How will McCain's "Mortgage buy-up" proposal play out?

[FVZA_Colonel]

I was listening to KO and it was mentioned that it was his new attempt to recapture some momentum on the economy. How do you think it will work out?

[maseman]

1. So he is a socialist now?

[Jersey Devil]

10. And how many freeper heads exploded when he said it? (nt)

[Hope08]

2. About as well as his gas holiday

I hope . . .

[speedoo]

3. It was a disaster. RWer's hated it. The dialers all went down.

Your typical stupid move by McCain.

McCain's people are already backtracking on it, per KO.

[FVZA_Colonel]

11. How exactly are they backtracking?

[speedoo]

41. I dunno. It was just reported that they were. nt

[FVZA_Colonel]

42. Oh, I didn't mean to suggest they weren't (they'll have to, sooner or later.)

I just wondered what the specifics were. But I can understand the McCain campaigns desire to keep those sorts of things a secret, given the pronouncement they made.

[Engineer4Obama]

4. Hows that spending freeze working out for ya McCain? n/t

[oviedodem]

5. Republicans nosedived on that one; independents a little high

Repugs will freak out hearing that one.

[FVZA_Colonel]

7. "independents a little high"

That's almost something that worries me, but if it really upsets the base he probably won't be able to keep with it for long.

[ErinBerin84]

6. yeah, Andrea said that the McCain camp is "very proud" of this new proposal.

Good one, McCain.

:rofl:

[bullwinkle428]

8. "I'm the maverickiest maverick that ever mavericked, my friends!"

[FVZA_Colonel]

15. I guess he suddenly loves big government again.

[electron_blue]

62. M's starting to resemble a Dr. Seuss book now.

[Jersey Devil]

9. $300 billion to buy up mortgages - I want an application!

http://apnews.myway.com/article/20081008/D93M1JEG1.html

McCain would buy bad homeowner mortgages
Email this Story

Oct 7, 10:20 PM (ET)

WASHINGTON (AP) - Republican presidential candidate John McCain is proposing a $300 billion program for the federal government to buy up bad home mortgages and allow homeowners to keep their houses.

McCain said: "Until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy and we've got to get some trust and confidence back to America."

In an unusual step, McCain announced the plan during Tuesday's debate. He said that as president he would direct the federal government to purchase mortgages directly from homeowners and mortgage providers. The loans would be replaced with fixed-rate mortgages, ostensibly at a loss to the government.

"Is it expensive? Yes," McCain said.

[FVZA_Colonel]

22. It certainly sounds good,

but after the last $700 billion dollar bail-out (or was it $850?), not to mention something like this being forced out of the initial bail-out proposal, I don't know how well it'll play over.

[central scrutinizer]

12. It's insane

Let's see - I am paying my mortgage on time even though my house has lost some of its value but I know that over time, the value will go back up. But then I hear about the government buying up mortgages so I immediately stop paying and get in line at the trough. Being responsible means you are a chump, but if you were a speculator flipping a house every month, you come out smelling like a rose, laughing all the way to the bank.

[Mojorabbit]

16. I think it is a great idea

but I have no idea how they would make it work. No matter who gets in office it will have to be done. Till the foreclosure problem is addressed our economy will continue to tank. I think of that poor 90 year old woman who shot herself during foreclosure. Something needs to be done.

[WinkyDink]

58. Oh? And who decides "the real value" of those homes?! It's RIDICULOUS, not to mention TOTALLY UNFAIR

to those who PAID their mortgages.

[Mojorabbit]

68. That is the same attitude

many had during the depression, till it cascaded and more and more people lost everything. For the people who were well off the attitude remained. I tend to think more of those who are losing everything than my own personal situation. Criteria could be put in place to help people stay in their homes. I don't begrudge those who are in a crisis situation some help. I can afford my mortgage thank goodness.
It is the attitude of how dare someone get something I am not which is pretty creepy to me

[On the Road]

13. The Government's Already Buying Mortgages

but the homeowners still have to make the monthly payment. How is McCain's proposal meant to keep people in their homes?

And how is it suppossed to stabilize housing prices if the value is renegotiated down 10%?

[FVZA_Colonel]

14. Given that this was designed, at least in part, by a "top Republican economist"

per KO, I doubt it'll really help out the average citizen.

[RagAss]

17. It will fade like a bad fart !

[zulchzulu]

18. McPenguin either has no concept of banking or he is a closet uber-socialist

An ad is probably being made this second.

[FVZA_Colonel]

19. Suggesting something like this will certainly look like "socialism" to his hard-core supporters.

He's gonna have to do a bit of backtracking.

[karynnj]

20. The Senate Finance committee put money to do this into their Stimulus package

but the Republicans filibustered it - The Senate Finance committee passed it with 20 votes (There are 21 Senators on the committee. That alternative stimulus package was filibustered by the Republicans. (That was a Kerry/Smith provision). It was then added to the recent banking bill that passed a few months ago. (Frank put it in the parallel House bill.)

[FVZA_Colonel]

21. I wonder how McCain will explain that one.

He'll probably just ignore it.

[karynnj]

66. I was shocked that not one of the "talking heads" seemed to know this

It was covered in the passing of the recent banking bill, but was given very little attention. (To be fair, I knew it because I regularly read Kerry's press releases on his web site - and the JK group posted the scanty MA coverage of it. (Given that both Kerry and Frank played major roles on that bill, the coverage was not what it should have been.)

[City of Mills]

23. Little pink houses, for you and me

We don't get to live there, but we get to pay for them.

[truthisfreedom]

24. Where do they draw the line? How do they decide who has the least possible equity in their home?

Who gets to choose?

It's insane. It's an insane idea that REEKS of desperation.

[PBS Poll-435]

25. It'll be gone by Friday.

:shrug:

[Overseas]

26. It seemed like a desperate after thought.

Like, what was the bailout supposed to do?
So, since you agreed to bail out Wall Street, now you're turning back to try to help Main Street?

Obama seemed to have a systematic plan, noting that the rescue was just a beginning, and that enforcement of oversight would be required as we moved forward with fixing our economy.

[unblock]

27. it won't happen in any meaningful way

mclame's proposal apparently is for government to buy mortages at full value and then forgive principal down to market price of a house and reamortize the payments.

in other words, he wants the banks to get out whole and the government to take the entire write-down. this is of dubious merit because if prices are still declining, this is not necessarily going to help. the vast majority of help would likely go to people who were not going to default anyway. this would provide some relief for some homeowners.

from an economic perspective, this would at best be ineffective and at worst it creates moral hazard. most likely, banks would take the money but not resume lending. so we'd still have a credit freeze.

basically, it's closing the barn door after the horse has left.

for this to have a meaningful effect, they'd have to spend an ENORMOUS amount of money on this. this is a very small bank for very big bucks plan.

[FVZA_Colonel]

28. "they'd have to spend an ENORMOUS amount of money on this"

I doubt $300 billion would be enough, given how extensive the problem really is.

[unblock]

43. exactly. drop in the ocean.

[endthewar]

29. Republicans will hate it and McCain will retract it quietly.

His campaign will try to pretend that it never happened.

[FVZA_Colonel]

30. My only fear is that they'll try to stubbornly stick by this, and it might attract people.

I doubt it will have that positive of an effect, but that's a fear (which I am consciously aware is stupid) I have right now.

[endthewar]

31. It won't have much political support

McCain suggested a freeze on government spending. A homeowner mortgage bailout would probably run around $300 billion.

[FVZA_Colonel]

36. At least 300 billion.

That's what McCain said, but it will probably be much more.

[endthewar]

37. My interpretation

was to use $300 billion to buy up some of the troubled mortgages. Sounds like the hope would be to buy up enough of them that the mortgage crisis would be much smaller, not necessarily buy up EVERY troubled mortgage.

[FVZA_Colonel]

38. How do they decide which ones to buy up?

On Edit: (I don't mean to sound snarky, I'm just curious how they could decide some people get help and some don't.)

[endthewar]

39. The same way Paulson decides which banks to bailout

Either way, some bad decisions would be made.

[endthewar]

40. Hehe. No offense taken.

:hug:

If McCain's camp sticks with this proposal (which I promise that they won't) they should probably propose something similar to the bailout that just passed. Have oversight of an appointee in charge of the homeowner bailout. It just smells like a bad idea though. The American people won't buy explanations about bailing out some people and not bailing out others. Too many or too few minorities bailed out? Too many rich people bailed out who might have been speculating? This idea was the ultimate Hail Mary.

[Kool Kitty]

45. Now, now-you know what a MAVERICK he is.

He'll just use this in the next debate, my friends, to show how he goes against his own party. :rofl:

[endthewar]

52. If McCain was smart politically, he would have opposed the bailout

It was unpopular when it passed and it's even more unpopular now. The best political message would be to blast the bailout and just point to the markets to say that the bailout didn't work. Misleading? Yes, but that message would resonate with many voters. Instead McCain has proposed another huge bailout. His advisors need to tell him that most voters aren't happy with the bailout.

[IndianaJones]

32. right wingers on a non-political board I post on are pissed about it. nt.

[krkaufman]

33. I have the debate playing right now, and that line just played.

What I found startling is that McCain is trying to claim that as "his proposal" -- literally stating that "It's my proposal. It's not President Bush's proposal. It's not Sen. Obama's proposal."

Actually, this has been proposed previously, and I think Obama's mentioned it -- though Obama didn't want the bailout package delayed by trying to get it included in the bailout legislation. Which makes me wonder... is McCain's next tactic to blame Obama for the mortgage re-negotiation not being included in the bailout?

[FVZA_Colonel]

35. I wouldn't be surprised.

But it was a Democratic proposal that got stripped to make the bill appeal to Republicans.

[Johonny]

34. it won't

McCain's plans don't have any there, there. No doubt it's a plan that fits on a piece of paper and has no actual plan to work with.

[vaberella]

44. First it's socialist. Second, it's buying shit debt which was supposed to be covered by

the "bailout". It's a weird statement to consider it a new plan.

[TwilightGardener]

46. Thumbs down--why not give the 700 billion bailout a chance to work before

suggesting a new way to spend our money?

[RoadRage]

47. I HATE this idea..

I posted this in a different thread.. and got creamed for it.. but I don't care. I don't agree with this plan. As a taxpayer I really don't want to pay the mortgage for a guy who bought a nicer house then mine and couldn't afford it. Now he gets to stay in the "nicer" house, but gets his mortgage lower to be about what mine is? Fantastic.. I get screwed twice... I continue to live in the "house I could afford", and my tax dollars go to the guy across town in the nicer house to help him pay his mortgage. Sorry.. that's not something I agree with. Anyway - my post from the other thread.. flame away... call me a freeper (whatever). :eyes:



I BOUGHT A HOUSE I COULD AFFORD. I GOT A MORTGAGE THAT WAS NOT GOING TO GO UP IN 3 YEARS.

I DID THE RIGHT FUCKING THING!!!! No, I do NOT think that the government should help the guy who wanted the $500,000 house, but could only afford the $100,000 house - but bought the $500,000 house anyway.

You know what.. banks are sitting with hundreds of thousands of empty houses right now. Do this. Say, hey - you can't afford your $500,000 mortgage.. but we want to help you out. We're sitting on an empty $100,000 house.. you can afford that. We are going to forclose on your $500,000 house (and try to sell that to a guy who can really afford it) but we're going to allow you to move into the $100,000 house that you can afford.

Home owner isn't bankrupt.. he's in a smaller / less nice house - but it's one he can AFFORD
Bank has one less house it has to try and sell.

GOVERNMENT ISN'T FUCKING INVOLVED.

Problem Solved.

[TwilightGardener]

49. Agree--If they're going to reduce the mortgages for people who bought

more than they could afford, at the height of the housing bubble when values were overinflated, then are they going to reduce MY mortgage, for my affordable old fixer-upper that INCREASED in value because of all the work we did on it? Hell no--I get nothing. Guess I should've gambled on a McMansion.

[RoadRage]

51. THANK YOU...

I'm glad i'm not the only greedy heartless dem out there who doesn't like to reward everyone who was greedy.. tried to buy more then they could afford, and now wants the government to keep them living the nice lifestyle... while I stay in my modest house that I can afford. :)

[Bluebear]

53. Sorry, this is not just about people who "tried to buy more then (sic) they can afford"

Look at California and Illinois v/ Countrywide to see how those predators tried to convince people that they COULD afford their homes.

[endthewar]

55. But how would you implement this homeowner bailout fairly?

I think that's the biggest issue here. There's a complete spectrum here. It's hard to say where the line should be drawn between people to help and people not to help.

[WinkyDink]

59. You think the McCain Bogus Plan is to help POOR schnooks?? Bwahahaha!

[sandnsea]

54. It'll create a downward housing spiral

You'll want to renegotiate your mortgage eventually, if the value of everybody else's house goes down.

I don't know what is going to happen here. All housing is too high.

[RoadRage]

61. Exactly.. it's a housing death spiral..

Everyone in my neighborhood currently has a house worth $300,000. But, since it's a newer neighborhood - 75% still owe mortgates. Let's say 10% of those homeowners can't afford their mortgages, so they get help from the US Government. Now, since 2004 when most of these houses were built, the housing market has gone down everywhere. Those $300,000 houses are now only worth $250,000. The government writes off the difference on 10% of the homes in my neighborhood.. so their values are now listed as being worth less.

So, now 10% more have lost their jobs, etc... and can't afford their homes anymore. The market continues to soften, so now the $300,000 house is only worth $225,00. The next 10% get an even bigger write off to get down to the amount they owe.

And the spiral continues.. and continues.

And the people who get screwed the MOST? The ones who continue to pay their mortgates.. or the ones who worked hard and actually got them paid off entirely. They get no financial help from the government - but continue to see their home values dwindle.

I don't know what the correct answer is.. but sometimes you have to let the market adjust itself. We can't throw money at every problem every time.

[Waiting For Everyman]

64. The amount of the mortgage is not the same as the sale value.

The mortgage amount has nothing to do with it.

[RoadRage]

65. I know that.. i was using a very generic example with easy numbers

You buy a $300,000 house - put 5% down. You owe $285,000. You've been living in it for 4 years and have paid it down to perhaps $270,000. So now the bailout would be $30,000 instead of $50,000.

My point is still the same. I was using fuzzy generic math. It's not the numbers.. those will change from family to family. It's the whole point that I was trying to get at.

[Higher Standard]

60. Agreed. We're to be punished for doing the right thing, apparently.

He'll renogotiate for people who chose risky mortgages to buy homes they couldn't really afford, but those who did things right, got safe mortgages on homes they could afford within their incomes, hey, you don't need anything. It's pandering, pure and simple, much like his gas tax holiday.

[Median Democrat]

48. Or, As Obama Proposed, Why Not Just Allow Bankruptcy Courts To Modify Mortgage Loans ...

Which accomplishes the same result. If the GOP is opposed to this, what makes McCain think that the GOP won't filibuster a much more expensive proposal that is duplicative of the $700 billion bailout.

[IndependentDem]

50. Obama brought this up weeks ago...

From AP: http://ap.google.com/article/ALeqM5hfHkP_o1JurPm5e9mEZEFMFKaJwgD93M3EK00

-snip-
In fact, at a news conference on Sept. 24, Obama said, "we should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage-backed securities."

Days later, in a news release, he said he would "encourage Treasury to study the option of buying individual mortgages like we did successfully in the 1930s."
-snip-

[anigbrowl]

56. It's brilliant - guaranteed to succeed

Isn't it?

[WinkyDink]

57. It's ASININE, not to mention a BLATANT LYING PLOY. AS IF McCain MEANS this! LOL!

Hey, I can't afford a POOL, either! Maybe I should take out a loan I can't repay to put one in!

[oviedodem]

63. Firstly he would NEVER do this if elected, second IT IS A STUPID IDEA, third the RW hates it

We already spent $850B, we can't afford another $300B. How you would identify the ones that SHOULD be helped is beyond me b/c many speculators are in this pickle because of their greed.

[Blue Meany]

67. He'll need a magic wand to lower taxes, balance the

budget and buy up the mortagages, even if he does use the Social Security Trust Fund to help pay for it.

[TexasObserver]

69. It won't be well received, and here's why:

1. The 95% of homeowners who are not in arrears do not want to bail out entirely those who are on the hook for this inflated debt. They will see it as another $300 billion down the tubes.

2. Those persons who are informed know that McCain's idea is included within the already passed bailout.

3. How do you pick which loans qualify, which loans get bought and then renegotiated with the homeowners?

4. It's probably not going to be workable, and if so, certainly not something that can be figured out in the near term.

5. It will piss off two key components of his voters: older voters will hate it, because they will not benefit, and GOP fiscal conservatives will hate it because its a "give away."