John McCain will direct his Treasury Secretary to implement an American Homeownership Resurgence Plan (McCain Resurgence Plan) to keep families in their homes, avoid foreclosures, save failing neighborhoods, stabilize the housing market and attack the roots of our financial crisis. America’s families are bearing a heavy burden from falling housing prices, mortgage delinquencies, foreclosures, and a weak economy. It is important that those families who have worked hard enough to finance homeownership not have that dream crushed under the weight of the wrong mortgage. The existing debts are too large compared to the value of housing. For those that cannot make payments, mortgages must be re-structured to put losses on the books and put homeowners in manageable mortgages. Lenders in these cases must recognize the loss that they’ve already suffered.
The McCain Resurgence Plan would purchase mortgages directly from homeowners and mortgage servicers, and replace them with manageable, fixed-rate mortgages that will keep families in their homes. By purchasing the existing, failing mortgages the McCain resurgence plan will eliminate uncertainty over defaults, support the value of mortgage-backed derivatives and alleviate risks that are freezing financial markets.
The McCain resurgence plan would be available to mortgage holders that:
· Live in the home (primary residence only)
· Can prove their creditworthiness at the time of the original loan (no falsifications and provided a down payment).
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; indeed by stabilizing mortgages it will likely be possible to avoid some purposes previously assumed needed in that bill.
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 may be necessary for Congress to raise the overall borrowing limit.
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14 comments:
I wonder why John McCain didn't put forth this "bold" proposal while he was jet-setting into DC to "save" the bailout bill.
I think I know why... it's because Barack Obama suggested it on September 24th:
At a Sept. 23 press conference, Obama said: "For example, we should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage- backed securities. In the past, such an approach has allowed taxpayers to profit as the housing market recovered. This is not simply a question of looking out for homeowners; it's doubtful that the economy as a whole can recover without the restoration of our housing sector, including a rebound in the home values that have suffered dramatically in recent months."
Link
And in an Oct. 1 statement, Obama repeated the idea. "We also must do more than this rescue package does to help homeowners stay in their homes. I will continue to advocate bankruptcy reforms to help families stay in their homes and encourage Treasury to study the option of buying individual mortgages like we did successfully in the 1930s,"
Link
SERENDIPITY will set you free.
...Therefore encouraging people to live beyond their means.
We are in trouble.
We are like alcoholics. Our politicians are buying us drinks.
Greybeard,
I do agree with you that people should not live beyond their means. But I also think that we need oversight and regulations to avoid the perpetual repeat of these problems.
You mean like the oversight Senator Dodd and Rep. Frank have provided during the last two years, Merge?
No thanks.
No. I mean restoring the type of common sense regulations that Senator Phil Gramm (with the help of his colleague and friend John McCain) worked to remove in 1999.
Is that the same regulation Dodd and Frank used to rape us, Merge?
No.
So what regulation was Senator Dodd using when he got sweetheart loans from Countrywide, merge?
What regulation was Barney Frank using when he shuffled business to Herb Moses?
Is there no regulation covering pushing government business to your live-in lover?
Thanks for bringing me up to date on these crooked republicans!
So, what's your point? The fact that individual corruption exists is an argument against regulation? That's ludicrous.
Ludicrous?
Let me tell ya what's ludicrous.
This system was humming along just fine until "progressives" decided some minorities needed help with home ownership and told lending institutions to "take more risk with your loans... we'll insure that risk."
That allowed shady folks like Dodd and Frank to manipulate the system.
I'll agree, the corruption is bi-partisan. But to suggest moving toward a more "free-market" system would have made this situation worse is ludicrous.
No sane businessman would have taken such risk.
The only possible way you can tie the financial crisis to the Democrats is through the Clinton Administration's initiative to offer loans to low income borrowers. This has been wildly overstated by those trying to defend the "free market" approach to capitalism. Fannie/Freddie account for a very small percentage of the overall number of subprime loans, and very few of those were mandated under CRA. Furthermore, all subprime loans constitute only a small portion of the current crisis. The bigger issues involve mortgage securities trading and credit default swaps, which were deregulated by Gramm in 1999. Regardless, anyone trying to make the claim that the GOP hasn't been the party of deregulation since Reagan is a purveyor of revisionist history.
...And anyone claiming that deregulation is the crux of this problem is delusional.
...And anyone claiming that deregulation is not a foundational element of this problem is a liar.
whoever becomes the president, I still support McLuvin.
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