Sandoval goes against GOP grain, promotes foreclosure assistance

By Anjeanette Damon

Wednesday, Dec. 14, 2011 | 2 a.m.

Gov. Brian Sandoval’s response to Nevada’s foreclosure crisis could be described as a keen example of dogma clashing with reality.

Or, as his critics put it, a failure to hold true to his professed philosophy of avoiding government interference in the private sector.

In Nevada, where one in every 180 homes was served a foreclosure notice in October, Sandoval has parted ways with some of his more dogmatic fellow free-marketers who believe the best response to the crisis is to let the market naturally reset itself — no matter how painful for homeowners.

Instead, Sandoval recently engaged in a high-profile effort to promote federal and state homeowner assistance programs — many of them created by Democrats — and has directed his cabinet to launch a state-based program to fill the assistance gaps.

The move is Romney may sound callous, but he may also be right at odds with Republicans running for president, including the candidate Sandoval endorsed, Texas Gov. Rick Perry.

And it has prompted criticism from a conservative Nevada think tank.

“I guess I would be surprised if someone (who is a) fan of the free market and free-market process that they would support programs like the foreclosure mediation program or federal assistance funds,” said Victor Joecks, spokesman for the Nevada Policy Research Institute. “It flies in the face of what you need the market to do, which is not encourage more people to go into foreclosure.”

NPRI and many national Republicans say further government intervention, in the form of loan modifications and mortgage assistance for distressed homeowners, is prolonging the foreclosure crisis. The programs, they argue, encourage homeowners to stop paying their mortgages to qualify for assistance. Mediation programs prolong the inevitable, they argue.

On the other hand, allowing the market to fix things may be painful, they say, but would be swift — kind of like ripping off the Band-Aid.

Sandoval doesn’t subscribe to that theory — at least when it comes to foreclosures.

He’s long been a vocal advocate of eliminating government regulation, saying it will allow the economy to repair itself. But that advocacy doesn’t extend to government involvement in foreclosures.

He has spent the past several months lauding Nevada’s foreclosure mediation program — created by former Assembly Speaker Barbara Buckley, D-Las Vegas — and is searching for ways to better publicize federal funding made available to distressed homeowners by the Obama administration.

“There is a big fund of money and we are only using part of it,” Sandoval recently told KLAS-TV, Channel 8 in Las Vegas. “My goal is to release as much as we can.”

Terry Johnson, Sandoval’s director of business and industry, which oversees foreclosure programs, said the governor believes “existing government resources” are an important tool in addressing the problem.

“There’s a shared responsibility that must be had by all,” Johnson said. “We all stand to benefit when we get to the other side of this housing crisis — and we will get to the other side of it. So we all have some shared responsibility in getting there.”

Sandoval’s approach is akin to those of other top Republicans in Nevada, who have found it politically unpalatable to champion a free-market approach given the severity of the crisis here.

U.S. Rep. Joe Heck, R-Nev., has taken heat from members of the Tea Party for his support of homeowner assistance programs. And U.S. Sen. Dean Heller, R-Nev., has also selectively supported assistance programs.

“The problem certainly was government created, but that doesn’t mean we shouldn’t be looking at all options to help folks underwater with their homes,” Heller’s spokesman Stewart Bybee said.

Sandoval’s chief of staff, Heidi Gansert, argued that putting federal funding to work helping distressed homeowners is no different from using federal money for Medicaid or to build roads.

“We’re doing that on many fronts,” Gansert said. “When the state is allocated funds, we want to make the best use of those funds.”

But Sandoval wants to go beyond using federal resources, tasking his cabinet to come up with a Nevada-based pilot program that would leverage public-private partnerships to provide additional assistance to troubled homeowners who aren’t eligible for other programs.

Johnson said one of the priorities would be to “limit taxpayer exposure” and the program, which is still being developed, may not involved financial assistance.

Sandoval’s administration has also successfully lobbied the federal government for changes to programs to better target the problems in Nevada, including increasing the amount available to distressed homeowners for mortgage assistance and principal reduction.

“If you just let the market work itself out, it could take up to five to 10 years,” Johnson said. “We want to see what steps we can take to get us to the other side more quickly. This has had a devastating effect on our economy and our communities. We’d like to see what we can do to keep people in their homes and in their communities.”