I’m going to have more about housing today because, you know, it’s Thursday. But before I do I wanted to put into context one reason why we’re not getting the housing policies we need in this country. We can talk about official malfeasance or conservative demonization but a lot of this has to do with the fact that the traditional media, the sources where most people get their news, don’t understand pretty much anything about housing. I mean not even the most basic stuff.

Here’s an excerpt from yesterday’s White House press briefing with HUD Secretary Shaun Donovan. This question comes from Fox News’ Ed Henry.

Q: Just a quick — you were saying at the top that basically to make the President’s plan work you’re going to tell financial institutions that they can’t say no to refinancing. How do you actually — how does the federal government tell private institutions, you can’t say no?

SECRETARY DONOVAN: You misunderstood.

Q: Okay.

SECRETARY DONOVAN: Single-family loans in this country are prepayable, so any homeowner already has the right, even if they’re — if you owe $300,000 on your house and it’s a $250,000 house and you have $300,000, you can go and pay off your mortgage today — right? The issue is they can’t get a new $300,000 loan.

So what this plan would do, the way it breaks through this barrier for these families is to allow them to refinance that loan, to get a new loan that allows them to pay off their existing loan. There’s nothing the existing lender can do today — we’re not changing this at all — the existing lender today can’t stand in the way of a family paying off their existing loan.

Q: You’re saying if they have $300,000 laying around to pay it off — or how do they do that? I don’t understand.

SECRETARY DONOVAN: They’re going to go get a new loan, and that new loan for —

Q: — the lender is okay with that, is just going to say, this is the rate you’re at right now, it’s fine if you just want to change it?

SECRETARY DONOVAN: No. What they would do is they would refinance into a new FHA loan and that would allow them to pay off their old loan. That’s what this plan would do.

So Ed Henry doesn’t know how a refi works. He doesn’t know what prepayment means. He doesn’t understand how a refi extinguishes an old loan and opens up a new one. He doesn’t understand that the FHA is not a bank. He doesn’t understand that a lender cannot deny the full payment of a loan.

This is the gatekeeper, someone explaining White House housing policy at the largest cable news network in America. And we expect people to understand and approve of, or have any opinion on, that policy? I mean, you can get to a place where housing policy is fairly nuanced. But Ed Henry isn’t able to grasp the very basics. There’s really no hope to get a full understanding of, say, why a $25 billion settlement for foreclosure fraud is a pittance or how the securitization machine led to mass chain of title problems.

We’re doomed, to sum it up.

Video here.

David Dayen

David Dayen