McCain Would Buy Bad Mortgages

Announces During Debate Intention To Spend $300 Billion To Help Allow Struggling Homeowners To Keep Homes

(AP)  Republican presidential candidate John McCain announced Tuesday he would order the federal government to spend $300 billion in federal funds to buy up bad home mortgages and allow financially troubled homeowners to keep their houses.

McCain's proposal, which he announced during Tuesday's presidential debate, would use nearly half the $700 billion from the recent bailout package to assist Americans directly, instead of indirectly by rescuing the nation's financial markets.

Democratic nominee Barack Obama last month sounded a similar theme, proposing that the government consider taking such a step.

But McCain's approach was far more categorical.

"I would order the secretary of the Treasury to immediately buy up the bad home-loan mortgages in America and renegotiate at the new value of those homes - at the diminished values of those homes and let people be able to make those payments and stay in their homes," he said.

The proposal, which he called the American Homeownership Resurgence Plan, is as much a policy plan for the future as it is a political tactic for the present.

The economy has been a key factor in helping Obama pull ahead of McCain nationally and in key battleground states. What's more, Americans reacted with helpless outrage at the need for a $700 billion rescue for the country's financial institutions.

Many Republicans voted against the package, objecting to its size and to government intervention in the free market economy. McCain's step would represent an even greater role for government and potentially an even greater financial loss.

McCain made clear he would use the plan to distinguish himself not only from his rival but also from President Bush, an increasingly unpopular figure as the economy sinks.

"It's my proposal," McCain said. "It's not Sen. Obama's proposal. It's not President Bush's proposal."

As conceived by Treasury Secretary Henry Paulson and as passed by Congress, the rescue package would be used primarily to purchase mortgage-backed securities. It would allow, but not require direct purchase of mortgages. Under McCain's plan, the Treasury would be required to rework mortgages directly with homeowners whose houses were losing value.

It was unclear - either from McCain's remarks or from the backup materials provided by the campaign - how such a massive plan would be administered. Though McCain, a budget hawk and critic of rising federal spending, did concede one point. "Is it expensive? Yes," he said.

Under the plan, the government would buy failing mortgages from homeowners and provide new fixed-rate mortgages.

A background paper provided by the campaign said the plan "could be implemented quickly as a result of the authorities provided in the stabilization bill, the recent housing bill, and the U.S. government's conservatorship of Fannie Mae and Freddie Mac."

It also said it could require Congress to raise the government's borrowing limit.

The Treasury's current plans for the money, however, could be well under way by the time a new administration is sworn in next year, leaving fewer options for a new administration.

During the congressional debate over the rescue package, liberal Democrats failed in an effort to give judges the power to modify mortgage terms for people who have filed for bankruptcy. They also were unable to get approval for part of any profits the government might receive to go to help people facing mortgage defaults.

The bailout package gives the secretary of the Treasury great latitude to deal with financial markets and address the current credit crunch. Ostensibly, the department would have the authority to intervene directly and help homeowners.

In fact, at a news conference on Sept. 24, Obama said, "we should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage-backed securities."

Days later, in a news release, he said he would "encourage Treasury to study the option of buying individual mortgages like we did successfully in the 1930s."

McCain has tried to portray himself as an activist in the midst of the financial crisis. He temporarily suspended his campaign to return to Washington and has depicted Obama as a more timid leader.

"Until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy and we've got to get some trust and confidence back to America," McCain said.

[johnlute]

I am an independent voter and finally had enough! If McCain wants the government to buy faltering mortgages and recast the principle owed, then fine but only under the condition that the Republicans finally take the responsibility and levy the taxes necessary to pay for this insanity on their own party''s registered voters. Leave me out of it. The Republican party has lost my vote.

[oldguy4truth]

That''s the flavor of the day on McCains ecconomic policy.... So sad to see the poor guy just blowing in the breeze like that. He''s like a one legged Maverick in an a-- kicking contest. Just too many.. He is overwhelmed.

[ioweign]

McCain Loses It: Calls Americans ''My Fellow Prisoners''

This is the kind of mental mixup that really makes you wonder what is truly going on inside of John McCain''s mind. Here he is, campaigning in Pennsylvania, accidentally calling Americans "my fellow prisoners"...

[mollybee5]

He scares me

[notopennshut]

You know it is a bad idea when McSame says that the government should buy back the bad mortgages. So he will get them back for a pittance, but unable to unload them to anyone, then sell them for half-a-pittance to his lobbyists friends, who then resell them to banks with a zillion% profit. So these banks are still holding these same mortgages which they had first unloaded to the government, and on paper, they have assets in the billions, but in reality, they are only worth half-a-pittance!! Who wins? The same lobbyists who bought them from McSame''s government. Who loses??? We, the citizens, because in the end, we will AGAIN be asked to bail out these financial entities that have assets on paper only, but in fact worthless. SO BE CAREFUL WHAT YOU ASK FOR: McSame is again trying the same old tactics to scam us more than we have already paid. NO MORE TO BUYING OUT BAD MORTGAGES AS PROPOSED BY MCSHAME!!!

[bobnjersey]

[So the idiots get a pass, the Wall Street ***** walk away with their pockets full and those of us who played by the rules and sacraficed get the bill. What kind of deal is that?]
[Posted by Element51 at 01:53 PM : Oct 08, 2008]

it''s a monty hall deal ... one w/ a goat behind one of the doors.

[mystysin]

After watching the debate, and the high interest in McCain`s BIG idea on buying up the bad mortgages,My instant thoughts were, Hum, he`s pulling new tricks out his hat to sway voters, after seeing his standings dwindling away amidst the "mudslingings". The folks at McCain & Co. said,we gotta get something new out there on the table!! Just my idea, what does everyone else think?

[bobnjersey]

["It''s my proposal," McCain said. "It''s not Sen. Obama''s proposal. It''s not President Bush''s proposal." ]

john ... did you come up with this on your own ... or did you possibly hear others proposing this ... and decided to make it your own?

[lordmi]

if to think - the idea is not bad at all, but except money it will ask for Government''s agences or other institutions to handle it an in huge quantity. Big question to make it practical and fast.
But certainly - that is not Mccains plan, not his idea.

[downtowner97]

The US has been a little bit Socialist since the New Deal, but this is a very overtly Socialist move. I am not comfortable with the idea of the United States Treasury calling me and asking me why my mortgage payment is a little late.

I''m also not comfortable with the idea of the government owning houses on my street when the owners continue to be unable to pay their mortgages due to unemployment. Will US soldiers be deployed to mow the lawns of those houses, and to make sure they aren''t vandalized?

Detroit, Michigan has been a preview to what the entire country will look like soon. There you can see thousands of decaying houses that were abandoned when jobs went away. There are far more houses in this country than there are families. As unemployment continues to climb, and pensions continue to shrink, people with multiple homes will be forced to let some of them go.

This will not be over quickly. We will not enjoy it.

[element51]

Maybe I don''t understand all this but I am wondering why I should be penalized because we bought a home we could afford and made our payments on time and no one was there to help us when times were rough and we had to literally do without food at times in order to pay the mortgage. The way I understand it, McCain wants to bail out, with my tax dollars, people who bought houses that they knew they could not pay for. Some of them were just stupid and some of them thought they could keep the house until the value went up and then sell it and make a bunch of money. I know that some people were doing the right thing but due to losing their jobs or medical problems found themselves in trouble. I don''t object to helping them. But the others really make me angry. So the idiots get a pass, the Wall Street ***** walk away with their pockets full and those of us who played by the rules and sacraficed get the bill. What kind of deal is that?

[future121]

McCain has now proven he knows little about the economics.

[merlgrey]

''''''This is only partially right, many of these people were talked into mortgages by unscrupulous mortgage companies, developers, and real estate agents. In many cases, we are talking about modest homes and condominiums purchased by first time buyers.''''''Posted by awinslow2 at 01:01 PM :

------

no no no no no

nobody was forced to buy an overpriced house in a high demand market. the responsibility falls on the purchaser to determine if they can afford the payments or not ... (thats why thet have those pesky little signature lines). if people cant afford them now, then they never really could... regardless of job losses etc... leave the keys in the door and walk away. i didnt sign on the dotted line for $12 an hour people buying 300k houses.

[ramos937]

The is the worse idea yet from anybody. The cost of this McCain mortgage buyout would be in the trillions not billions. I am sure there are qualified pros out there who can put forth better plans but this one is for the looney bin.

[hypnotoad72]

and the 2004 dewbacle when Dems said there were no problems with Fannie and Freddie... or 2003 when President Bush put into a law that would allow lots of poorer people able to buy homes at no money down -- http://www.americandreamdownpaymentassistance.com/

For dems, repubs, Bush, buyers, sellers, anything can be spun to fit a specific viewpoint. And that''s not to say some bankers didn''t abuse or some consumers went overboard either... never mind the other factors (like losing a job).

Too many issues. Time to focus on what will buoy our economy. And Europe''s economy too; last I read they''re in a dire situation too...?

[awinslow2]

Many people who are posting on this article believe that those people who were issued mortgages exceed their means. This is only partially right, many of these people were talked into mortgages by unscrupulous mortgage companies, developers, and real estate agents. In many cases, we are talking about modest homes and condominiums purchased by first time buyers. Many other people are in trouble because of lost jobs and high medical costs (another failure of the government). I doubt if McCain''s proposal will help some of those people. Many of the debt issues are also tied to developers over developing certain areas. Don''t make assumptions. I know from first hand experience.

[mydogdylan6]

ANOTHER $300 BILLION!

This is McCain''s "spending freeze"?

Apparently the change McCain wants to offer is a change the meaning of words?

Seriously, does this guy even know what he is saying anymore?

[drivelphobe]

McCain''s true colors are glistening. Amnesty, open borders, bailout for scheming investors, and pandering. What a guy. Every scumbag who is over his head in the housing market is going to be bailed out? What can this possibly solve?

The truth is that we are going to have a major recession/ depression regardless of what these yokels do. They are throwing away good money simply because that''s what the politicians know how to do.

The end is near. If the Muslim wins, all is lost. If McCain wins all, is lost.

What a tragedy for America.

[timetrips1]

This is absolute BS! No way, No how, should the government buy up over priced mortgages and renegotiate. Buy the securities by all means if that will help, but don''t REWARD people who bought houses they couldn''t afford with no-money down. My house has lost value just like everyone elses, however I can afford my payments (and if I lose a job and lose the house well that is life!) and on top of it I put 20% down on the house (just like you are supposed to). Now it will take years just to get the value of the house back to what I paid (is anyone going to pay off the balance if I sell short? NO!!!!. So don''t reward people who got into trouble. If you reset the value then in a few short years they will be able to sell at a profit while I''m still waiting to recoup my initial investiment. WRONG WRONG WRONG!!!!!!!

[goforitin08]

WALL STREET SLICED AND DICED THESE MORTGAGES UP SO BAD, PLACED A VALUE ON THEM AND FRANKLY HAD NO CLUE WHAT THEY WERE WORTH. BUT THE SWAP LAW HAS QUADRUPLED THE PROBLEM . IT WAS PURE OUT BETTING, AND CLICK YOUR HEELS TOGETHER, HOPING FOR THE BIG SCORE,IT DEFIES
LOGIC FOR SOMEONE IN ECONOMICS TO DO THIS AND KNOW THEY HAVE NO RESERVE. ITS CRIMINAL.