Talking Points

What Democrats learned from Obama's foreclosure mistake

Barack Obama did a lousy job of helping Americans stay in their homes.

Obama, of course, became president in 2009 — right as the Great Recession was raging out of control. Home foreclosures were already on the rise when he entered the White House, and his administration didn't do nearly enough to stop the tide: In the years before the recession, there were an average of 250,000 foreclosures annually. In just the first half of 2010, there were 1.65 million. By 2016, more than 6 million foreclosures had taken place over the previous decade. Along the way, a narrative took hold: The Obama administration bailed out banks, but not homeowners. The Week's Ryan Cooper in 2016 labeled the whole mess "Obama's biggest failure," and other observers believe the issue helped Donald Trump capture the presidency.

Democrats have learned their lesson.

Through the Consumer Financial Protection Bureau, the Biden administration is formulating a rule to slow new foreclosures on federally backed mortgages until 2022. Lenders would be required to ask late-paying borrowers if they're suffering from a financial hardship caused by the COVID-19 pandemic, then list and describe available options to temporarily pause or reduce payments. The proposal already has the backing of at least one major bank, Wells Fargo.

To be fair, Republicans deserve some credit here. Early on during the pandemic — when the GOP controlled the Senate and White House — Congress included foreclosure-mitigation efforts in its relief legislation. More than 7.2 million homeowners have reportedly taken advantage of so-called "forbearance" plans during the last year.

"It's almost the exact opposite of what we saw during the last financial crisis," one economist told Axios.

For Democrats, that's probably the point of continuing work to keep a new foreclosure surge at bay. Biden ran for president, in part, by embracing his association with Obama. In office, though, his administration has seemed intent on avoiding his predecessor's mistakes — most notably by ignoring austerity concerns and "going big" on an economic stimulus bill. Helping Americans is good because it helps Americans. If Democrats are lucky, it will also be good politics.