So what did McHoover mean by this anyway?

[Jersey Devil]

http://www.youtube.com/watch?v=VpfcJUMBTy0

He would have government buy up all the bad mortgages and renegotiate them "at the new value of those homes, at the diminished value of those homes".

Does that mean if someone bought a house for $400,000 with a 5% down $380,000 mortgage (not uncommon)and it's now worth $300,000, he would then reduce the mortgage balance from $380,000 to $300,000, giving a gift to the homeowner of $80,000 paid for by taxpayers?

And the rest of us who have owned our homes for let's say 28 years (like me) and have seen our values go down just as much as those who bought recently with little or nothing down get what? The bill?

Is is forking nuts?

[aasleka]

1. Yes, it is. The guy simply has no good ideas,

[alcibiades_mystery]

2. How about those of us who didn't buy homes because we didn't have 20%

to put down and didn't think it was wise or prudent to get involved in a risky lending scheme of 5% down interest only ARM nonsense? What's our reward for being financially responsible? A slap in the fucking face, and a bill for some reckless asshole's irresponsible mortgage. Thanks!

[Jersey Devil]

3. yes, that too, indeed

I realize the guy is desperate but didn't think until now that he is also insane.

[kick-ass-bob]

4. You got it!

Winner winner chicken dinner!

[Lerkfish]

5. Further, he was responding to a senior about making ends meet NOW, house values

only come into play when they sell or have to move.
although, I must admit, Obama kinda missed the point of the question as well.

[ellacott]

6. His economic advisor, Douglas Holtz-Eakin was on a radio show this morning

Congressman Jesse Jackson Jr. and Roland Martin were also on the program.

Douglas tried to explain this "new" proposal and Jesse Jackson Jr. said it was already part of the bailout package and that there is another bill that was passed that covers this. Eakin went on to say that as President McCain would be able to make sure that this program is carried out. In the end he admitted that it is not a new proposal but something that already exists.

[electron_blue]

7. Yes, you heard right.

Realistically, how likely is this to happen? Imagine the shear volume of paperwork needed to do this, not to mention dealing with the people in flux ( selling their house this year for example). I don't know how you deal with people who basically own their house, which has now fallen in value (like you), but if you wanted a quick and fair way for people to pay less for their houses right now, then you could just make their interest doubly tax deductible. Use the taxes to even things out. People who own their homes outright, or almost, will benefit from stabilizing the housing market.

[Morning Dew]

8. he is nuts.

I wouldn't have a problem with it if those mortgages got switched to 40 years from 30. That would drop the payment and make it more possible for people to stay in their homes.

To do what McCain suggests is crazy.

[Jersey Devil]

9. I'd go along with that too

But giving someone a gift because their house is now "upside down" (equity less than mortgage balance) is just plain crazy.

[TwilightGardener]

11. Right--why not let people who are losing their homes extend payments, or

have a few months of no payments to catch up, or be allowed to have their previous missed payments forgiven, or get them into a fixed rate interest/terms that they can afford--in other words, renegotiate. I am for people being helped, but NOT at my expense just because I was responsible. There's a difference between giving someone a hand and handing them a winning lottery ticket.

[Bluenorthwest]

10. And those of us who have not yet purchased

would have to pay for other people's houses to have an artificial value, and then pay that price when we buy as well. Thanks, but no thanks.

[frogcycle]

12. what COULD be done

The simple fact is that home values have dropped, and there are mortgages that exceed the value of the homes. One of two things can happen. The owner keeps paying, hoping the value will come back, or the mortgageholder gets the house, through foreclosure or just walkaway.

That puts tons of perfectly good houses on "used car lots" with tons of people out of their homes.

Assuming there is not a total meltdown, many of those people may be able to swing a new loan, with the recent rate cuts and all, and buy one of those houses - maybe even the one they were kicked out of - at less than what the bank put up for it originally.

If some entity were to set up a disciplined clearinghouse to facilitate this, perhaps the economy could weather the storm. Ultimately, those who invested in the mortgage-backed securities take the hit - most of the banks sold the mortgages long ago. Well, tough shit. They are in the "risk" business. They are the "high rollers" who bet on tulip prices. They are the ones who should be out of their houses - the 30,000 square foot behemoths they built with their obscene bonuses for presiding over this crap shoot.

Essentially, all those loans for artificially inflated home values were funny money. It goes poof; the economy shrinks; the government does stuff like WPA, CCC, etc. to feed the economy from the bottom up (including a housing program as alluded to above) and we pull through the mess, start a period of real growth instead of ponzi scheme.

The losses on Wall Street only matter to the extent they have clobbered retirement funds (multi-millionaires who lost half their wealth are still wealthy). That is an issue that will need addressing. Some safety net for those most hurt will probably be necessary. Healthcare and Social Security would be a good place to start.

Those of us who had paper wealth from the appreciation in value over a long time and have lost it are hurt, as are those of us who have seen 401k auger in (I am both). But I am still working, still paying the mortgage, still in the house. If the economy can be rebuilt from the bottom up, I expect to recover some of that nest egg.