Is McCain’s Homeowner Bailout Proposal New?
By Justin Gardner | Related entries in 2008 Election, Economy, Housing, McCain
First, Politico details the “new” proposal…
“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,” according to the campaign. “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.”They price the proposal at $300 billion and say it would be offered for primary residences and only to those homeowners who made a down payment on their original purchase. The new mortgage would be FHA-guaranteed and at a fixed rate.
Personally, I already thought Biden proposed this last week in the VP debate. And wasn’t this already in the rescue package?
Well, looks like he did…
Biden -”Number two, with regard to bankruptcy now, Gwen, what we should be doing now — and Barack Obama and I support it — we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you’re paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal that you owe.”
So this isn’t new…or am I missing something?
This entry was posted on Tuesday, October 7th, 2008 and is filed under 2008 Election, Economy, Housing, McCain. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
October 7th, 2008 at 9:18 pm
He said “what we should be doing is…” Biden said that a lot in one way or another, by the way. But Biden isn’t on top of the ticket, he’snot setting policy proposal.To my knowledge, Obama has not said this is something he’s sure he wants to enact. I guess he should have, huh?
Meanwhile, McCain said quite clearly that “I will do this” or words to that effect.There’s a difference. Honestly, who cares whose idea it was? I can guarantee Biden heard someone else say it. It’s not that novel an idea. The part that is novel is that McCain, of the 2 candidates, has explicitly said he’ll do it.
October 7th, 2008 at 10:47 pm
The most glaring difference is Biden’s mention of bankruptcy court. Unless I’m missing a step in the process, it sounds like a homeowner would need to declare bankruptcy to receive reworked terms. McCain seems to insert the gov’t before a homeowner reaches bankruptcy.
Now, the actually mechanics of either plan are mysterious so who knows how this would actually work in practice.
October 8th, 2008 at 12:18 am
[...] Is McCain’s Homeowner Bailout Proposal New? [...]
October 8th, 2008 at 3:06 am
That bit about the government purchasing the defaulted mortgages seems like a difference.
October 8th, 2008 at 8:48 am
None other that Hillary Clinton proposed this last month:
Let’s Keep People In Their Homes
http://online.wsj.com/article/SB122230767702474045.html
As did Dr. Nouriel Roubini
http://www.swamppolitics.com/news/politics/blog/2008/09/bailout_homeowners_first_exper.html
Rep. Rush Holt spoke of being annoyed that this was stripped out of the original bailout package:
http://thinkprogress.org/2008/10/03/holt-holc/
And the Center for American Progress proposed this back in August
http://www.americanprogress.org/pressroom/statements/2007/08/andrew_bush_mortgage.html
So, no, it is not new.
October 8th, 2008 at 8:49 am
Yes you are. McCain proposed $300 billion for purchasing existing mortages, whereas Biden is proposing a renegotiation in Bankruptcy court on the interest rate as well as the mortgage.
October 8th, 2008 at 9:53 am
How about the Hope for Homeowners Act…which was signed into law in July
http://dodd.senate.gov/index.php?q=node/4324
http://www.nydailynews.com/money/2008/07/30/2008-07-30_who_qualifies_for_mortgage_help_and_how_.html
October 8th, 2008 at 2:00 pm
How about we not keep people in homes they couldn’t afford in the first place. That way real estate comes crashing back down to some sort of reasonable level and those people, like myself, that waited and saved rather than jumping in can go out and buy a house this isn’t overpriced?
October 9th, 2008 at 8:37 am
Both the Dems and the Repubs admit that our economy is now based on housing inflation. It’s like trying to create wealth out of nothing. People borrow money that they can’t pay back, so the government steps in and bails them out by either borrowing more money, or stealing from taxpayers and investors.
The economics books I have studied state that a nation’s wealth is based on a combination of productivity and natural resources divided by population. Nowhere do they mention that wealth is based on inflation; quite the contrary.
October 14th, 2008 at 5:10 pm
The major difference is McCain’s plan is to buy from banks at current value - you can see the plan on his website - whereas the Obama proposal says buy from banks at a negotiated discount rate. McCain’s plan means the taxpayers would take the hit and the greedy banks would remain whole. Not ok.
I do not agree that the homeowners should be bailed out at all. Because many of us are fiscally responsible and live within our means we should have to bear the burden when others gamble and lose? The real estate market was artificially inflated when investors and buyers artificially created excess demand. Prices went out of control. Now the market is correcting itself so many buyers find themselves underwater. Sad for them, but great news for me who might finally be able to find something decent at an affordable price. If we bail everyone out, the prices will never come down as much as they would if allowed to correct on their own.
The bailout only covers primary residences so we arent bailing out the investors, but what about those living beyond their means? Not just subprime buyers, but those that bought $1M homes on multiple arms… Example - I make $120k a year. I was pre-approved for $725k. I gasped and asked how - since I was hoping for $400k - 3 loans, interest only plus arms with creative financing. My payment was only $2400 a month! I walked away knowing it was a bad idea with loads of risk. If I’d have gone forward I might be in the same boat as others. I didnt. I rent. Now, my tax dollars are going to bail out irresponsible people and the prices may never fall to the point they should.
I say them lose their home and walk away with no impact on their credit rating. They can rent and start over, lesson learned. Banks can sell the homes for whatever the market determines, thus allowing it to correct itself.