McCain would buy bad homeowner mortgages

[TangoJuliet]

Text

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.

I don't post here (P&N) often and I did a search on this statement by McCain in the debate last night and I wanted some feedback. I don't know a ton about politics and don't pretend to but I know enough to get by.

So let me see if I understand this correctly. The government is going to buy back the loans and people then can renegotiate their mortgages with fixed rate loans? The people that went over their heads and bought things they couldn't afford get a mulligan while the people that acted responsible and bought things they could afford get penalized. What a bunch of junk!

My wife and I bought a home in 2006 when the market was very strong here in NY. We qualified for a home in the $500,000 range but we decided not to go to our financial edge and purchased a home for $255,000. Now, if you know what the housing market in NY is like - $255,000 does not buy a very big place. We decided if anything were to happen then we would still be able to afford our home and pay our bills without worries or have to foreclose. This actually helped because I got a new job where I am making 50% less (initially) then my old job. If we had purchased the half million dollar home we would be one of the aforementioned people.

We got a fixed rate 30 year loan at something like 6.75% which was pretty good at the time. Now heres some questions. Obviously the housing market is down so our home is not valued the same as 2006. So refinancing is not really a option plus we don't plan on staying here much longer (maybe 2 more years) so even if it was worth it to refinance we would lose by having to pay closing costs, etc.

Will the government buy back my loan so I can refinance it at the new rate and cost of my home? That would be great if my home has depreciated $20,000 and I can get a new rate. Right now Citibank is offering a 30 year fixed at 6.25%. (current mortgage lender). But I'm sure the responsible people that took loans will not qualify.

Please be gentle as like I said in the opening post that I don't post much here.

 

[BigDH01]

It's a crazy stupid plan. "I'm going to initiate a freeze in federal spending except for defense, veterans', and entitlement programs, oh yeah, and my new G$300 buyback program where I buy mortgages sure to take a loss. I represent small government and fiscal responsibility."

It may buy him a few votes but there's no way this can actually happen. These idiots need to learn to quit spending like drunken sailors.

 

[Dari]

I don't think Democrats should say much and let the Republicans eat him alive over this.

 

[StageLeft]

I believe that this was already in law so I am not sure what McCain is talking about as if it's a new idea.

Anyway, I think people who were overextended should lose their homes. They can get apartments. That's how it works. The government should, at the very most, be buying back those defaulted or bad debts so that the banks have enough money to lend out again, but not to an extent that they don't suffer for their folly, but ultimately we need to get close to letting the chips lay as they fall without the cancer spreading severely enough that we all end up sick.

Giving a person who was always woefully out of their depth with a house a big prop up is doing nothing but artificially inflating the cost of housing locally and ironically it is keeping out some people who would rationally qualify for the house if it fell to what it ought to.

 

[JulesMaximus]

Originally posted by: Dari
I don't think Democrats should say much and let the Republicans eat him alive over this.

No kidding. I couldn't believe he said that. Of course, I don't expect he'll actually do half the things he says he's going to do *if* he gets elected.

 

[TangoJuliet]

Obviously we have a problem so what can we do to fix it?

If the government doesnt step in to fix the problem then we fall deeper into the financial crisis, the dollar loses its value, gas prices rise, etc. However, its the people who overextended themselves and the banks that allowed it to happen that are at fault. So what do we do about it?

I'm guessing the best bet would be to keep people in the homes so that they aren't foreclosed upon and given back to the banks. Would it help if the government allowed people to refinance at a lower rate only with no penalties or fees? Say keep the current loan but make the rate down to 1-2%? OR is it too far beyond repair that even that wont help these people out?

 

[GTKeeper]

As bad and 'fiscally irresponsible' this plan is...

It actually makes sense. What the government NEEDS to do, is allow people to eventually pay for these massive mortgages. And I think it will do that one way or another. If that means helping REFI into a lower 30 year fixed rate, so be it. But that is the underlying problem.

I understand that people were dumb and shouldn't have taken these loans out. But what everyone needs to realize is that this hurts EVERYONE. If people are thrown out of their homes, that has a deeper economic impact than allowing them to refi part of their mortgage or something, and allow them to pay back eventually what they owed on it.

 

[rudder]

Note to self... stop paying mortgage immediately.

 

[TangoJuliet]

Originally posted by: GTKeeper
As bad and 'fiscally irresponsible' this plan is...

It actually makes sense. What the government NEEDS to do, is allow people to eventually pay for these massive mortgages. And I think it will do that one way or another. If that means helping REFI into a lower 30 year fixed rate, so be it. But that is the underlying problem.

I understand that people were dumb and shouldn't have taken these loans out. But what everyone needs to realize is that this hurts EVERYONE. If people are thrown out of their homes, that has a deeper economic impact than allowing them to refi part of their mortgage or something, and allow them to pay back eventually what they owed on it.

Yep that is basically what I am saying.....but if you are going to let these people REFI then what about everyone else? I would like to be able to REFI my home as well at a lower rate/cost.

 

[bamacre]

This is just part of his Spending Freeze plan?

 

[BigDH01]

Wait, why should anyone pay their mortgage then? If people who paid too much get a principle reduction (which is really the only thing that will save many people), why shouldn't everyone get a mortgage deduction courtesy of the government? What about renters like me? When is it my turn to feed from the trough? The government should at least forgive my federal student loans. It's a burden on me so I don't feel I should have to pay them any longer.

You CANNOT keep rewarding irresponsible behavior. Everyone that I work with has announced that if mortgages are reduced for people who can't pay, then they will all quit paying to fall into that group. I imagine most mortgage owners here would feel the same way. Then the financial system really collapses. We need to just swallow the pain that is to come and get it over with.

 

[Xavier434]

Originally posted by: JulesMaximus

Originally posted by: Dari
I don't think Democrats should say much and let the Republicans eat him alive over this.

No kidding. I couldn't believe he said that. Of course, I don't expect he'll actually do half the things he says he's going to do *if* he gets elected.

My jaw dropped when I heard him say that. If someone bet me a bunch of money that he was going to suggest that plan last night then I would be out of some serious cash hehe.

 

[Thump553]

Originally posted by: Dari
I don't think Democrats should say much and let the Republicans eat him alive over this.

All I could think of was all the heart attacks he was causing in GOP land. If Obama made that proposal, all you would hear is "socialism" and "rewarding deadbeats."

I suspect McCain's campaign will "correct" this proposal out of existence today. It should mostly likely be treated as a another hail mary pass / desperation play by McCain.

 

[Xavier434]

Originally posted by: Thump553

Originally posted by: Dari
I don't think Democrats should say much and let the Republicans eat him alive over this.

All I could think of was all the heart attacks he was causing in GOP land. If Obama made that proposal, all you would hear is "socialism" and "rewarding deadbeats."

I suspect McCain's campaign will "correct" this proposal out of existence today. It should mostly likely be treated as a another hail mary pass / desperation play by McCain.

I look forward to reading the spin when it comes to the other side of this story. Is there anything out there already that someone can link?

 

[CPA]

Originally posted by: Dari
I don't think Democrats should say much and let the Republicans eat him alive over this.

sigh, It's as if he's wanting me NOT to vote at all this year. I am losing any sense of difference between these two candidates. I'm at the point that it won't matter who I vote for, I'm going to get a Socialist, Nanny-Stater.

 

[Genx87]

Isnt this what the recent bailout for 700 billion was? I thought the govt was buying the bad debt off the banks. What is different in this proposal?

 

[GTKeeper]

Originally posted by: TangoJuliet

Originally posted by: GTKeeper
As bad and 'fiscally irresponsible' this plan is...

It actually makes sense. What the government NEEDS to do, is allow people to eventually pay for these massive mortgages. And I think it will do that one way or another. If that means helping REFI into a lower 30 year fixed rate, so be it. But that is the underlying problem.

I understand that people were dumb and shouldn't have taken these loans out. But what everyone needs to realize is that this hurts EVERYONE. If people are thrown out of their homes, that has a deeper economic impact than allowing them to refi part of their mortgage or something, and allow them to pay back eventually what they owed on it.

Yep that is basically what I am saying.....but if you are going to let these people REFI then what about everyone else? I would like to be able to REFI my home as well at a lower rate/cost.

If the gov't were to offer some kind of REFI plan, it should be available to everyone. Some people will need it, others won't. What they also need to do is make the loans (because that is what it will be, the gov't will give money to mortgage bank, bank will give lower rate to consumer) like student loans in that they HAVE to be paid back. The problem we have now is that people can walk away from their home, and their other assets cannot be touched.

 

[GTKeeper]

Originally posted by: Genx87
Isnt this what the recent bailout for 700 billion was? I thought the govt was buying the bad debt off the banks. What is different in this proposal?

The difference is, that this plane helps with the pain at the bottom level, which is what needs to happen.

Loan rates are still resetting and will continue for the next 4-5 years. Those risky borrowers will walk out of their homes leaving the banks holding something that doesn't sell very easily. The initial bailout was to buy up the securitized 'toxic waste' as they call it so that banks have capital to lend again. BUT the underlying problem still exists. House prices are falling and people cannot make their mortgage payments. Until that part balances out, we are not going start the market recovery process.

 

[SP33Demon]

Originally posted by: CPA

Originally posted by: Dari
I don't think Democrats should say much and let the Republicans eat him alive over this.

sigh, It's as if he's wanting me NOT to vote at all this year. I am losing any sense of difference between these two candidates. I'm at the point that it won't matter who I vote for, I'm going to get a Socialist, Nanny-Stater.

Yep, and to make it worse he claims he will fund this with the "bailout money". WTF? Is this guy missing a chromosome or something?

 

[Mursilis]

Originally posted by: GTKeeper
As bad and 'fiscally irresponsible' this plan is...

It actually makes sense. What the government NEEDS to do, is allow people to eventually pay for these massive mortgages. And I think it will do that one way or another. If that means helping REFI into a lower 30 year fixed rate, so be it. But that is the underlying problem.

I understand that people were dumb and shouldn't have taken these loans out. But what everyone needs to realize is that this hurts EVERYONE. If people are thrown out of their homes, that has a deeper economic impact than allowing them to refi part of their mortgage or something, and allow them to pay back eventually what they owed on it.

And what about the deeper economic impact of rewarding (and thus encouraging future) stupidity? I'm one of those responsible people who bought a home about 4 years ago and opted to go with a smaller home with a fixed rate, conventional mortgage instead of the larger home simply because the smaller home was the prudent choice. Now, the gov't wants to reward the foolish at the expense of the responsible - again.

 

[Mursilis]

Originally posted by: SP33Demon

Originally posted by: CPA

Originally posted by: Dari
I don't think Democrats should say much and let the Republicans eat him alive over this.

sigh, It's as if he's wanting me NOT to vote at all this year. I am losing any sense of difference between these two candidates. I'm at the point that it won't matter who I vote for, I'm going to get a Socialist, Nanny-Stater.

Yep, and to make it worse he claims he will fund this with the "bailout money". WTF? Is this guy missing a chromosome or something?

McCain's just trying to keep up with the other side, which is offering free healthcare, a tax cut, and other swell presents. When you're running for national Santa Claus, you've got to promise the big ticket stuff.

I miss Paul Tsongas and his "panderbear" accusations.

 

[SP33Demon]

Originally posted by: Mursilis

Originally posted by: SP33Demon

Originally posted by: CPA

Originally posted by: Dari
I don't think Democrats should say much and let the Republicans eat him alive over this.

sigh, It's as if he's wanting me NOT to vote at all this year. I am losing any sense of difference between these two candidates. I'm at the point that it won't matter who I vote for, I'm going to get a Socialist, Nanny-Stater.

Yep, and to make it worse he claims he will fund this with the "bailout money". WTF? Is this guy missing a chromosome or something?

McCain's just trying to keep up with the other side, which is offering free healthcare, a tax cut, and other swell presents. When you're running for national Santa Claus, you've got to promise the big ticket stuff.

I miss Paul Tsongas and his "panderbear" accusations.

Well, it's ok to promise big ticket stuff but to say it will come out of the 700bill bailout money is just lying to Americans. Flat out, brazen, and preposterous to lie like that.

 

[Xavier434]

Originally posted by: Mursilis

Originally posted by: GTKeeper
As bad and 'fiscally irresponsible' this plan is...

It actually makes sense. What the government NEEDS to do, is allow people to eventually pay for these massive mortgages. And I think it will do that one way or another. If that means helping REFI into a lower 30 year fixed rate, so be it. But that is the underlying problem.

I understand that people were dumb and shouldn't have taken these loans out. But what everyone needs to realize is that this hurts EVERYONE. If people are thrown out of their homes, that has a deeper economic impact than allowing them to refi part of their mortgage or something, and allow them to pay back eventually what they owed on it.

And what about the deeper economic impact of rewarding (and thus encouraging future) stupidity? I'm one of those responsible people who bought a home about 4 years ago and opted to go with a smaller home with a fixed rate, conventional mortgage instead of the larger home simply because the smaller home was the prudent choice. Now, the gov't wants to reward the foolish at the expense of the responsible - again.

No one who supports such measures with any kind of brain in their head will tell you that proper regulation reform and enforcement needs to be coupled with these kinds of solutions in order to effectively attempt to prevent similar problems in the future. There has been some talk about that by those in power, but details are extremely limited at this point in time. The only real thing we as citizens can do is vote for whoever we believe will provide the best chances of that happening and crossing our fingers.

I know what we don't need though and that's further deregulation and loopholes tossed in the mix of the current broken system. Deregulation attempts are much better done during times when things are more stable. Doing it during a crisis like this one is far too risky imo.

 

[dmcowen674]

Originally posted by: TangoJuliet

I don't post here (P&N) often and I did a search on this statement by McCain in the debate last night and I wanted some feedback. I don't know a ton about politics and don't pretend to but I know enough to get by.

So let me see if I understand this correctly. The government is going to buy back the loans and people then can renegotiate their mortgages with fixed rate loans? The people that went over their heads and bought things they couldn't afford get a mulligan while the people that acted responsible and bought things they could afford get penalized. What a bunch of junk!

Obviously the housing market is down so our home is not valued the same as 2006.

So refinancing is not really a option plus we don't plan on staying here much longer (maybe 2 more years) so even if it was worth it to refinance we would lose by having to pay closing costs, etc.

Will the government buy back my loan so I can refinance it at the new rate and cost of my home? That would be great if my home has depreciated $20,000 and I can get a new rate. Right now Citibank is offering a 30 year fixed at 6.25%. (current mortgage lender). But I'm sure the responsible people that took loans will not qualify.

Please be gentle as like I said in the opening post that I don't post much here.

Welcome to P&N

Same here.

Bought a house in Feb 2006 after got out of New Orelans after Katrina.

Got laid off last year by AT&T after the Cingular merger.

Got two appraisals to try and sell the house. We put quite a bit of improvement into it yet the value dropped by 20% so we can't sell it since we would owe thousands on the mortgage still.

I will vote for McCain because his plan will save me.

 

[jman19]

Originally posted by: dmcowen674

Originally posted by: TangoJuliet

I don't post here (P&N) often and I did a search on this statement by McCain in the debate last night and I wanted some feedback. I don't know a ton about politics and don't pretend to but I know enough to get by.

So let me see if I understand this correctly. The government is going to buy back the loans and people then can renegotiate their mortgages with fixed rate loans? The people that went over their heads and bought things they couldn't afford get a mulligan while the people that acted responsible and bought things they could afford get penalized. What a bunch of junk!

Obviously the housing market is down so our home is not valued the same as 2006.

So refinancing is not really a option plus we don't plan on staying here much longer (maybe 2 more years) so even if it was worth it to refinance we would lose by having to pay closing costs, etc.

Will the government buy back my loan so I can refinance it at the new rate and cost of my home? That would be great if my home has depreciated $20,000 and I can get a new rate. Right now Citibank is offering a 30 year fixed at 6.25%. (current mortgage lender). But I'm sure the responsible people that took loans will not qualify.

Please be gentle as like I said in the opening post that I don't post much here.

Welcome to P&N

Same here.

Bought a house in Feb 2006 after got out of New Orelans after Katrina.

Got laid off last year by AT&T after the Cingular merger.

Got two appraisals to try and sell the house. We put quite a bit of improvement into it yet the value dropped by 20% so we can't sell it since we would owe thousands on the mortgage still.

I will vote for McCain because his plan will save me.

LOL

Please kill yourself.