McCain Proposes $300 Billion Mortgage Plan

[Dymanic]

You are saying there properties have zero value right now? Can you support this?

I'm not saying that.

Who is betting on it?

A lot of people were betting that the borrowers on a lot of those mortgages would be making more money some years into the mortgage than they were at the outset. It's a reasonable enough assumption except when an entire economy starts heading south.

Government picks up the mortgage (at no more than say $100,000), 5 years down the line the house is sold for $50,000 - the government has only lost just over half of the money.

I haven't seen a lot of detail on McCain's plan (and then there's the question of what such a thing would look like once Congress got done with it). The way I'd assume it would work is that the government would pay out on a lot of morgages that exceeded the value of the properties securing them. By reselling those, some of the money would indeed be recovered -- and that money would be used to buy other properties, also at a loss, until there wasn't any money left. Or something like that.

 

[Malerin]

Pure pandering. There's at least 12 million households that are "upside down" on their mortgage. Given the economy, and resetting ARM's, that number could easily reach 20 million. Even a conservative $20,000-per-mortgage "rescue" on 15 million homes would cost $300,000,000,000.

And what about the "moral hazard"? Speculation should carry an inherent risk to it. If people think govt. is going to bail them out if housing goes south, we're going to get in the same mess all over again. If we ever claw our way out of this one, that is.

Anyway, it's being panned, left and right: http://www.msnbc.msn.com/id/27091196/

 

[pgwenthold]

My mortgage is probably outstripping the value of the house right now (especially considering the maintainance that is required). I want in!!!

 

[Puppycow]

Pure pandering. There's at least 12 million households that are "upside down" on their mortgage. Given the economy, and resetting ARM's, that number could easily reach 20 million. Even a conservative $20,000-per-mortgage "rescue" on 15 million homes would cost $300,000,000,000.

And what about the "moral hazard"? Speculation should carry an inherent risk to it. If people think govt. is going to bail them out if housing goes south, we're going to get in the same mess all over again. If we ever claw our way out of this one, that is.

Anyway, it's being panned, left and right: http://www.msnbc.msn.com/id/27091196/

Wow! I didn't realize McCain was proposing paying full price (100 cents on the dollar!) for these distressed assets, thus letting buyers and lenders completely off the hook and passing 100% of losses on to the taxpayers!

No wonder the conservative Heritage Foundation hates it!

This is not a serious plan. It's desperate flailing!

 

[ZenFountain]

To do so, the government would pay the full face-value of the distressed mortgages, Holtz-Eakin said.

Under that scenario, the government could buy a $200,000 subprime mortgage on a home now worth just $100,000, give the homeowner a 30-year, $90,000 loan with a 5 percent interest rate, and essentially eat the $110,000 difference.

"It's the only way to do it in a timely fashion," Holtz-Eakin said.

From one of McCain's economic advisers. I doubt this would sound reasonable to the most liberal congressional Democrats, it's simply ludicrous.

 

[Puppycow]

George Will:

Tuesday night, McCain, seeking traction in inhospitable economic terrain, said that the $700 billion -- perhaps it is $800 billion, or more; one loses track of this fast-moving target -- bailout plan is too small. He proposes several hundred billions more for his American Homeownership Resurgence -- you cannot have too many surges -- Plan. Under it, the government would buy mortgages that homeowners cannot -- or perhaps would just rather not -- pay, and replace them with cheaper ones. When he proposed this, conservatives participating in MSNBC's "dial group" wrenched their dials in a wrist-spraining spasm of disapproval.