Senator McCain has proposed a plan using some of the money allocated in the recent economic rescue plan to keep people in their homes who face forclosure.
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.
Filed under: Economy, McCain | Tagged: home foreclosures, home payments, mccain home owners, mccain homeownership, mccain homes
McCain simply cannot add. He is suggesting that he can buy up trillions in bad debt, continue to fund a $10b/month war, and cut everything “but the critical programs” (e.g., the military - the lion’s share of the budget) - and balance the budget.
I wonder whether Palin is putting some of that good Wasilla meth in his water… because it simply doesn’t add up.
McCain is either lying through his teeth or can’t operate a calculator… the numbers simply don’t add up.
The proof is in the pudding. The mechanics of McCain’s plan are in the bailout bill. It is the right thing to do and money all committed! Money committed in the bill Congress just passed!
Though I too remain a little skeptical of how quantitative this program would be, it’s not designed to buy outright the entire mortgage package of a homeowner.
It would essentially swap the existing mortgage vastly over valued for the home market with a new mortgage reflecting a truer value. The government and the mortgage company would eat the difference.
I.e., a home valued at $100k with a mortgage of $115K; new mortgage written to reflect the home value with the $15k removed.
By limiting this to homeowners who DID initially qualify for a loan WITH down payment involved, many of the true subprime loans (those that never should have been issued) will still default into foreclosure.
This is more to protect as many honest home buyers as possible while letting the more risky loans that shouldn’t have been made go under.