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McCain's mortgage proposal  

post #1 of 23
Thread Starter 
The McCain campaign and its cheerleaders appear to have missed the point that the U.S. and many other countries are in the middle of a huge economic crisis, and that's what most people are concerned about. Remember Bill Clinton's campaign slogan?

McCain's plan is to have the government pay off people's original mortgages. People could refinance their homes, getting FHA loans based on the reduced value of their homes with lower principals and interest rates. And guess who gets stuck paying the difference? Taxpayers.
Taxpayers, Not Lenders, Would Bear Costs of McCain's Mortgage Proposal
Quote:
The homeowner assistance plan that Senator John McCain announced without detail in the presidential debate Tuesday night would allow millions of financially stretched Americans to refinance their mortgages with government help, but it would leave taxpayers to cover the losses, rather than the financial institutions that hold the original mortgages. Mr. McCain said in the debate that the program would be expensive, and on Wednesday his chief economic adviser, Douglas Holtz-Eakin, acknowledged that the liability would be borne directly by taxpayers.
The idea originated with Hillary Clinton: Long History for Proposal by McCain on Mortgages

Obama is criticizing the plan, as taxpayers, rather than financial institutions, have to cover losses. Obama Calls McCain Mortgage Plan 'Risky'
Quote:
Speaking to several thousand Ohio voters at baseball stadium in this battleground state, Mr. Obama took new aim at Mr. McCain’s plan, which would allow millions of struggling Americans to refinance their mortgages with government help – yet leave taxpayers to cover the losses rather than the banks or other institutions that hold the mortgage.
Mr. Obama particularly zeroed in on Mr. McCain’s intention to impose more risk on taxpayers than on the banks, because, under his plan, the government would pay full face value on the mortgage papers even if they had declined in real value.
post #2 of 23
Personally, I think we all should strike the polls this year.
post #3 of 23
Quote:
Originally Posted by jcat View Post

McCain's plan is to have the government pay off people's original mortgages.
[/url]


Misleading and untrue. Try again please.
post #4 of 23
I also heard him make those statements during the debate the other night. He was entirely vague about his plans so I am curious about the details. But based on his vague comments, I wondered how he could pull this off without raising taxes to pay for it. This from a man who voted on bills to raise taxes 477 times.
post #5 of 23
Quote:
Originally Posted by Momofmany View Post
I also heard him make those statements during the debate the other night. He was entirely vague about his plans so I am curious about the details. But based on his vague comments, I wondered how he could pull this off without raising taxes to pay for it. This from a man who voted on bills to raise taxes 477 times.
At least he's got the chutzpa to actually give a plan to the public, even if every detail isn't delivered. (Don't they have a time limit on debates anyway? How can one detail any economic plan in like 2-5 minutes?) Obama just criticizes the plans but doesn't say anything but "we need to help the homeowners". How is that any more detailed than what McCain put out?
post #6 of 23
Quote:
Originally Posted by ckblv View Post
Misleading and untrue. Try again please.
This is from McCain's own website:

http://www.johnmccain.com/Informing/...f-19df8cfec83d

Quote:
The new mortgage would be an FHA-guaranteed fixed-rate mortgage at terms manageable for the homeowner. The direct cost of this plan would be roughly $300 billion because the purchase of mortgages would relieve homeowners of “negative equity†in some homes. Funds provided by Congress in recent financial market stabilization bill can be used for this purpose;
Didn't the funds provided by the bailout come from taxpayers?
post #7 of 23
That is not paying off homeowner's mortgages now is it? That is making it more "manageable" for the homeowner himself to pay off.

And if it would have been Obama's idea, it would be stupendous according to some.
post #8 of 23
What is Barry's plan again? Specifics, if possible.
post #9 of 23
Wall Street keeps dropping lower and lower every day. When I listen to the various opinions of the financial analysts, its clear that no one really understands how to fix the crisis we are in. Whether that is to reverse the trends on Wall Street, or how to help the average person across America.

I have total doubts that the plan the McCain posted on his website would ever come to fruition. What makes me stop and think about it is the fact that he tried to do something at all, and what he came up with punishes American citizens while rewarding the very predatory lending institutions that had a huge hand in the mess. It just seems to me like he shot from the hip without thinking about the consequences of his proposal.
post #10 of 23
Even the National Review gave it a thumbs down. (NR is still considered conservative, right?)

Quote:
We never thought we would defend the Frank-Dodd legislation, which we bitterly opposed last summer. But it looks downright prudent compared to what McCain has proposed. McCain’s plan is a full bailout for lenders, and it cannot do much more than the Frank-Dodd bill without letting “ruthless borrowers” and other reckless types off the hook. It is time to acknowledge that the government has gone as far as it can without creating a level of moral hazard that is unacceptable. Give Frank-Dodd — and the Paulson plan — time to work.
http://article.nationalreview.com/pr...NmNzc3NzM2NWY=
post #11 of 23
Who is Barry, Cindy?
post #12 of 23
Quote:
Originally Posted by hissy View Post
Personally, I think we all should strike the polls this year.
Gary and I have long been proponents of NOT ENCOURAGING them. In the end, it's all about power, and we can't vote for leadership in the EU and China - and the idiots here have done a great job at destroying our banking system, our mortgage system, and making it so huge it has a global impact.

Laurie
post #13 of 23
Quote:
Originally Posted by valanhb View Post
At least he's got the chutzpa to actually give a plan to the public, even if every detail isn't delivered. (Don't they have a time limit on debates anyway? How can one detail any economic plan in like 2-5 minutes?) Obama just criticizes the plans but doesn't say anything but "we need to help the homeowners". How is that any more detailed than what McCain put out?
Yeah, that. At least he has the makings of a plan. Which is not a bailout or taxpayers paying off mortgages. Its loaned money from the rescue plan already in place, used to assist homeowners that are struggling by getting them into a more reasonable plan with a fixed rate. If they can't make it then, they are on their own. Can't get much fairer than that. Give them a good rate on a reasonable amount of money, and they can sink or swim.
post #14 of 23
Quote:
Originally Posted by Jillian View Post
Who is Barry, Cindy?
That is Barack's nickname Jillian.
post #15 of 23
Still waiting on Barack's plan.


*******drums fingers on desk**********

********whistles softly*********

******sings under breath********
post #16 of 23
Thread Starter 
Quote:
Originally Posted by ckblv View Post
What is Barry's plan again? Specifics, if possible.
Most of his mortgage plans were conceived last year (August 2007), as illustrated by what he wrote for the Financial Times:
Fine Unscrupulous Lenders

Here's what the FT said then: Obama unveils radical mortgage plan
Quote:
Unscrupulous lenders who deceptively sold subprime mortgages to millions of Americans should be fined and the proceeds used to help bail out borrowers facing a wave of foreclosures, according to Barack Obama, the Democratic senator running to be his party’s presidential candidate.
The proposal is among the most radical yet from a leading Democrat and comes as Washington tries to respond to a growing wave of foreclosures and a crisis in credit markets.
It also comes amid greater discussion in Washington on whether the mortgage industry – including credit rating agencies involved in rating mortgage-related securities – should be more tightly regulated to prevent a repeat of the crisis.
This article is from today's Boston Globe: Candidates step up battle over mortgage crisis, ailing economy
Quote:
Obama said he favors helping homeowners facing foreclosure by going after predatory lenders, making sure the government doesn't overpay for any mortgages it buys, and allowing bankruptcy judges to redo mortgages.
Obama appears to have the weight of opinion on his side. Since McCain announced the proposal without much fanfare during Tuesday night's presidential debate, it has drawn criticism - even from the staunchly conservative National Review magazine - because taxpayers would cover any losses, not the financial institutions that hold the original mortgages.
His site talks about homeownership and mortgage fraud (scroll down): http://www.barackobama.com/issues/ec...home-ownership but isn't any more specific than McCain's, as far as I can see. Obama did point out during the debate that a plan is already in place, namely the Frank-Dodd one referred to in the National Review: Frank_Dodd 2008 , which sounds more prudent, IMO.
Quote:
Under the Frank-Dodd housing bill that was signed into law last summer, borrowers qualify for a federally subsidized workout only if they meet the following criteria:

1) The borrower must live in his house — no investment properties.2) The borrower must show that he has been spending at least a third of his income on mortgage payments since March of this year.

3) He must also show that he can afford to make lower payments if his lender agrees to a write-down.
Philadelphia's plan also seems to be working:
Philadelphia Will Try to Reduce Foreclosures
Quote:
Philadelphia announced a program on Wednesday to reduce the number of people who are forced from their homes because they cannot afford the payments on an adjustable-rate subprime mortgage. The program, which officials called the first of its kind by a city, will require any property scheduled for sale by the local sheriff’s office to be referred to officials who will negotiate with lenders in an effort to restructure the loan so that the borrower can keep the property.
Success Seen in Program to Save Homes
Quote:
A program intended to curb residential mortgage foreclosures here has averted the sale of almost 80 percent of the properties referred to it in its first three months.
The effort is the first city-sponsored plan in the United States to broker negotiations between mortgage lenders and homeowners who have fallen behind in their payments.
The plan, started in June by the city government and the Philadelphia Court of Common Pleas, requires all owner-occupied properties scheduled to be foreclosed and sold by the Sheriff’s Office to have their mortgages reviewed by borrowers, lenders and the court before they can be sold.
post #17 of 23
"Going after predatory lenders"

I won't hold my breath.

And do we even know if we can go after the snakes that did this?
Do we even know if they did anything illegal?
post #18 of 23
Quote:
Originally Posted by neetanddave View Post
Yeah, that. At least he has the makings of a plan. Which is not a bailout or taxpayers paying off mortgages. Its loaned money from the rescue plan already in place, used to assist homeowners that are struggling by getting them into a more reasonable plan with a fixed rate. If they can't make it then, they are on their own. Can't get much fairer than that. Give them a good rate on a reasonable amount of money, and they can sink or swim.
My understanding of the McCain plan is this, and I'll use a made up example to explain it.

A homeowner borrowed $200,000 to purchase a home. The housing prices have dropped, and the house is now valued at $175,000. The homeowner now faces bankruptcy with an outstanding loan ($200,000) greater than the value of the home ($175,000). According to the plan, the $300B bailout money would pay the lender $200,000 to get out of debt, and the homeowner can go out and refinance the home for its current value of $175,000.

Yes, the homeowner wins because they are relieved of $25,000. But the bank that made the bad loan has regained its entire loan amount. This on the backs of the taxpayers who are chipping in for the $300B bailout money.

For unscrupulous lenders, this is rewarding them for their bad practices. For homeowners who overextended themselves in the first place, this rewards their bad practices. Of course there were good lenders and good homeowners who also benefit, but how to you distinguish between the good and the bad?

If I'm reading this wrong, someone correct me.
post #19 of 23
Quote:
Originally Posted by jcat View Post
Most of his mortgage plans were conceived last year (August 2007), as illustrated by what he wrote for the Financial Times:
Fine Unscrupulous Lenders
WOW. That's more than he wrote the whole time before his novels. I've seen a few pieces bantered about looking for his work, mostly in questioning if he had a ghostwriter for "Dreams." Wonder why this article never came to light?

On topic: looks like he's a bit unclear about a plan as well. And the Franks-Dodd plan? The two biggest buffoons in the current scandal. Franks should be investigated for fraud, as he should've dismissed himself from any legislation involving Fannie since he was involved with Herb Moses, the guy running them for 11 years. Talk about conflict of interest!
post #20 of 23
Quote:
Originally Posted by Momofmany View Post
My understanding of the McCain plan is this, and I'll use a made up example to explain it.

A homeowner borrowed $200,000 to purchase a home. The housing prices have dropped, and the house is now valued at $175,000. The homeowner now faces bankruptcy with an outstanding loan ($200,000) greater than the value of the home ($175,000). According to the plan, the $300B bailout money would pay the lender $200,000 to get out of debt, and the homeowner can go out and refinance the home for its current value of $175,000.

Yes, the homeowner wins because they are relieved of $25,000. But the bank that made the bad loan has regained its entire loan amount. This on the backs of the taxpayers who are chipping in for the $300B bailout money.

For unscrupulous lenders, this is rewarding them for their bad practices. For homeowners who overextended themselves in the first place, this rewards their bad practices. Of course there were good lenders and good homeowners who also benefit, but how to you distinguish between the good and the bad?

If I'm reading this wrong, someone correct me.
Not quite. They won't be buying the mortgages at the current prices, that's what the whole "toxic loan packages" problem is. They get bought for pennies on the dollar, then the government assists the homeowner with a new loan for a revaluated home and a fixed rate. THEN if they can't make the payments, they default and the goverment has the house to sell again. Either way, the government's investment is minimal, and guarantee with the property.
post #21 of 23
Thread Starter 
Quote:
Originally Posted by neetanddave View Post
Not quite. They won't be buying the mortgages at the current prices, that's what the whole "toxic loan packages" problem is. They get bought for pennies on the dollar, then the government assists the homeowner with a new loan for a revaluated home and a fixed rate. THEN if they can't make the payments, they default and the goverment has the house to sell again. Either way, the government's investment is minimal, and guarantee with the property.
But that's not McCain's plan, which Amy just referred to, according to the National Review:
Quote:
McCain’s plan would also be a gift to lenders who abandoned any sense of prudence during the boom years. Under the Frank-Dodd bill, lenders must agree to “take a haircut” — slang for writing down the value of a mortgage — in order to qualify for federal insurance on a distressed mortgage. The lender bears an initial loss but is protected if the borrower eventually defaults. McCain would transfer that initial loss to the taxpayers. Under his plan, the government would buy mortgage loans at face value and then reduce the principal and interest on these loans to accommodate distressed borrowers.
http://article.nationalreview.com/?q...zM2NWY=&w=MQ==

The Wall Street Journal also underlines that: http://online.wsj.com/article/SB122351316270117559.html
Quote:
The proposal, which Sen. McCain announced during Tuesday night's presidential debate with Sen. Barack Obama, also could make winners out of investors -- including predatory mortgage lenders -- that the Bush administration and Congress have tried to exclude from the government's largesse....Sen. McCain's program would effectively reinvent the homeowner program to speed up the process. The government would buy the existing troubled loans at face value -- absorbing the haircut itself -- and the Federal Housing Administration would issue a new, federally guaranteed 30-year fixed-rate loan, based on the property's present value, at a "manageable" interest rate, the McCain camp said.
post #22 of 23
I'm not convinced it's a final plan by McCain, but looks like large numbers of people approve of it.

http://www.rasmussenreports.com/publ...e_bailout_plan

Democrats like McCain’s plan more than Republicans, even though Barack Obama opposes it. Fifty-nine percent (59%) of Democratic voters think it’s a good idea, compared to 47% of Republicans – and 49% of unaffiliated voters.



In the absence of a plan by VDemocrats like McCain’s plan more than Republicans, even though Barack Obama opposes it. Fifty-nine percent (59%) of Democratic voters think it’s a good idea, compared to 47% of Republicans – and 49% of unaffiliated voters. [/i]

In the absence of a plan by BO 4 days after the debate, leadership by McCain gains acceptance.
post #23 of 23
This plan is an embarrassment to the Conservatives. It allows the banks to walk away with no penalty. It allows homeowners who have been irresponsible to get a great handout and forces everyone else to pay the cost. In fact, it could encourage more people to go into foreclosure. Why should I continue to pay an upside-down mortgage when my neighbor gets $25000 knocked off his?

This is a plan I would expect from Obama, not the Republican candidate.
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