Both presidential candidates have announced plans to help voters deal with the challenging housing economy.
Here are their ideas as posted on their election websites:
Sen. John McCain:
Direct assistance to homeowners. No taxpayer money should go to real estate speculators who made bad decisions about investments.
Reform financial and lending systems to prevent a repeat.
Require participating lenders to forgive part of subprime borrowers’ loan principals and place them into new 30-year Federal Housing Administration loans.
Give financing to municipal and civic groups trying to solve problems within their own communities.
Sen. Barack Obama
Create a standardized disclosure plan that allows for full-disclosure of loan costs and provisions.
Crack down on mortgage fraud.
Give a mortgage credit to those who don’t itemize deductions.
Create a fund to help homeowners who face foreclosure refinance.
Allow bankruptcy courts to modify a homeowner’s mortgage payments.
Source: The San Diego Union-Tribune, Lori Weisberg
Presidential contender Sen. John McCain stepped into a political hornet’s nest Tuesday night when he proposed that the U.S. Treasury department “buy up the bad home-loan mortgages in America and renegotiate at the new value of those homes at the diminished value of those homes.”
In subsequent explanations, McCain’s economic adviser Douglas Holtz-Eakin said McCain is proposing that the government would buy mortgages from banks and investors at the original value of loan, no matter how inflated that it now appears to be, and then give the home owner a new mortgage at current value at a more affordable interest rate. “Obviously, the taxpayer is on the hook for the difference,” Holtz-Eakin said.
Barack Obama’s top economic advisor Austan Goolsbee was among those highly critical of the idea. “This proposal, if enacted, would be a massive government subsidy from taxpayers to the most irresponsible banks, including the ones that committed fraud,” Goolsbee said, adding, “This proposal would give the taxpayer all the risk, with no gain.”
Source: BusinessWeek.com, Jane Sasseen