Speaking in Dayton as he started a two-day bus tour of hotly contested Ohio, Obama said McCain's plan would force the government to absorb the full cost of renegotiating mortgages to prevent borrowers from losing their homes. Lenders should share some of the costs, he said.
The Democratic presidential candidate's campaign also criticized McCain's mortgage plan in a new 30-second ad to air nationally on cable TV, a relatively inexpensive way of drawing media attention to an issue.
Both candidates are competing hard for Ohio's 20 electoral votes which were pivotal in President Bush's victory four years ago. Obama plans five Ohio rallies Thursday and Friday, and will return next week to Toledo to prepare for Wednesday's debate on Long Island, N.Y.
Obama took another jab at McCain, whose family owns several houses, when he renewed his call to change bankruptcy laws to help hard-pressed borrowers keep their homes.
"Right now, the law lets bankruptcy judges write down your mortgage if you own six or seven homes," he said, "but not if you have only one."
"That might help Sen. McCain sleep easier at night, but it won't do anything for folks like you," Obama told thousands at a baseball stadium.
Obama said McCain's mortgage plan "punishes taxpayers, rewards banks, and won't solve our housing crisis."
He said it would "guarantee that American taxpayers lose by handing over $300 billion to underwrite the kind of greed and irresponsibility on Wall Street that got us into this mess."
McCain's campaign, meanwhile, has changed its mortgage plan. When the campaign distributed its description of the plan, it said the government would buy failed mortgages at discounted rates. Conservatives had pushed for that language because many of the homes are not worth the amount mortgaged.
But on Wednesday, the campaign deleted that line, which would mean the government would pay the full value of the mortgage.
McCain spokesman Brian Rogers said the policy didn't change, but an edit was made to remove "excess and confusing language."
The move would make the plan more costly than the $300 million initially cited to pay additional funds to financial institutions.
McCain has said his plan is expensive but necessary to get thousands of bad mortgages off the books and to stop the fall in home values and credit availability.
McCain campaign spokesman Tucker Bounds said the plan represents "no new expense to the taxpayer, but simply refocuses priorities to more directly assist the homeowners who are hurting instead of greed on Wall Street."
Obama said the government should use some of the $700 billion in the newly enacted financial rescue plan to buy up troubled mortgages.
"But we need to do it in a responsible way," he said. The government should not overpay for the mortgages, he said, or reward "the very lenders whose recklessness helped cause this crisis."
Taxpayers should be assured "a share of the benefits when our housing market recovers," he said, and the government should crack down "predatory lenders."
Saying McCain has offered widely different economic proposals lately, Obama added, "I don't think we can afford that kind of erratic and uncertain leadership in these uncertain times." Some Republicans say the word "erratic" is meant to raise doubts about McCain's age, 72.
Obama's campaign criticized McCain's mortgage plan Wednesday, but Thursday marked the first time Obama addressed it himself.
A new Obama campaign TV ad says McCain "would shift the burden from lenders to taxpayers, guaranteeing a loss of taxpayer money" and rewarding lenders "that caused the crisis in the first place."
Speaking to about 8,000 people under sunny skies, Obama veered occasionally from his prepared text to make lighthearted asides. Stock values have dropped so sharply, he said, that many people's retirement accounts are now "101(k)s" instead of 401(k)s, the name derived from a section of the tax code.