McCain on Mortgages

I'm sure they'll be either reeling back from this one or "surging" ahead, which as already noted angered some Republicans. From J-Mart:

The McCain camp sends over details on the proposal McCain rolled out at the top of the debate, aimed at keeping Americans in their homes.

"The McCain Resurgence Plan would purchase mortgages directly from homeowners and mortgage servicers, and replace them withmanageable, 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.

The plan reflects the continued demand that both candidates do more to address the economic crisis and, in McCain's case, offers a substanative plan to deal with an issue that has done grave damage to his campaign.

It also provides a measure of distance from the plans being pushed by the GOP president."It is my proposal. It's not Sen. Obama's proposal. It's not President Bush's proposal," McCain said.

There's only one problem -- it wasn't his proposal and in fact such a proposal was part of the Rescue package that passed through the Senate and for which John McCain criticised. From the Act Summary:

EESA requires the Treasury to modify troubled loans – many the result of predatory lending practices – wherever possible to help American families keep their homes. It also directs other federal agencies to modify loans that they own or control. Finally, it improves the HOPE for Homeowners program by expanding eligibility and increasing the tools available to the Department of Housing and Urban Development to help more families keep their homes.

John McCain and House Republicans (especially) lobbied that in lieu of purchasing such mortgages from troubled companies offering banks insurance on potential hazardous assets instead of direct negotiations over mortgages was a more appropriate way to go, if anything at all.

But such a program is not new and certainly isn't McCain's idea as he tried to stress at the debate last night. As Obama pointed out in the first debate Sept. 26 in Oxford, FDR did this during the great depression. From the transcript,

"...[e]ven if we get all $700 billion back, let's assume the markets recover, we' holding assets long enough that eventually taxpayers get it back and that happened during the Great Depression when Roosevelt purchased a whole bunch of homes, over time, home values went back up and in fact government made a profit. If we're lucky and do it right, that could potentially happen but in the short term there's an outlay and we may not see that money for a while."

Many "conservatives" scoffed at such a notion, but the Nation magazine ran an article detailing Roosevelt's efforts on September 13th of this year.

FDR's resulting legislation established the Home Owners' Loan Corporation. The HOLC was authorized to issue new loans to replace the existing liens of homeowners in default. Instead of a short-term, interest-only loan, the HOLC loans would be fully amortizing over 15 years, meaning that when the last payment was made, the borrower owed nothing further to the bank and owned the home free of any debt. HOLC was far more patient with borrowers than the banks could have been, and delinquent loans got individualized attention, including debt counseling, family meetings, and budgeting help.

I should hope that the media will have the gumption to at least point this out - no matter how hard and fast the McCain campaign tries to spin this it's a moot point, it's dead in the water and tell those folks to try again.

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