McCain changes homeowner plan

Mike Allen Thu Oct 9, 12:29 AM ET

Sen. John McCain (R-Ariz.) made an overnight change in the homeowner bailout he proposed at Tuesday’s presidential debate, making it more generous to financial institutions and more costly for taxpayers.

McCain's staff says it was always meant that way.

When McCain sprang his surprise idea at the start of the debate in Nashville, his campaign posted details online of his American Homeownership Resurgence Plan, which would direct the government to buy up bad home mortgages, allowing strapped people to keep their property.

The document posted and e-mailed by the McCain campaign on Tuesday night says at the end of its first full paragraph: “Lenders in these cases must recognize the loss that they’ve already suffered.”

So the government would buy the mortgages at a discounted rate, reflecting the declining value of the mortgage paper.

But when McCain reissued the document on Wednesday, that sentence was missing, to the dismay of many conservatives.

That would mean the U.S. would pay face value for the troubled documents, which was the main reason Sen. Barack Obama (D-Ill.) gave for opposing the plan.

A McCain campaign official explained the change: “That language was mistakenly included in the initial draft, and it’s been corrected. It doesn’t reflect the intentions of the initiative, which necessitated the correction and the removal of the sentence. A simple mistake.”

Obama Campaign Economic Policy Director Jason Furman said in the campaign statement opposing McCain's plan: "John McCain wants the government to massively overpay for mortgages in a plan that would guarantee taxpayers lose money and put them at risk of losing even more if home values don’t recover. The biggest beneficiaries of this plan will be the same financial institutions that got us into this mess, some of whom even committed fraud."

The McCain campaign estimates in both documents that the plan would cost about $300 billion.





More money for the taxpayers. Heavy sigh.

HUH! who'da thunk it

yeah but her "executive" experience was gonna make it all right.

It doesn't surprise me that he'd do this. It's just a peek inside the way he'll run the country.

Scary, isn't it?

The government MAY by the bad mortgages.

But if you have bad credit, which a lot of people do in this economy, rest assured you will not be keeping your home.

This is what Lendingtree.com has to say on this matter.

U.S. government may buy mortgages
By Marcie Geffner - LendingTree.com

Top officials in the federal government have been working on a new plan to strengthen the country’s financial system.

The bailout plan would allow the U.S. government to buy mortgage-backed securities and other assets from banks and financial institutions. The U.S. Treasury would then be able to sell those assets or keep them as investments. The goal of the plan is to protect the nation’s economy.

Treasury Secretary Henry M. Paulson, Federal Reserve Chairman Ben Bernanke and members of Congress have been working on the plan this week. The plan needs approval from Congress and the President’s signature to go forward.

The plan would be cheaper than other alternatives and would "fundamentally and comprehensively" address the root causes of the stress in the financial system, Paulson explained in a statement.

“When the financial system works as it should, money and capital flow to and from households and businesses to pay for home loans, school loans and investments that create jobs,” he said.

What the plan means for borrowers
The plan isn’t designed to bolster home prices or help homeowners who can’t afford their mortgage payments. Rather, it’s intended to unfreeze the financial sector, which could indirectly strengthen the housing markets over time. If that happened, homeowners would benefit.

The plan also could affect interest rates that borrowers pay on mortgages and other consumer loans, but right now it’s difficult to predict what the effect on interest rates will be. The government’s purchases of mortgages and other financial assets might make interest rates lower. But the government will need to borrow a lot of money to put the plan into effect, and that could push interest rates higher.

Given that uncertainty, borrowers should focus on their own personal financial situation.

http://www.lendingtree.com/smartborrower/Mortgage-News/US-government-may-buy-mortgages.aspx

This is a BAD plan, and will no doubt make things worse.
They need to lower people's payments so they can keep their homes. Actually give everyone a break and not just the privileged few.

Wow. This sure is a nightmare.