McCain's mortgage bailout plan

[Gan]

Here are details of the plan Sen. John McCain (R-Ariz.) announced during Tuesday night's presidential debate "to keep families in their homes, avoid foreclosures, save failing neighborhoods, stabilize the housing market and attack the roots of our financial crisis":

AMERICAN HOMEOWNERSHIP RESURGENCE PLAN

John McCain will direct his Treasury secretary to implement an American Homeownership Resurgence Plan (McCain Resurgence Plan) to keep families in their homes, avoid foreclosures, save failing neighborhoods, stabilize the housing market and attack the roots of our financial crisis. America’s families are bearing a heavy burden from falling housing prices, mortgage delinquencies, foreclosures and a weak economy. It is important that those families who have worked hard enough to finance homeownership not have that dream crushed under the weight of the wrong mortgage. The existing debts are too large compared to the value of housing. For those that cannot make payments, mortgages must be restructured to put losses on the books and put homeowners in manageable mortgages. Lenders in these cases must recognize the loss that they’ve already suffered.

The McCain Resurgence Plan would purchase mortgages directly from homeowners and mortgage servicers, and replace them with manageable, fixed-rate mortgages that will keep families in their homes. 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.

The McCain Resurgence Plan would be available to mortgage holders that:

• live in the home (primary residence only).
• can prove their creditworthiness at the time of the original loan (no falsifications and provided a down payment).

The new mortgage would be an FHA-guaranteed fixed-rate mortgage at terms manageable for the homeowner. The direct cost of this plan would be roughly $300 billion, because the purchase of mortgages would relieve homeowners of “negative equity” in some homes. Funds provided by Congress in recent financial market stabilization bill can be used for this purpose; indeed, by stabilizing mortgages, it will likely be possible to avoid some purposes previously assumed needed in that bill.

The plan could be implemented quickly as a result of the authorities provided in the stabilization bill, the recent housing bill, and the U.S. government's conservatorship of Fannie Mae and Freddie Mac. It may be necessary for Congress to raise the overall borrowing limit.

http://www.politico.com/news/stories/1008/14377.html
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I need to think about this before rendering a vote. On the surface it sounds workable but I'm still not comfortable bailing out stupidity, unless said stupidity in turn tanks others who get caught in the side effects.

[Clove]

I need to think about this before rendering a vote. On the surface it sounds workable but I'm still not comfortable bailing out stupidity, unless said stupidity in turn tanks others who get caught in the side effects.Well this sounded in line with what Biden briefly mentioned in the VP debate; I didn't like it from him and I don't like it from McCain. I don't like McCain's healthcare proposal any better than Obama's. Frankly I wish I had a third (better) option between the two.

[Parkbandit]

I haven't read the 850 BILLION dollar bailout bill, but Biden is stating that this is in the bill... which would make McCain's "This isn't Obama's idea, this isn't Bush's idea.. this is my idea" seem relatively stupid.

[crazymage]

Yeah if it is infact in the Bill that's already passed.. he's going to take some heavy heat for trying to use it as his 'own' idea.

[Clove]

Yeah if it is infact in the Bill that's already passed.. he's going to take some heavy heat for trying to use it as his 'own' idea.Especially if it actually is his own idea. I hate it.

[Mighty Nikkisaurus]

It's not a bailout, it's a "rescue".

[Soulpieced]

This is without a doubt the worst possible "response" to the "housing crisis" that could be proposed.

Basically, you are bailing out people who have essentially "rented" their homes since the beginning of their ownership. So they lose their home, big fucking deal, they were renting just like the rest of us. It's not their God-given right to say I own this house even though they haven't paid any principal, nor built any equity into it. I understand that "predatory lenders" got them into their homes with things like ARMs or Interest Only mortgages, but the bottom line is THEY DON'T OWN ANY FUCKING EQUITY IN THE HOME, SO THEY NEVER OWNED IT IN THE FIRST PLACE. Why the hell should these people get bailed out when you have plenty of credit worthy people with money sitting around to jump into those homes when their value drops back down to levels that are more in-line with historical home values prior to the explosion.

Bottom line, this proposal is outright fucking ridiculous, and will artificially inflate/maintain the housing market prices at the current levels. Oh, and guess what. If the homeowner gets "bailed out" into a fixed rate loan (that they probably can't afford anyway), what happens when the house CONTINUES to lose value. The family even then won't be able to sell the place because once again, there is a possibility their mortgage will ONCE AGAIN go underwater. What a disaster.

To add something constructive to my post, the real response should be to "forgive" defaults and bankruptcy pertaining to foreclosures by erasing them from the [former] homeowner's credit score. Basically eliminate any history that the person ever bought the house, and any negatives that would come with them defaulting on the loan. Allow the lenders to buy back the homes and sell them for whatever the going rate, and pretend like [deadbeat non-paying] homeowner's transaction never happened. That way, their future isn't ruined in the form of credit score, and people who SHOULD be in the home who have sat on the side saving diligently and building their own credit can have their chance at homeownership.

End rant, pardon my French.

[Audriana]

They were stupid enough to think they could afford the house, let them get foreclosed on and fuck up their credit. Fuck em. This feeling of entitlement because some bank 'tricked' them into a mortgage they can't afford is just bullshit.

If you're dumb enough to not know how to estimate, add and subtract, then you deserve to have that black mark on your credit and you deserve to get your house taken from you.

[Parkbandit]

I wouldn't be surprised if this WAS McCain's idea from the get go. Just another example of why he's never earned my vote.

[Parkbandit]

This is without a doubt the worst possible "response" to the "housing crisis" that could be proposed.

Basically, you are bailing out people who have essentially "rented" their homes since the beginning of their ownership. So they lose their home, big fucking deal, they were renting just like the rest of us. It's not their God-given right to say I own this house even though they haven't paid any principal, nor built any equity into it. I understand that "predatory lenders" got them into their homes with things like ARMs or Interest Only mortgages, but the bottom line is THEY DON'T OWN ANY FUCKING EQUITY IN THE HOME, SO THEY NEVER OWNED IT IN THE FIRST PLACE. Why the hell should these people get bailed out when you have plenty of credit worthy people with money sitting around to jump into those homes when their value drops back down to levels that are more in-line with historical home values prior to the explosion.

Bottom line, this proposal is outright fucking ridiculous, and will artificially inflate/maintain the housing market prices at the current levels. Oh, and guess what. If the homeowner gets "bailed out" into a fixed rate loan (that they probably can't afford anyway), what happens when the house CONTINUES to lose value. The family even then won't be able to sell the place because once again, there is a possibility their mortgage will ONCE AGAIN go underwater. What a disaster.

To add something constructive to my post, the real response should be to "forgive" defaults and bankruptcy pertaining to foreclosures by erasing them from the [former] homeowner's credit score. Basically eliminate any history that the person ever bought the house, and any negatives that would come with them defaulting on the loan. Allow the lenders to buy back the homes and sell them for whatever the going rate, and pretend like [deadbeat non-paying] homeowner's transaction never happened. That way, their future isn't ruined in the form of credit score, and people who SHOULD be in the home who have sat on the side saving diligently and building their own credit can have their chance at homeownership.

End rant, pardon my French.

I agree with most of your post.. except the "constructive" part. Why are we simply forgiving people for being stupid? Granted, there are examples of people getting bad breaks in life and being forced to declare bankruptcy.. but that has happened for years and years and years. Why is this any different than what happened 10-20-30 years ago?

[wood1559]

$300 billion on top of the $850 billion "rescue"? that's effin crazy.

[Soulpieced]

Because someone needs to propose a "politically acceptable" response, and though I completely agree with Audriana, that's not the response that the American public can handle.

[Audriana]

Everybody's a fucking victim.

I've worked hard for every nickle I've earned. I drive a 13 year old car every day because I've done the math and just am not pleased with my funds should I purchase a new car.

I go without things daily because I know I can't afford them. I've watched my friends and family buy houses they couldn't afford and be foreclosed on because they were too stupid. I know 5 people that have been foreclosed on (one being my parents). Not a single one of them deserves a bailout. They fucked up, they made a bad decision.

Do I get a house too because I made a good decision to not buy a house when I couldn't afford it? no... fuck you, Audriana, you've been responsible with your money, and haven't been in debt for one day in your life... You can fuck off.

[Gan]

They were stupid enough to think they could afford the house, let them get foreclosed on and fuck up their credit. Fuck em. This feeling of entitlement because some bank 'tricked' them into a mortgage they can't afford is just bullshit.

If you're dumb enough to not know how to estimate, add and subtract, then you deserve to have that black mark on your credit and you deserve to get your house taken from you.


Everybody's a fucking victim.

I've worked hard for every nickle I've earned. I drive a 13 year old car every day because I've done the math and just am not pleased with my funds should I purchase a new car.

I go without things daily because I know I can't afford them. I've watched my friends and family buy houses they couldn't afford and be foreclosed on because they were too stupid. I know 5 people that have been foreclosed on (one being my parents). Not a single one of them deserves a bailout. They fucked up, they made a bad decision.

Do I get a house too because I made a good decision to not buy a house when I couldn't afford it? no... fuck you, Audriana, you've been responsible with your money, and haven't been in debt for one day in your life... You can fuck off.

Thats :love: talk right there.

AMEN SISTAH!

The only downside that any politician who proposes this can pretty much sink any chance in hell to get elected. The pander level of your position is a negative 1,000. That indeed makes me sad about the state of our politics today.

[Gan]

Speaking of the bailout plan...

http://entertainment.msn.com/video/playern/?pid=iutJnSN1631YX75T7vwmYQIGnw7NTpkH&GT1=BUZZ3 (http://entertainment.msn.com/video/playern/?pid=iutJnSN1631YX75T7vwmYQIGnw7NTpkH&GT1=BUZZ3)


The SNL skit of it.

[Mighty Nikkisaurus]

Everybody's a fucking victim.

I've worked hard for every nickle I've earned. I drive a 13 year old car every day because I've done the math and just am not pleased with my funds should I purchase a new car.

I go without things daily because I know I can't afford them. I've watched my friends and family buy houses they couldn't afford and be foreclosed on because they were too stupid. I know 5 people that have been foreclosed on (one being my parents). Not a single one of them deserves a bailout. They fucked up, they made a bad decision.

Do I get a house too because I made a good decision to not buy a house when I couldn't afford it? no... fuck you, Audriana, you've been responsible with your money, and haven't been in debt for one day in your life... You can fuck off.

That pretty much sums up my views on it.

[crb]

The edited SNL skit?

Anyways... I hate bailing out stupid people, but what McCain said in the debate is right, the root cause is the decline in home prices. Unfortunately it is dragging everything else with it. Too many stupid people made too many irresponsible decisions abetted by a greedy wall street and stupid political posturing in washington.

So, I could support this... if... if...

1. The government gets all capital appreciation in the home if it is sold at a later date. If you want the government to buy your loan and write down your principle then you need to give up any future gains from home appreciation. We'll keep you in your home, but not allow you to use it as an investment. Any removal of fixtures from the home (defined as anything part of the structure and or attached to the structure (nailed down)) would be a felony.

2. Fuck fannie, fuck freddie, fuck social engineering, and fuck subprime loans. Split those giant fucking wasteful mortgage companies up in 10 or 12 units, and resell them to the private sector. Get the government out of the mortage business permanently.

3. Reform regulation. I don't mean cajole or encourage banks through HUD or various other programs to loan to people who should not own a home. I mean lay down ironclad rules as to new loans and requirements for buyers. No more subsidized loans for subprime borrowers. No more loans without proof of income. No more interest only loans (fucking dumb idea). No more loans where the monthly payment would exceed say 40% of takehome pay.

We have things like "Truth In Lending" to protect buyers from banks, we need "Truth in Borrowing" to protect banks from buyers (and their own overzealous bonus seeking employees).

4. Do not allow mixed mortgages to be securitized together. Group them by credit scores and payment percent of income.


Do all those things, and I can hold my nose and accept bailing out idiots while simultaneously wishing I had bought a bigger house and had been irresponsible on it, or atleast had refinanced for the full value or something.

Also, FWIW.

The bailout bill does, in broad strokes, give the Treasury the authority to do this plan. It does not, however, order them or go into such specifics.

[Dwarven Empath]

This sucks.

Why, oh why does anyone have to bail out stupid mother fuckers.

Just let them fail.

And we go on.

[Keller]

what McCain said in the debate is right, the root cause is the decline in home prices.

I thought the root cause was mark to market accounting? And Fannie and Freddie?

This crisis must have a branching root system, because there are an aweful lot of roots.