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.

[misha128-2009]

McCain sells out the right on the unqualified buyer argument.

[armydog2]

Isn''t covering these bad mortgages part of the 700 billion?

[cbshoveit]

Say and promise anything to get elected and then forget it! How about all the good hard working Americans people that keep their mortage payments up to date in tact and current? If his poll numbers go down anymore, could John Mccain buy me a new house in a good neighborhood and a 2009 Chevrolet Corvette tax free? I''d vote for him then. If he put it in writing. He''s flip floped on more issues than John Kerry. Lets see how many votes the Republicans can buy!

[formrusmcsgt]

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

More Repub defecit spending.

[bobbyd4999]

Talk about wasteful spending. John McCain would be pissed if he heard about that proposal. I think it''s probably necessary for the economy, but I''m sure at John McCain''s next rally, he''s going to kick the snot out of John McCain for asking for more big government deficit spending.

Have you all seen this?
http://en.wikipedia.org/wiki/Image:Us_unemployment_rates_1950_2005.png
It''s pretty interesting about how unemployment rate goes down in the blue sections and up in the red sections.

Comrade McCain spent far too much time in Vietnam.

[arlt1627]

sn''''t covering these bad mortgages part of the 700 billion?

Posted by armydog2

Nope. Why don''t you tack on another $300 billion!! Wow! More socialist plans than Obama. There goes that Republican argument, huh.

[tbuckl]

No the 700 billon went to Corp. America and it''s banking system CEOs to buy more planes, ships, cars, vacations, and housing for the rich. Off they go laughing at us middle class and poor class of Americans. Took us to the cleaners they did. Our children can go hungry, and our old people can sit in the dark with the heat off this winter for all they care. The rich has told us other classes, "let them eat cake" just like before. History will now need to repeat itself. No mercy for those CEOs and bankers. Arrest them all.

[pensacola98]

Buying a sour mortgage isn''t new. The Resolution Trust Corporation of the late ''80''s & ''90''s did buy them after they were defaulted. Leaving a mortgage holder in the property ASSUMES the mortgage holder is the resident of that very same property.

We have more defaulted mortgages where the mortgage holder has multiple properties and doesn''t live in any of them. Does keeping a lease active with negative cash flow qualify for John McCain''s proposal?

There is also the big question about properties with multiple mortgages and deciding which mortgage is considered the primary absorber of the equity loss and which is the secondary.

One big misnomer is the PMI - insurance. Under which scenario does the defaulted or distressed property actually produce a claim and pay out benefit? and to whom? This is a huge opening for a Title Insurance NIGHTMARE where property ownership can be slowed down upon transferal of ownership such as a sale, making it difficult to move in a market.

[arlt1627]

HILARIOUS when LIBS don''''''''t read the articles and go straight to the LIES!
Posted by pmsnbc2 at 09:20 AM : Oct 08, 2008

LISTEN, oh moron-type person. The 700 Billion Bailout
has been legislated for providing liquidity (uh duh, what''''s that???) to the markets ... John McCain will have no ability to allocate -ANY- of these funds.


Posted by cbs3200


Thanks! That was my point without going into details. He hasn''t thought this through. So we''ll get another package of $300 billion.

[delfmast]

editorialstaff net notes: Our earlier comments to the Paulson plan suggested that weapons of mass financial destruction, identified by Buffet, be purchased with taxpayer''s money, but at prices as close to zero as possible, then held to maturity, or unwound, retraced, done over as it were, to insure that no more of the 1.5 billion/15 billion, minor mis-pricing of Wachovia is perpetrated at taxpayer expense, by clueless regulators catering to Wall St, as usual. We also suggested that if the mortgages in foreclosure can be in any way identified, as part of the securities owned by the taxpayer, that the owners in those homes be allowed to purchase their mortgages, or their homes, at some multiple of the taxpayer''s cost predicated on their home''s actual value, their incomes, and their past and future mortgage payment performance. The concept is to insure that any profits ensuing from this catastrophe end up in the taxpayer''s pockets, and that any windfalls accruing to private persons, accrue with a fair profit to the taxpayers, to the actual homeowner, residing in a home, and savaged by the fraud and stupidity of the lenders, regulators, et. al. McCain''s approach, if adjusted in this manner, could actually reach the home ownership goals, for those who will work and pay reasonable mortgages, that the Democrats touted as their reason for destroying the system they forced into making liar''s loans, and worse.

[nolalou]

The other thing the media didn''t pick up on, is McCain said he knew how to find Osama Ben Laden, and when I become president, I''''ll get him. Well why has he kept this a secret? why hasn''t he told our generals or our President. I am afraid McCain is now desperate, erratic and out of control

Posted by bagley12

I agree! On the one hand McCain said he''ll find Bin Ladin, and "I''ll get him", but on the other hand when Obama said IF we find Bin Ladin in Pakistan, and the Pakistani government is unable or unwilling to get him, we will, McCain accused Obama of wanting to invade Pakistan! What a moron! So is McCain saying if he found Bin Ladin in Pakistan, he woudn''t do anything unless we got permission from Pakistan?

[ioweign]

McCain Would Buy Bad Mortgages
Announces During Debate Intention To Spend $300 Billion To Help Allow Struggling Homeowners To Keep Homes

####

The above socialism is OK but a universal health care program is not...

[sleepyric]

He acts like it''s his big new idea. It was part of the $7B "rescue" bill he voted for. Duh...it''s not his idea, it''s already law. Catch up on current events McCain.

[john6pack]

I was leaning McCain until his last bomb shell exploded: ''the treasury should buy all the bad mortgages and give a house to all real estate gamblers''.
John that is the most socialist approach uttered by any politician in the last decade!
If USA chooses the socialist path, than we better hand it to Obama since he will not make a joke of the conservative principles.
Sorry John, I''m voting with the libertarian Barr.

[julez41]

The bailout for homeowners is something Obama suggested months ago. So now McCain is pulling it out like it''s his "new" idea. He hasn''t had a new idea for the entire campaign, unless you count hiring the racist Sarah Palin as VP.

[newscomment-2009]

I don''t understand why McCain advocates out of one side of his mouth that Govt needs to be LESS interventionist, yet makes these off-the-cuff (ill thought-out) proposals to the contrary just to buy himself some popularity in the polls.

Isn''t the answer to work with the banks to get THEM to negotiate fairer deals with homeowners? The banks created the current economic crisis and have made a lot of money while doing do. They have the power to write down some of the loans and make the same adjustment that John McCain is proposing the Govt make directly. I''m sure the banks will find a way to make their money back in time.

From what I can tell, it sure would be better for the economy, and communities as a whole, if families can live in their homes and keep life as normal as possible in such trying times.

[julez41]

The bailout for homeowners is something Obama suggested months ago. So now McCain is pulling it out like it''s his "new" idea. He hasn''t had a new idea for the entire campaign, unless you count hiring the racist Sarah Palin as VP.

[julez41]

The bailout for homeowners is something Obama suggested months ago. So now McCain is pulling it out like it''s his "new" idea. He hasn''t had a new idea for the entire campaign, unless you count hiring the racist Sarah Palin as VP.

[julez41]

The bailout for homeowners is something Obama suggested months ago. So now McCain is pulling it out like it''s his "new" idea. He hasn''t had a new idea for the entire campaign, unless you count hiring the racist Sarah Palin as VP.

[DCropp]

McCain...

$850 billion bailout
$300 billion mortgage bailout
$120 billion per year in Iraq
$300 billion to big business ($0 to small business)

However, he''ll save $20 billion in earmarks.

That means McCain''s plan is to spend $1.550 trillion. We''re not talking billion, we''re talking trillion. McCain''s budget deficit is three times worse than Bush.

[misha128-2009]

Under the bill congress passed, the answer is no. The new law proposes buying the secondary paper from the financial houses.

McCain is proposing using $300B of that money go to distressed homeowners.

Posted by pmsnbc2 at 09:23 AM

Sounded to me like McCain wanted to lard up the bailout with another 300 Billion maybe attached to a stimulus bill as an earmark to get it to a full trillion for the financial/housing bailout alone. Boy when he decides to ask for an earmark it''s a whopper.

Funny how Senator McCain had no comment about the wasteful spending by AIG a company that is now 80 % owned by the US Government. More lack of oversight just like the inept Congressional practices by the Republican Majority for the first 6 years of the Bush Administration as well as the inept administration for entirety of President Bush''s disservice to the country.

[mrmazerati]

As a homeowner, I would strongly disagree with anything that "resets" the value of a home. This would effectively dictate the values in my area and make it very difficult for me to sell at a profit in the future. I would rather they work with banks, and keep the mortgage amounts the same for individual homeowners.

[watching_you]

The article also clearly states:

%u201CDemocratic nominee Barack Obama last month sounded a similar theme, proposing that the government consider taking such a step.%u201D

This only proves one thing: The old phony maverick McCain isn%u2019t content to just co-opt Obama%u2019s change mantra, he steals Obama%u2019s ideas too.

How CAN you conservatards be sooooo moronic?

McCain is completely devoid of integrity ------- and, based upon the current Rolling Stone article ------ courage, as well

[watching_you]

Dear John6Pack:

{}{}{}{}

You diehard free market conservatards just don%u2019t get it. Without government regulation and infrastructure, you%u2019d have no highways, no border patrol, no FCC (to prevent greedy telecoms from charging you $1200/m for your phone) -------- and, no military.

Go ahead though: Privatize EVERYTHING. How%u2019s that been working the past 8 years? Do you like having that gas nozzle shoved up your nether regions? I know you do.

Moron.

[bobbyduck1]

Interestingly, the Democrats in Congress tried to do something similar to this as part of this $700 Billion measure that just passed. But the House GOP wouldn''t vote for it unless it was removed from the package.....and their approach was to leave the government funding out, just allow bankruptcy judges to do this with no need for the government to purchase anything at all.

GOP hollered like stuck pigs!

[newscomment-2009]

My understanding is that the banks are doing that anyway - - writing down the value of your home - - by unilaterally adjusting the equity value in your home.

I agree that a lot of home values were artificially set to begin with. But the current trend is for the banks to repossess, and sell the home for the written down, current market value, while requiring you to pay the mortgage debt at the original home value.

So effectively the home values in your neighborhood will go down anyway, as the banks continue to repossess and sell homes at current, lower market values. At least with some negotiation, home-owners can protect their neighborhoods by keeping families in their homes, and together, with time, can rebuild the value of their collective real estate.

[VegasResident]

McCain said "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.

Great, so all of us who make our payments and are not the idiots who got into foreclosure status will continue to hold upside down houses while our neighbor that went out and got an ARM ends up with a new mortgage and a new house value. This way he can one day sell his house and we will be stuck paying to sell of having to wait 15 years.

Where is the help for the good mortgage payer who is stuck upside down due to these people they are trying to help keep their homes????

[incog-nito]

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

"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."

In other words, it''s not McCain''s plan.

[VegasResident]

hungry said "The value of the homes were artificially inflated, which caused the meltdown in the first place.
Resetting the prices, would only be correcting an error".

While correct in concept, they would only reset the price for those that got into trouble with ARMS, etc. They will NOT reset the prices for those that had to pay for the artificial prices and got a 30 yr fixed and can afford their payments. These owners will be left upside down and receive no help.

If they reset prices for the idiots that got ARMS, etc they should offer that to every homeowner in America. The value of my home has dropped 50% and I pay my mortgage. I put 20% down. And it will be years before I can sell my house without having to pay to sell it. Offer a reset for some, they should then offer it to all.

[antoniof123]

McCain Would Buy Bad Mortgages
Announces During Debate Intention To Spend $300 Billion To Help Allow Struggling Homeowners To Keep Homes

With all your tax cuts that you want were are you going to get the money John. Borrow and spend Republicans nothing that has to do with fiscal responsibiltiy.

Enough is enough we do need change and you John are not capable of bringing it around. Same old tired conservative agrument never works just keep doing the same thing and hope it comes out differently.

[martel_v]

Some people seem to have the incorrect notion that home values were somehow ''artificially inflated'' before those values dropped. False. The value of a house is defined by what people will pay for it. Home values DO go DOWN as well as up. This has always been true, even if some Americans aren''t familiar with this basic concept.

Among other factors, when there are many more houses for sale than buyers willing to buy them, home values go down...and vice versa.

A house may be your home, but that doesn''t change the fact that it''s also just a commodity when you choose to sell it.

[tejasdemo]

Hey McAhole----USE YOUR OWN DA MN MONEY DO THIS !!!!!!!!!!!!!!!!

[bikerb54]

HEY MCCAIN____ I don''t want my hard earned money used to pay someone else''s debts. I work two jobs to pay for my home and my debts. If I asked the government to pay my bills, I''d get laughed out of DC because I don''t make enough money and my name isn''t linked with big business. It''s a *** shame when the middle to lower class citizen is penalized because some dumba.. on Wall Street or in some banking business does underhanded deeds and rakes in multi million dollar perks that makes the stock market and his business to fail.

[gce65]

Maybe John McSame and Cindy Lou Who should use their OWN $100 Million beer fortune to buy bad mortgages!

[goforitin08]

MCCAINS GENIUS, PHIL GRAMM, IS THE ONE WHO PUT THE CREDIT DEFAULT SWAPS INTO A LARGE BILL. THIS IS WHAT IS CRASHING THESE LENDERS. IT ALLOWED WALL STREET TO TURN INTO LAS VEGAS EAST ,WITH NO REGULATION AND UNFORTUNATELY NO RESERVE . WE COULD HAVE ABSORBED THE 6% RISKY MORTGAGES BUT THESE SWAPS ARE SATURATED INTO THE MARKET AT THE TUNE OF 60 TRILLION(NOT A MISPRINT).
WALL STREET WAS BETTING LIKE WILD FRAT BOYS AND NOBODY KNEW TILL IT WAS TOO LATE, BECAUSE MCCAINS BOY
WONDER, FORCLOSURE PHIL HAD ONLY HIS FAT CAT FRIENDS IN MIND.THE WHOLE PRACTICE DEFIED BASIC ECONOMIC RESPONSIBILTY AND WE HAVENT SEEN NOTHING YET. FORCLOSURE PHIL WILL BE KNOWN AS POINT X AND THIS IS
WHO MCCAIN CAME TO FOR ECONOMIC EXPERTISE, GREAT JUDGEMENT.

[craigh9]

My wife and I worked hard to save money and buy a home we could afford. I''m happy to say it will be paid for in 5 years. Now McCain thinks I should support all the STUPID home buyers that overspent for their home and financed it in a ridiculous manner.
I am all for reducing their interest rates and/or lengthening the years for repayment if it allows them to stay in the home and meet the financial committment. I DO NOT FAVOR any type of "BAILOUT" regarding the value of the home. My family did the right thing and now nearly own a home outright worth about $200,000. Mr. McCain wants to REWARD the STUPID home buyer that over extended themselves to get a house they can''t afford by lowering the value on their loan. This may well result in the STUPID home buyer paying about the same amount of money I paid overall - but owning a house nearly double the worth of mine.
NOT A SINGLE RED CENT should be deducted from what the STUPID home buyer owes - reduce his interest rate, increase his years to pay - FINE, but DO NOT reduce what he owes. STUPID is what STUPID does - let''s not compound it!

[longtree-2009]

Buying out bad mortgages doesn''t seem right. People bought more house than they could afford, didn''t live within their means, didn''t save, spent money on credit, and now taxpayers have to bail them out? So those who did the right things have to pay for those who were greedy, and stupid. Don''t agree with McCain at all. Bad enough taxpayers have to bail out Wall Street executives, corporations, and et al. Perhaps homeowners can contact their lender and work out a deal on how much they can pay for the time being. Something. It should not all automatically go on taxpayer''s back and especially those that did the right thing from the start. Time for another revolution like the one that started this country. Somebody find a George Washington!

[merlgrey]

ron paul would rightfully not approve.

would a real conservative please step up and would john mccain please move over to the socialist ticket.

this is friggin ridiculous, absolutely wrong. punishmnent for those who live withing thier means... reward for greed and bad personal choices. unbelievable.

[briannorwood]

"McCain Would Buy Bad Mortgages"

Why not? He already has 13 houses. What''s a few more? LOL

[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.

[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!!!!!!!

[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.

[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?

[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.

[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...?

[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.

[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.

[future121]

McCain has now proven he knows little about the economics.

[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?