of REALTORS®’ virtual Real Estate Forecast Summit. “The Biden administration wants to deal with the racial wealth gap,” Parrott said in a Q&A session with NAR President Charlie Oppler, “and they view the racial homeownership gap as being a core part of that problem. If you can bridge the homeownership gap, you can bridge the wealth gap.”
Two of Biden’s most anticipated proposals involve the reinstitution of a first-time home buyer tax credit, which aims to help low-income households achieve homeownership, and the expansion of mortgage forbearance options. Whether these proposals stand a chance in Congress depends on the outcome of two Senate runoff races in Georgia, which will be decided Jan. 5 and determine Democratic or Republican control of the chamber.
“If Georgia breaks [for Republicans], the Biden folks will have to rethink their strategy,” Parrott said. “They remember how hard it was to get stuff done in the Obama years, and they’ll go in eyes wide open. That means hiring the right people. The team Biden [is putting] together is a team that knows each other and has wrestled with similar issues in a time of economic stress. It’s a pretty well-positioned team to move quickly and aggressively.”
One of the biggest issues facing the Biden administration will be the future of the government-sponsored enterprises Fannie Mae and Freddie Mac, Parrott said. President Donald Trump has taken steps to begin transitioning Fannie and Freddie to private ownership. If the mortgage giants, which have been under government conservatorship since the Great Recession, become privatized, Biden may have a harder time relying on them as avenues to administer federal housing programs that help boost homeownership.
Parrott, who worked with Biden on housing issues in the Obama administration, recalled Biden as a “cut-to-the-chase decision-maker” who drilled down to specifics and “wanted to understand whether the proposal on the table would hurt, say, firefighters who wanted to get a 30-year mortgage.
“Biden cares a lot about housing as part of the American dream,” Parrott said. “For him, it’s not an abstract concept; it’s a centerpiece of how he thinks of himself as a leader.” For that reason, one of Biden’s first moves likely will be to expand mortgage forbearance options for homeowners struggling financially through the pandemic, Parrott predicted. He may extend forbearance timelines so they “match up more with the timeline of the recovery. When people come out of forbearance, you want them to come into a healthy economy.”
However, he predicted that foreclosure levels resulting from the economic downturn likely won’t be as severe as those of the Great Recession. Most homeowners aren’t upside down on their properties and can “solve their housing problems by selling rather than going into foreclosure,” Parrott said.
