• News
  • Celebrities
  • Finance
  • Crypto
  • Travel
  • Entertainment
  • Health
  • Others

McCain’s Mortgage Giveaway

Incredibly, Republican presidential nominee Sen. John McCain changed his surprise mortgage plan this week to make it even easier on lenders, Politico noted.

After introducing the idea in Tuesday’s debate, a summary of the proposal on McCain’s Website noted that lenders taking part must recognize the losses they’ve already suffered – which led people to believe lenders would be taking a haircut on the loans in return for $300 billion in government money to rewrite them.

Not so.

The MCain folks removed that line, Politico said, and made it clear that lenders will be asked nothing in return for getting taxpayer money to refinance troubled loans.

McCain is selling his plan as a bold and fresh move: The government buys bad mortgages and renegotiates them on lower terms, so people can stay in their houses. But the reviews from economists haven’t been good. The plan, they say, lets the same lenders that made risky loans that helped lead to this crisis totally off the hook. There’s no moral hazard here. Lenders don’t share in the pain.

From Brad DeLong:

The McCain plan is:

  • Take $300 billion.
  • Pay double current market value to banks that have troubled mortgages on their books, thus:

There’s a big difference here: Democrats want to prevent depression and support the financial markets by investing taxpayer money in banks with troubled assets. Republicans want to give taxpayers money away to the shareholders and managers of banks with troubled assets.

As the details of the plan are sinking in, it’s becoming clear that McCain has essentially torpedoed the program the government is now trying to roll out — the one included in the mortgage rescue bill passed this summer, in which the Federal Housing Admin. guarantees mortgages that lenders refinance after taking a loss on the loans.

The program is voluntary. Imagine you’re a lender. You could swallow a 10 or 15 percent loss on your loan and take part in the FHA program, or you could look at McCain’s plan and ask yourself: Why should I? Why not wait to see McCain wins, and then not take any loss? Under his plan, the loss just shifts to the taxpayers.

So just as the program is being put into place this month, and just in the crucial period as the FHA is trying to get it going, the McCain idea comes along.

Sure, the FHA plan wasn’t going to be able to help millions of homeowners — 400,000 or so was the estimate — but it was better than nothing. And it it made clear that since we’re all to blame in this mess, everybody pays. Lenders take a loss. Homeowners have to return any profits from the future sale of their homes to the government.

As Housing Wire reports today, the government is trying to expand the program as best it can to include more homeowners. Now it has yet another obstacle to overcome — the notion for lenders that there might be something better down the pike.

McCain wanted to distinguish himself with this plan. But if he really wanted to be a maverick, he could have chosen another route besides sinking a modest rescue effort already in place — that’s just an insult.

McCain could have done what he talks about so much in his campaign: Stand up to special interests. He could have come to Washington when he suspended his campaign during the bailout negotiations, and he could have faced down the lending industry and said: Enough.

The government now owns or controls $5 trillion worth of mortgages, but it can’t renegotiate many of them because they are sliced and diced into pieces and sold around the globe, and servicers say they can’t force all those investors to agree to modificiations.

Too bad, McCain could have said. He could have taken the radical step of telling servicers they had to modify the loans — after taking a loss on them.

Imagine the tumult that would have followed. The lending industry would be screaming foul. Conservatives would be appalled. McCain would have to rally lawmakers to get on board, and probably, he couldn’t.

But the idea would be put on the table — and a way of breaking a huge logjam that has prevented loan modifications from happening would be in play, thanks to McCain’s leadership. Maybe lawmakers and policymakers would have followed his lead, and thought of ways to encourage lenders to participate, with either sanctions or incentives. He would have done something to help, and, as the crisis worsened, more people might have gotten on board.

On Thursday, as my son’s preschool class walked down the street to the fire station for a field trip, the substitute teacher strolling behind me was talking about the mortgage crisis. Her sister’s loan was underwater and she couldn’t sell her house. The government passed a rescue plan this summer, she said, but did you know that it’s going to take a really long time to rewrite any mortgages?

Well, yes it will. Because it’s increasingly clear to all of us that there’s not a fast or simple way out of this. There’s no magic bullet from the government. There’s no rescue plan that will make a difference right away.

There’s just a lot of pain ahead, and no easy way out. And don’t let McCain, or any other politician, tell you anything different.

Discussion & Comments (0)

    Recent Articles

    • Things You Should Know about North America

      Things You Should Know about North America

      Get to know more about North America.

    • Eurovision 2010 Paula Seling Unpredictable Contest

      Eurovision 2010 Paula Seling Unpredictable Contest

      Paula Seling's experience on the Eurovision stage led her to declare that "Eurovision is an unpredictable contest". Which may explain the success of the young Lena from Germany, about whom the predictions before the event did not offer much chances for victory.

    • VIPRow.me - The Best Sports Streaming Website Today

      VIPRow.me - The Best Sports Streaming Website Today

      Have you ever contemplated creating a user-friendly site dedicated to sports-related free live streaming channels?

    • Learn How To Download, Install, And Use The Xnxubd 2022 Frame App

      Learn How To Download, Install, And Use The Xnxubd 2022 Frame App

      XNXUBD 2022 Nvidia users are able to watch thousands of videos and other contents online. XNXUBD 2022 Nvidia New is a piece of software that enables people to watch videos online without having to pay for memberships. On a graphics card, the XNXubd also provides some of the best gaming and virtual reality experiences.

    • Xvideostudio Video Editor Apk Free Download For Pc Full Version In 2022

      Xvideostudio Video Editor Apk Free Download For Pc Full Version In 2022

      A new edition of the Video Editor Apk for xVideostudio.Video Studio has all the latest features, including support for multiple video download formats in HD, FHD, and even 4K resolutions.

    • 9 Best Lotion For Masturbation - Popular Choice For 2022

      9 Best Lotion For Masturbation - Popular Choice For 2022

      Masturbation is a common activity for men and women. It's a natural and risk-free way to explore your body, experience pleasure, and release sexual tension.

    • Reasons Why You Need To Stop Watching Movies From Sflix

      Reasons Why You Need To Stop Watching Movies From Sflix

      Without having to sign up or pay anything, you can watch movies online for free with SFlix. It has more than 10,000 movies and television shows.

    • Coi Leray Mom And Dad's Family History & Wife, Explained

      Coi Leray Mom And Dad's Family History & Wife, Explained

      Coi Leray Collins (born May 11, 1997) is a rapper from the United States. Leray started publishing songs to SoundCloud in 2014, and in 2018 she released her breakthrough track "Huddy" as well as her first mixtape, Everythingcoz.

    • Listen And Download Music On MyFreeMP3 For Free

      Listen And Download Music On MyFreeMP3 For Free

      Are you in a bind and looking for a place to obtain free mp3 songs? Never again will you need to bother, since this article has everything necessary to obtain your solution. Download free music from MyfreeMP3.com, one of the world's most popular websites.