Tonight's State of the Union message will be when President Barack Obama lays out his proposals and goals for the coming year. Will housing and mortgages be part of the mix?

Coming at it from one perspective, it doesn't seem like he'd be able to do much, even if he wanted to. Congress seems mostly focused on other issues right now, and Obama doesn't appear to have a lot of time or political capital to push through any new initiatives between now and the mid-term elections. There's also the fact he was only able get a handful of last years' proposals through Congress and united Republican opposition.

That doesn't mean he's paralyzed, though. Even with Congress' cooperation, there's still a lot that a president can do through executive order. This week's directive to raise the minimum wage for federal contractor's to $10.10 an hour shows he may be increasingly willing to use that authority, and there are several areas in housing and mortgage finance where he could achieve goals strictly through administrative action that he could announce tonight.

Fannie, Freddie overhaul?

The one area where he's most likely to find common ground with Congress would be on winding down or overhauling Fannie Mae and Freddie Mac, commonly known as the Government Supervised Enterprises, or GSEs. There was a great deal of support for doing this in the aftermath of the housing crash, when Fannie and Freddie required billions of dollars in taxpayer bailouts and many in Congress were demanding they be phased out to avoid a repeat of such an occurrence.

But those calls have diminished as the crisis receded and Fannie and Freddie have returned to profitability and repaid almost all of the $188 billion in taxpayer money they received. Still, there remains a consensus that their fundamental model needs to be revised, even if they are not replaced, and Obama could put forward a plan for lessening the government's liability for the mortgages they guarantee.

Obama might also call for extending the politically popular Home Affordable Refinance Program past its current expiration date past the end of 2015 or expanding it to include privately securitized mortgages, which would include many of the surviving subprime loans made prior to 2007, which currently are not eligible for the program.

Principal reductions?

On the executive action front, the recent confirmation of Mel Watt as director of the Federal Housing Finance Agency gives Obama his own appointee in charge of an agency with more authority over mortgage policy than any other. (The previous head, former acting director Richard Cordray, was a Bush administration holdover whose goals often clashed with Obama's).

With Watt in place, Obama could announce plans tonight to finally begin offering principal reductions on distressed mortgages as part of a modified payment plans. Private lenders often do this with troubled debts and it's something the administration has been kicking around since the housing crash, but Cordray opposed the idea. But with the foreclosure crisis largely over, it's not clear whether there would be much to be gained by such a move at this late date.

Easier credit?

More likely, perhaps, would be a call to loosen mortgage credit for first time homebuyers. Since the FHFA has authority over Fannie Mae and Freddie Mac, this is something Watt could do under his own authority, and is a position he has supported in the past.

On a related front, many will be looking to see if Obama puts forward any proposals for reducing the burden of student loan debt, which is proving to be a major obstacle for many young people seeking to buy their first home.

Published on January 28, 2014