President Obama used his State of the Union address to outline an expansion of current federal housing policy, with the proposal of a new mortgage refinance program and a call for a probe of the originators and securitizers that fueled the housing bubble. However, the president also avoided commenting on several lingering controversies that continue to impact federal housing policy.

The president offered his mortgage finance program wrapped within a thinly veiled slam at Republican presidential aspirant Mitt Romney, who has been the subject of a Democratic National Committee advertising campaign centering on his comments from last October that the government should step back and let the housing market "run its course and hit the bottom."

"While government can’t fix the problem on its own," Obama said, "responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief. That's why I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won’t add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust."

The president also set up a Main Street versus Wall Street environment, with Washington standing on the side of Main Street.

"Let's never forget: Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same," he said. "It's time to apply the same rules from top to bottom: No bailouts, no handouts and no copouts. An America built to last insists on responsibility from everybody. We've all paid the price for lenders who sold mortgages to people who couldn't afford them, and buyers who knew they couldn't afford them. That's why we need smart regulations to prevent irresponsible behavior."

Obama also announced the planned establishment of a "Financial Crimes Unit of highly trained investigators" designed to "crack down" on financial fraud. The president did not state if the new unit would be part of the Consumer Financial Protection Bureau (CFPB) or the Department of Justice, and he called on Congress to toughen existing financial fraud laws.

"Some financial firms violate major anti-fraud laws because there's no real penalty for being a repeat offender," he said. "That's bad for consumers, and it’s bad for the vast majority of bankers and financial service professionals who do the right thing. So pass legislation that makes the penalties for fraud count."

Obama also asked U.S. Attorney General Eric Holder to create a "special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners and help turn the page on an era of recklessness that hurt so many Americans."

However, the president's speech did not offer any specifics regarding the timelines or budgets for the new programs and units.

Furthermore, the president did not mention several key issues that continue to shape federal housing policy: the status of the government-sponsored enterprises (GSEs), which have been under federal conservatorship since September 2008; the criticism of very generous compensation packages paid to the GSE executives; the announcement by the Federal Housing Finance Agency that mortgage principal writedowns by Fannie Mae and Freddie Mac would cost taxpayers $100 billion; the rising level of mortgage fraud perpetrated by borrowers against lenders; the status of a draft agreement in the foreclosure settlement negotiations between the major banks and federal and state government agencies; and the controversy surrounding the Jan. 4 recess appointment of Richard Cordray as CFPB director while the Senate was in pro forma sessions - an act that was called unconstitutional by several congressional Republicans and is the subject of a Feb. 15 House Judiciary Committee hearing.