Obama rips McCain’s “ill-advised” mortgage plan

Sen. Obama went on the offensive today ripping into Sen. McCain’s mortgage buy-out plan in which the US Treasury would begin buying up bad mortgages and dealing with the homeowners directly.

Story from Yahoo News:

DAYTON, Ohio – Democrat Barack Obama told a campaign audience Thursday that Republican John McCain’s mortgage buyout plan would cost taxpayers billions of dollars and reward bad behavior by lenders.

Speaking in Dayton as he started a two-day bus tour of hotly contested Ohio, Obama said McCain’s plan would force the government to absorb the full cost of renegotiating mortgages to prevent borrowers from losing their homes. Lenders should share some of the costs, he said.

The Democratic presidential candidate’s campaign also criticized McCain’s mortgage plan in a new 30-second ad to air nationally on cable TV, a relatively inexpensive way of drawing media attention to an issue.

Obama took another jab at McCain, whose family owns several houses, when he renewed his call to change bankruptcy laws to help hard-pressed borrowers keep their homes.

“Right now, the law lets bankruptcy judges write down your mortgage if you own six or seven homes,” he said, “but not if you have only one.”

“That might help Sen. McCain sleep easier at night, but it won’t do anything for folks like you,” Obama told thousands at a baseball stadium.

Obama said McCain’s mortgage plan “punishes taxpayers, rewards banks, and won’t solve our housing crisis.”

He said it would “guarantee that American taxpayers lose by handing over $300 billion to underwrite the kind of greed and irresponsibility on Wall Street that got us into this mess.”

McCain’s campaign, meanwhile, has changed its mortgage plan. When the campaign distributed its description of the plan, it said the government would buy failed mortgages at discounted rates. Conservatives had pushed for that language because many of the homes are not worth the amount mortgaged.

But on Wednesday, the campaign deleted that line, which would mean the government would pay the full value of the mortgage.

McCain spokesman Brian Rogers said the policy didn’t change, but an edit was made to remove “excess and confusing language.”

The move would make the plan more costly than the $300 million initially cited to pay additional funds to financial institutions.

McCain has said his plan would be expensive. But he says it is necessary to get thousands of bad mortgages off the books and to stop the fall in home values and credit availability.

Obama had proposed a similar plan, report from the NY Sun on Sept. 23rd from an Obama press conference:

Now, there are a number of ways we can accomplish this. For example, we should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage- backed securities. In the past, such an approach has allowed taxpayers to profit as the housing market recovered. This is not simply a question of looking out for homeowners; it’s doubtful that the economy as a whole can recover without the restoration of our housing sector, including a rebound in the home values that have suffered dramatically in recent months.

This mortgage mess is more and more convoluted, it’s difficult to keep their plans straight.

  • Babs

    So now Obama is ripping into McCain for a proposal he made himself a few weeks ago? Now that’s rich.

    I have a couple of problems with Obama’s argument. First, he says “McCain’s plan would force the government to absorb the full cost of renegotiating mortgages to prevent borrowers from losing their homes. Lenders should share some of the costs, he said.”

    Well, isn’t what the bailout bill is designed to do??? Hasnt that already been established? What does Obama want? For us taxpayers to hand over billions to the lenders and to hell with the people? Just “trust” the lenders to protect them? I don’t know about you, but none of them have MY trust.

    “He said it would “guarantee that American taxpayers lose by handing over $300 billion to underwrite the kind of greed and irresponsibility on Wall Street that got us into this mess.”” AGain, isn’t this what the bailout bill is to start with???? At least with this plan, we could bypass the dirty lenders and get the help to the mortgage owners that meet the criteria, and the rest of the bad loans the lenders are holding and the mortgage holders that don’t deserve help – they can stick it where the sun don’t shine as far as I’m concerned.

    Just more socialist rhetoric from THAT ONE.

  • Babs

    Well, Obama was real cute on the campaign trail today.

    “Speaking to about 8,000 people under sunny skies, Obama veered occasionally from his prepared text to make lighthearted asides. Stock values have dropped so sharply, he said, that many people’s retirement accounts are now “101(k)s” instead of 401(k)s, the name derived from a section of the tax code.”

    I got my IRA statement today, and I really don’t see the humor in Mr. Obama’s “lighthearted aside”. Not that he really cares, as you can tell from his poor attempt at “humor”.

  • U.S.A.

    Babs

    McCain supports the CEO K. How is that? Kinda like bitting the hand that feeds you here. Although they are both in politics Obama will help the people more and the very ones who curse him will get the most help. It will take 20 years before these people admit how he helped them though. Atleast McCain will never be President.

  • Dreadsen

    Babs

    both of their arguments are equally horrifying if you ask me. Right now Obama is probably just opposing him for the sake of opposing him lol!

    I’ll tell you one thing I’ll wish I had gotten hold of one of those damn subprime mortages if McCain gets in. A portion of the crisis are some people who just walked away because their value tanked so bad they didn’t want to pay on a mortgage for 600K when the house is now only worth 100K. They can’t sell if because they owe far more than what anyone would pay for it. Could you imagine having a 600K house which value has dropped to 100K and mccain buys up what was left and all i have to pay on is the current value of 100k? Hell if those CEO can take advantage of the bail out package with 400K parties at least a poor sap like me could pull some kind of shenanigan out of the deal!

    How come neither one of them are pushing for the arrest of crimes which were committed in this fiasco?

  • Babs

    Dreadsen, the house values tanked because they were ridiculous to begin with. I agree with you on those getting a sweet deal of a new mortgage for the 100K instead of the 600K, but that’s the people getting the sweet deal, not the mortgage company, and I’m against the lenders getting anything. I’m all for Freddie/Fannie taking the losses.

    I bought 2 lots in Florida at the beginning of the market boom. I sold them less than a year later for double what I paid. Those same 2 lots sold 2 years later for TEN TIMES what I sold them for – and they weren’t worth it. I heard from a Realtor friend down there that those lots are now again worth what I sold them for. The market has corrected itself on that particular coastal area, and that Realtor friend of mine – who invested in property herself – is filing bankruptcy. So there’s a domino effect with the situation as well.

    Actually, at a McCain town hall that Fox aired yesterday, the criminal part came up in a question from the audience, demanding McCain to name them and punish them. He said he would, and started naming names then – Franks and Dodd were the first ones to be named. But he did say he wanted an investigation into it. Whether that’s something that will be done before the crisis is settled, I guess, will be a question of priorities. But you can bet Obama won’t investigate anything. The best shot we have at getting to the truth would be under a McCain administration.

  • Yeah and guess what?
    We have no shot at either one of them investigating the crimes of the Bush administration.
    C-Span hearings in the house have all the layed out evidence of laws being broken. Obama claimed he would look into it. I dont think he will because Nancy Pelosi i hear may go to jail with Bush Admin.

    But is our best shot at this going to be McCAin admin? Hell no because we know some dems may go to jail on that issue but he would not dare want to have Bush’s admin arrested for it.

    This housing crisis is the same thing. McCain has some friends who were also involved.

    There is no shot at either one of them doing anything on either of those two issues or other issues of the bi-partisan nature.

  • I think this housing bust is a good thing in a way and I agree with Babs that all its done is correct itself. Shame there isn’t a beer bust, because I’d like a pint of beer to go down in price too…LOL

  • Rob

    Obama took another jab at McCain, whose family owns several houses, when he renewed his call to change bankruptcy laws to help hard-pressed borrowers keep their homes.