In contrast to Barack Obama’s own homeownership plan, John McCain has suggested a plan to involves more direct federal ownership of distressed mortgage assets. McCain’s plan, entitled the McCain American Homeownership Resurgence Plan, seeks to utilize the recently granted Treasury Secretary authority to use federal funds to help adjust mortgage terms for homeowners.
Simply put, the McCain resurgence plan would use funds authorized to the Treasury Secretary to purchase mortgages directly from mortgage providers. The plan would use tax payer money to buy home loans from banks, and would then re-negotiate the terms of those loans and replace them with more manageable, lower interest rate mortgages to ensure families can remain in their homes.
The campaign states that the plan will “eliminate uncertainty over defaults, support the value of mortgage (securities) and (help unfreeze) financial markets.)
Pre-foreclosure fight statement: “Lenders and borrowers alike were caught up in the speculative frenzy that has harmed the housing market. And it is not the responsibility of the American public to spare them from the consequences of their own bad judgment.” — McCain
McCain’s Foreclosure Fight Plan:
- Under the plan, these new home loans would take the form of Federal Housing Administration FHA fixed-rate loans that would be determined in a sliding scale to allow for continued homeownership.
- The McCain campaign estimates the plan would cost roughly $300 billion of the $700 authorized to the Treasury Secretary under the recent economic stabilization bill with the assistance of the Treasury Secretary, the FHA and the government sponsored Fannie Mae and Freddie Mac organizations.
- The ambitious plan is restricted to primary residency holders only (homeowners must reside in the house currently) and those who can document and prove that they had accurate information on their original mortgage application and paid a down payment upon purchase.
- While the details of the economic stabilization are still being determined, and have evolved from an initial plan to buy mortgage-backed assets to making direct capital investments in lending institutions.
- McCain’s plan aims to subsidize mortgage rates to keep them closer to 5% (current rates are closer to 6%, and some home owners may be paying much higher rates depending on their down payment and variable rate structure.)
Chief McCain economic adviser, Douglas Holtz Eakin, believes the plan will not only help homeowners but also will help stabilize the larger financial sector (see The Sacremento Bee).
As the campaigns debate the finer points of their plans and seek to establish themselves as the authority on the issue, it’s important to do the necessary research to determine which candidate’s plan that you favor. A good source for information are non partisan political sites such as FactCheck.org, which provide documented discussions of the points made by each campaign.
Whichever candidate wins this election will have a huge responsibility to helping hom owners adjust to the new economic environment. As usual, we will continue to bring you independent information to help you make informed decisions and help to stand up for your economic rights.
We realize that a number of people have been treated unfairly by mortgage lenders over the past few years, so we will continue to point out the underlying plans that politicians have to tackle the issue – whether they are Presidential candidates, Governors, Senators, Congressmen or local politicians – government at all levels should aim to level the economic playing field going forward.