'Tis The Season

President Obama says he's going to make solving the economic crisis his number one priority the next two years. Apparently, he's checked off the other items on his agenda and he can turn his attention to the biggest and most baffling one remaining – but I think we can be safe in assuming that most people would trade his legislative victories for lower unemployment and a recovery in housing. After the low point following the November elections, the idea of the President doing any shellacking of his own appeared remote. He didn't stay down for long, though, judging by the succession of year-end deals that have gone his way. The highlights of the first two years in office would be an impressive list if perception wasn't so heavily based on the pocketbooks of the American people. Reform in healthcare, finance, the end of don't ask don't tell and the extension of the Bush tax cuts all involved major focus and political skills to put in place, but they haven't yet resulted in more real dollars in the wallets of the average person. Creating jobs and economic growth will require more than even President Obama's prodigious and highly touted people skills. Did he think that he could pursue the other agenda items because they were more easily disposed of and the recession would just wait? Maybe he's gathering a head of steam that will push new growth-driving policies and initiatives. Or maybe the momentum will be sapped by new battles with the incoming Congress and we have to wait for another mad scramble two years from now. Everyone likes a comeback and besides, the New Year is a time for optimism and even a little giddiness. So let's go with it—lord knows the doom and gloom will start up again soon. The stock market and bond yields continue to climb as more positive economic indicators are released. Retail sales are expected to be stronger than anticipated for the 4th quarter. And regardless of the debate about who benefits from the extension of the Bush tax cuts, the new bill lowered the payroll tax to provide a direct stimulus for 2011. The President needs some fresh, effective ideas to save the millions of homeowners from going into foreclosure—bailing out the banks and asking them nicely to modify loans (or even paying them per mitigation) hasn't worked. Especially with his new and surprising bi-partisan salesmanship, he still has the ability fuel a recovery in housing that will cement his legacy. Most people want to stay in their homes and, even if foreclosed upon, there's a number of ways they could stay and limit the consequences on themselves, the housing market and the banking system. Instead of living rent-free while their foreclosure case is dealt with (which takes several years to be adjudicated), the lenders could offer to receive the home in exchange for a multi-year lease with reduced and affordable payments. At the end of the lease agreement, it could be extended or converted back to a mortgage either to the original borrower or someone else. Banks can also be incentivized to rent out the homes they already own, perhaps with tax credits so they don't just continue to dump them on the market. People staying in their homes would stabilize housing prices and stem the flood of millions more homes on the market steadily over the next few years. Instead of staggering under the weight of more foreclosures and short sales, home sales would start to improve as inventory would finally start to shrink. As soon as buyers began to see that the bottom had definitely been reached on home prices, the pent-up demand would be released and so would a return to normal sales levels -- if not even higher due to the number of buyers that have been waiting out this terrible market. The sidelines are teeming with first-time home buyers, second-timers who've out-grown their space and most importantly, the unprecedented numbers of baby-boomers looking to retire and move down south and out west. These millions have been holding back not just because of economic uncertainty but because they simply don't want to buy and see prices continue to drop — even a little. It's a natural psychology, especially in such a large purchase. Spending so much political capital on issues not perceived as addressing the economy cost the President dearly in November. And his re-election will likely be a referendum on the same issue that carried the day for him when he first won office. Perhaps our economy would be in a lot better shape if he hadn't engaged in lofty distractions, but maybe this was his plan all along so that we would have to believe in the power of his priorities once things start looking brighter. It is, after all, the season for believing. Ken Schiff is vice-president of far/bar Lending in Clearwater, Florida. He can be reached at kschiff@repcorporate.com