Sale Pending

Trump’s Advantage on Economy Could Face Test on Housing

The Republican may be best positioned to pick up voters still dealing with foreclosures or underwater mortgages in Ohio and across the wide swaths of the Midwest.

An auction sign stands in front of a foreclosed house on Oct. 29, 2012, in Warren, Ohio.

Photographer: John Moore/Getty Images

Marc Dann, who sues mortgage brokers and banks over predatory loans in Ohio, is losing business to Donald Trump.

A former Democratic attorney general, Dann watched as two of his clients this year temporarily suspended their lives, and quit their small businesses to go to follow Trump’s campaign during the primary season.

Dann believes the remnants of the housing crisis in America should turn voters to his party’s presumptive nominee, Hillary Clinton. Instead, it’s her Republican opponent who may be best positioned to pick up voters still dealing with foreclosures or underwater mortgages in Ohio and across the wide swaths of the Midwest that Trump wants to flip into the Republican column this year. 

“Trump’s messaging has a lot more appeal with the folks I deal with, who were victimized by the housing market, because there is a perception that Hillary has made book with the folks on Wall Street,” Dann said. “There’s a lot of misplaced anger. But people aren’t picking up the nuances here. They’re pissed. And who represents pissed?”

While prices have largely recovered since the peak of the housing crisis a decade ago, more than 2 million mortgages are seriously delinquent or facing foreclosure in the U.S., according to data compiled by Bloomberg. About 4 million homeowners are still trying to lift themselves out from underneath mortgages that cost more than the value of their homes, according to CoreLogic, a company that tracks mortgage data. 

Yet the housing crisis has yet to emerge as a decisive issue in the presidential campaign, or in how voters are deciding which candidate would better handle the economy.

Voters' confidence in Trump's economic abilities is strong despite several months of attacks against his business record and charges from the Clinton campaign that he rooted for a housing crisis.

“They were just so disappointed with where their life has left them,” Dann said of the two clients that signed on with Trump. “Both are in their early 50s, and just completely frustrated knowing they’re never going to pay of their home or have enough equity to sell it.”

Among the 30 metropolitan areas with the highest rate of underwater mortgages, 11 are in the Midwest. Four of those -- Cleveland, Akron, Toledo and Cincinnati -- are in Ohio, the perennial battleground state and the host of the Republican National Convention next week.

The Clinton campaign plans to try and paint Trump as callous to the hardships of struggling homeowners. 

"While Hillary Clinton was standing up for homeowners, Donald Trump was actively rooting for the housing market to crash and the economy to tank so he could cash in on the suffering of families being thrown out of their homes," Clinton campaign spokesman Zac Petkanas told Bloomberg Politics in an e-mail. "Voters deserve to know that the only person Donald Trump is looking out for is Donald Trump."

So far, Trump's Ohio backers have looked past the housing issue -- and also his founding of Trump Mortgage, which opened during the height of the bubble with a branch in Columbus, the state's capital city, according to state records.

Instead, they are drawn to the anger he has reflected over international trade deals, which Trump warns are helping nations like China and Mexico to get the better of the United States. 

‘Down the Tubes’

In Cincinnati, the economic wounds from the housing crisis in Cincinnati still need soothing. Collapsing porches, boarded-up windows and unwieldy vines choking facades in the city’s historic Mount Auburn neighborhood reveal the recovery that remains.

Last week, Trump talked nearby about real-estate profits. His own. “Made a lot of money,” Trump said at a convention center 15 miles north in suburban Sharonville. He was referring to one of his first deals after joining his father’s company as a young man in the 1960’s, a 1,200-unit apartment complex called Swifton Village that they bought in Ohio’s queen city.

“And after we left, it went down the tubes,” he continued. The presumptive Republican presidential nominee’s lips were stretched tight across his teeth as he sucked in a quick breath at the unfortunate memory. “It went down the tubes, but we did great.”

As the Clinton campaign is quick to point out, Trump has also boasted of his ability to make a buck during a housing market crash. "If there is a bubble burst, as they call it, you know, you can make a lot of money," he said in 2006.

Trump Mortgage aimed to leverage his celebrity status from the reality TV show, “The Apprentice.” Designed to connect potential homebuyers to lenders, the company’s infomercials and marketing strategy were designed to “play off many consumers’ trust in Mr. Trump,” E.J. Ridings, Trump Mortgage's chief executive officer, told American Banker in 2006.

In Columbus, the firm brokered a $25 million mortgage on a 200,000-square-foot building, according to 2006 report from CPN Online, a website focused on commercial real estate news. “We know we’re going to make plenty of money,” Ridings told the website.

In the crowd of a few thousand people at Trump’s rally in suburban Cincinnati, Robin Rowe, a 45-year-old nurse who lost her home to foreclosure before President Obama was elected, has since rebounded along with much of the economy and is a homeowner once again. She’s backing Trump because thinks its time for new blood in Washington.

Rick Schweitzer, a 56-year-old construction worker, said he was only able to keep his home because of HARP, the Home Affordable Refinance Program that Obama’s administration created to help underwater homeowners refinance their mortgages. He’s at the Trump rally in Cincinnati and wants to know where he can go to see the Republican’s next rally. “It’s time for a change,” he said. “I’m tired of the political b.s.”

At the campaign’s merchandise table, Millie Weaver handed over money to buy a red "Make America Great Again" cap. Housing trouble in Colorado forced her to move in with in-laws in southwest Ohio. When asked what issues are most important to her in the presidential election, opposition to international trade ranks at the top of her list. She can’t name any companies that have moved work overseas, or any particularly factory jobs she wants, but her faith is in Trump anyway.

“We need some drastic measures to bring jobs back to America,” Weaver said. “It’s affected my whole generation. Millennials are reaching adulthood in a broken economy.”

Trump-Sanders Connection

Trump’s appeal was apparent to many Democrats during the state’s primary in March. Even though he lost to Ohio Governor John Kasich by nearly 230,000 voters, the New York businessman picked up many Democratic voters who otherwise might have supported U.S. Senator Bernie Sanders, said Jeff Rusnak, the Ohio director of Sander’s primary campaign.

Trump won just a fraction of Ohio’s counties, but nearly all of them were along the state’s eastern and southern border, where, along with fellow Appalachia neighbors in southwest Pennsylvania, West Virginia and Kentucky -- a region that has struggled to recover from poverty and job losses.

“We really thought that Senator Sanders would do very well there and perform strongly, but those voters crossed over and voted for Trump, Rusnak said. “There’s an angry and disenfranchised group of voters there and they crossed over to support Trump.”

For Rusnak, Trump’s success in the state will turn on keeping these voters along the Ohio River, catching fire along the stretch of Interstate 80 that runs from Youngstown to Toledo in Northeast Ohio, and making sure his own business record doesn’t become a liability.

“If voters realize Donald Trump’s record in the housing collapse and his personal stake in the banking industry, will it matter to them? I think it will,” Rusnak said. “So far his own outrageous comments just bounce off them. But when you look at his business experience, that’s where the record could start to stick.”

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