John McCain's Plan To Combat The Housing Crisis
By Pejman Yousefzadeh Posted in Economy | John McCain | The Housing Crisis — Comments (11) / Email this page » / Leave a comment »
It is certainly more responsible than anything that the Clinton and Obama campaigns have put forward. Highlights:
_Unlike the Democrats, McCain would have individual borrowers apply to have their mortgages refinanced. Democrats would have the mortgage-holders apply for refinancing, which [economic adviser Douglas ] Holtz-Eakin said could leave taxpayers on the hook for risky loans that lenders want to unload.
_And unlike Bush, McCain would let people have more equity in their homes; Bush would allow as little as 3 percent, while McCain would allow 10 percent, Holtz-Eakin said.
_McCain's plan would benefit the government as well as the original lender by giving them certificates for part of the loan's original value. If the homeowner sold for more, he or she would benefit along with the government and the original lender.
"It is built on the reality that homeowners should have an equity capital stake in their home," he said. "Homeowners would end up with a 30-year mortgage and an equity stake in their home. The new lender would receive a federal guarantee of the mortgage.
"And the taxpayer gets a benefit if the sale value ever recovers," he said.
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John McCain's Plan To Combat The Housing Crisis 11 Comments (0 topical, 11 editorial, 0 hidden) Post a comment »
The devil here will appear in the details. This could be a reasonable approach to things if the "application rules" are designed to approve those homeowners who may have been taken advantage of to some extent, misled, or otherwise put in a bad position not entirely based on their own folly.
If we expand the program so that foolish people who chose to gamble with interest-only loans on property they put no money into, then we are rewarding bad behavior that should be punished.
There are plenty of people out there who could use some help, who probably are deserving of assistance, and a plan that requires the homeowner to apply for assistance is probably the best way to find those people. But we need to make sure that the rules by which those applications are reviewed do not lead to the same end result as the Democratic proposals that amount to a huge taxpayer-funded bonanza for financially irresponsible borrowers and lenders.
McCain's plan would benefit the government as well as the original lender by giving them certificates for part of the loan's original value. If the homeowner sold for more, he or she would benefit along with the government and the original lender
Why wouldn't the housing rebate eventually devaluate the worth of their homes?
this plan is no better than his rivals. McCain showed political courage and economic sense when he initially said no one would be bailed out and that the market would need to fix the excesses.
Bailing out the so called deserving sounds great, however that is vague and undefined. Anyone can be deserving and so the practical effect is that we will bail out those with the biggest sob story. If you are late on your mortgage there is almost no reason why you are deserving of a bailout. If you have been defrauded there are already mechanisms for relief. Everyone else took on more risk than they should have and they don't deserve a bailout.
Was it over when the Germans bombed Pearl Harbor
unfortunately, just saying you disagree isn't enough. You need to explain why. What exactly do you disagree with and why?
Was it over when the Germans bombed Pearl Harbor
Individuals who were defrauded should compensated by those who defrauded them and only as the last possible option by the government (i.e. you and me via our tax dollars). Furthermore, those who defrauded them should be punished appropriately as violators of the law.
However, the VAST MAJORITY of homeowners who suffered loses due to the mortgage "crisis" should not be bailed out. They were NOT defrauded in any way. They simply made the bad decision to take on more risk than they were able to handle and should not be compensated or remunerated at the taxpayers expense.
If I think I developed the perfect blackjack system and decide to go to Las Vegas and gamble away my mortgage in the hopes of winning enough to retire on but instead I lose everything; should the government cover my loses?
John McCain is follwing the donks on this and it is not a good trail, neither politically nor economically, to follow.
there are already mechanisms in place for them to find relief. They can sue and the maximum benefit is a total elimination of their debt. Thus, if someone was defrauded, McCain needs to do nothing new.
On everything else we agree and I am a bit disappointed that McCain didn't show the kind of political courage he normally shows on such matters.
Was it over when the Germans bombed Pearl Harbor
My "last resort comment applies only to situation where the defrauding party is no longer in existance.
The American Taxpayer is already on the hook whether we like it or not.
1. Collapsing banks will cost the FDIC & the USA Govt.
2. Dropping real-estate prices will cost local taxpayers more when local and state govt's raise taxes.
3. Harder to obtain credit means you will pay more for your loans thru higher interest rates and bigger down payments.
4. Loss of hundreds of thousands jobs means higher unemployment & more welfare payments from tax dollar accounts.
This is a tragic mistake for him, the Republicans and the Country. This diary is a silly apologia that doesn't hold water.
McCain was taking a reasonable stand that the artificially high bubble prices must come down. He now would put the American Taxpayer on the line to keep the prices so high that working people could never afford them.
That his plan may be not as bad as the Dems could be true, but it is pretty trivial stuff.
And what does it say about his character, and conviction, if he changes his mind without any explanation other than he doesn't have the courage of his convictions.
This is really bad news.
is that the vast majority of Americans are against a Democratic type of bailout and McCain's plan is far short of what the Dems are offering. McCain should really nail this point home all the time about how Obama wants to use your tax money to bail out thos irresponsible borrowers.