* Issue has downsides for both candidates
* Prices edge up, but market still troubled
* "Like rolling rock up the hill"
By Andy Sullivan
LAS VEGAS, Sept 20 (Reuters) - If pocketbook issues are the main focus of the U.S. presidential election, President Barack Obama and Republican rival Mitt Romney have remarkably little to say about a topic that directly affects most voters: the still-dismal housing market.
The two candidates battle daily over taxes, gas prices and job creation, but as they make their final pitch to voters before the Nov. 6 election, they have been largely silent on housing, which accounts for one-sixth of the economy.
"Neither one wants to explain themselves because any explanation is going to be unpleasant," said Richard K. Green, a public policy professor at the University of Southern California.
Some of the worst housing markets happen to be in key swing states, like Nevada and Florida, where Obama and Romney make frequent stops in their final two months of campaigning.
Obama can point to some progress in refinancing and foreclosure relief efforts, but even his campaign acknowledges he has not done enough.
Romney has been haunted by his remark last year that the foreclosure process should be allowed to "hit bottom," and he did not release a housing plan until earlier this month. Long on rhetoric and short on details, it calls for many of the approaches that Obama is already taking.
For both candidates, the downsides are clear. The problem is massive and dauntingly complex, and action to help struggling homeowners could stir a backlash from neighbors who have kept up with their mortgage payments.
Five years after the housing market's collapse touched off the 2007-09 recession, $7 trillion in household wealth has vanished and neighborhoods across the country are still pockmarked with boarded-up houses.
Although home prices are edging upward in many markets, they are unlikely to return to pre-bust levels for years.
The stagnant housing market amounts to a massive drag on the economy as shell-shocked homeowners postpone major purchases as they try to rebuild their wealth.
One-quarter of all homeowners are effectively trapped in their houses because they owe more than their homes are worth, eliminating their ability to move to areas where they might find work. Unemployment in the construction sector stood at 11 percent in August, well above the national average.
While Obama acted boldly to stem the recession and prop up industries like banking and auto manufacturing when he took office in 2009, he has been less bold when it comes to housing.
As home values plunged and foreclosures skyrocketed, his economic team spent two years tweaking programs to modify and refinance existing mortgages that did not address the problem on a comprehensive basis.
Fewer than 2 million households have taken part in programs aimed at lowering mortgage rates or reducing monthly payments, far short of the administration's goal of 9 million.
Obama has stepped up his efforts over the past year, but regulators, mortgage lenders and Republicans in Congress have blunted many of his efforts. One plan that would have forgiven debt owed by struggling homeowners - a controversial approach that many experts say is the only way to fix the problem - was blocked by the head of the Federal Housing Finance Agency in July.
The Federal Reserve has driven home mortgage rates to record lows by injecting money into the economy through its bond-buying programs. Most economists polled by Reuters think the latest round, announced last week, will not give a substantial boost to the housing market.
U.S. home resales rose in August to their highest rate in more than two years, and groundbreaking on new homes also climbed, data on Wednesday showed, signs that a budding housing market recovery is gaining traction.
Although the worst of the crisis has passed, the market remains deeply troubled. Some 190,000 properties get a foreclosure notice each month - more than twice as many as before the crisis hit, according to RealtyTrac, a real-estate research firm. Many of those who have gotten government help have subsequently fallen behind on their payments again.
"It's kind of like rolling the rock up the hill over and over again," said RealtyTrac Vice President Daren Blomquist.
Many Obama supporters are inclined to give him a pass on the issue. They note that the housing market collapsed under his predecessor, Republican President George W. Bush, and say he would doubtless be doing more if Republicans would cooperate.
"I honestly believe he's trying to help. He's trying to get money to the people who are underwater," said retiree Michele Gates at an Obama campaign event in Las Vegas last week.
In areas like Las Vegas that have been hit especially hard, Obama promises to expand his efforts if he wins re-election.
"My administration has already helped more than a million responsible homeowners refinance their mortgages and I'm running to give more like them the chance to refinance," he told a crowd of 8,000 at the city's convention center.
Elsewhere, Obama mentions the subject only in passing as he touts the achievements of his first term and lays out his agenda for a second term. In his stump speech, Obama promises to hire more teachers, boost manufacturing jobs and expand natural-gas production if he wins the election, but he makes no new promises on housing.
Campaign aides dispute the notion that Obama is avoiding the topic. They say he speaks about housing in states like Nevada and Florida where it is a concern of voters, even if he does not work it into every speech.
"The president is the first to say that this is an issue where there's more that needs to be done," spokeswoman Jen Psaki said. Obama "is happy to put his record and the efforts he's made to improve the housing market up against Mitt Romney's any day of the week."
Romney told a Las Vegas newspaper last year that the foreclosure process should be allowed to "hit bottom" - a view shared by many market experts who say that efforts to slow the foreclosure rate only prolong the pain. Democrats say the comment shows that Romney does not care about struggling homeowners, and he has frequently had to clarify those remarks in return visits to the state.
Romney's stance is not as simplistic as Democrats would suggest. He has expressed support for refinancing assistance and said lenders should not be allowed to peddle exotic loans that were widespread before the crash.
His housing plan, released earlier this month, calls for selling off vacant homes owned by the government, helping troubled homeowners avoid foreclosure, streamlining regulations and reforming the government-owned finance companies that underpin much of the mortgage market.
The plan contains few details and echoes many approaches already under way. When pressed for specifics, Romney points to programs that Obama has put in place.
"There's a federal program that helps people refinance homes and receive lower interest rates," he told an NBC affiliate in Reno, Nevada, in July. "That's already there for folks."
Like Obama, he has not made housing part of his stump speech. Critics say his silence on the issue undercuts his claim that he is the best candidate to fix the economy.
No matter who wins the White House in November, the problem is not likely to go away soon. E conomists say any rise in home values is likely to be modest as long as wages stay flat.
Millions of mortgages remain at risk of foreclosure, and consumers who struggled to pay their bills during the recession are less likely to qualify for a mortgage in the years to come. Efforts to boost the market, from loosened monetary policy to tax credits for new buyers, may have run their course.
"I don't think either side has good ideas that are going to be catchy," said Robert Van Order, a professor of finance and economics at George Washington University. "There aren't that many tools left in the kit."