Take That, IRS
Lest anyone ever call into question CAP’s non-partisan bona fides:
Republican presidential candidate John McCain announced Tuesday he would order the federal government to spend $300 billion in federal funds to buy up bad home mortgages and allow financially troubled homeowners to keep their houses. [...] Under the plan, the government would buy failing mortgages from homeowners and provide new fixed-rate mortgages. As a policy matter, the plan would likely have greater support among Democrats than Republicans. Economists with the liberal Center for American Progress have been pushing a similar idea for some time.
Here’s the CAP plan. All joking aside, it’s genuinely true that a progressive policy operation is always hoping some Republicans somewhere will cotton to some of our ideas. It’s genuinely difficult to achieve anything legislatively in the United States without some bipartisanship. Obama has made some similar noises in the past. Hopefully McCain’s embrace of this idea means something like it can actually get done.
31 Responses to “Take That, IRS”
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October 8th, 2008 at 10:00 am
If they are going to steal my plan, they should at least give me credit…although mine is better for both the economy AND the taxpayer.
http://www.bostonherald.com/news/opinion/letters/view.bg?articleid=1121644
October 8th, 2008 at 10:02 am
So– will fixed-rate mortgages be available to any homeowner who wants a fixed-rate mortgage, or does one have to be in really dire straits to qualify? Because I suspect there are a lot of homeowners out there who’d like to refinance on better terms than what they currently have.
October 8th, 2008 at 10:12 am
You don’t expect McFlip to actually support such a program, either as Pres. or Sen., do you? Unless the minimum qualifying mortgage is over several million, or encumbers a fourth or fifth home?
October 8th, 2008 at 10:15 am
I have a 10 year ARM but Imake my payments, have a good job (for now) and I live in an area with relatively few foreclosures. Will I be able to refinance to better terms? If not, why not? Why do these programs only seem to help those that screwed up, or were screwed, in the first place?
October 8th, 2008 at 10:16 am
Shudder.
The idea that the US Government might put Matthew in charge of fixing the subprime crisis is the best argument against government intervention that I ever heard of.
October 8th, 2008 at 10:16 am
Nothing can keep house prices from falling until they’ve reached pre-bubble, normal median valuations of 2.5 to 3x median incomes. Meanwhile more & more people will be “upside” down on mortgages and just walk away, especially if we have a deep recession. People won’t “lose their homes”, they’ll just go back to renting.
October 8th, 2008 at 10:28 am
Lehmans and Washington Mutual credit default swaps come due for settlement this month. Given that there are roughly $50+ TRILLION in such contracts, I sure the markets will be watching to see if they are still worth anything.
Note: $50+ Trillion for the Market as a whole –not just for Lehmans and Washington Mutual.
I think I heard a few pacemakers gurgle out there –sorry.
October 8th, 2008 at 10:58 am
Just finished year 4 of my 2/30 ARM (can’t refi since the bubble burst and i’m 40k in the hole)… but I’ve always been able to make my payments so I’ve not qualified for one single handout or help.
So I must continue living month to month. Why do I feel all I have to do to qualify is stop making payments.
October 8th, 2008 at 11:45 am
McCain calls it the “American Homeownership ReSURGEnce Plan”. Well, of course he does. The guy can’t take a dump without reminding us how it just SURGES right out.
October 8th, 2008 at 12:18 pm
The AP describes the McCain plan as follows: “Under the plan, the government would buy failing mortgages from homeowners and provide new fixed-rate mortgages.”
But how can the gov’t buy mortgages from homeowners? It can’t. Homeowners don’t own their mortgages. They own their homes. Lenders and investors own the mortgages.
It’s true that the gov’t could “buy” the homeowner’s obligation to pay his/her mortgage. The goverment would assume full responsibility to pay the mortgage in exchange for a contract with the homeowner, who would pay a lower and fixed monthly amount, with the gov’t paying the full difference and assuming the entire risk that the homeowner would default. Maybe that’s what McCain means. If so it’s a 100% bailout of the lenders and investors, with the government taking the full loss of the difference between what the homeowner can pay and what s/he owes. It’s nothing like the CAP plan, which wants the lenders and investors to take some of the loss.
October 8th, 2008 at 12:33 pm
What Bloix just said.
October 8th, 2008 at 12:46 pm
Maxine Waters was on Tavis Smiley last night and insisted that the recovery/bailout plan passed last week already will do what McCain (and CAP?) are proposing.
I’m not sure she is right, but she is on the House committee that worked the bill…isn’t that curious?
October 8th, 2008 at 1:40 pm
I went to McCain’s website and read the “plan,” which says that the gov’t will buy mortgages from homeowners and “mortgage servicers,” whoever they are. And it says that “lenders in these cases must recognize the loss that they’ve already suffered.”
Must? Why must they? Because the prezinet tells them to? These mortgages have been bundled and sold and borrowed against and insured multiple times, so for any one loan there are multiple stakeholders with legally enforceable rights. Many are off-shore and out of reach of US legislation, in Europe or in tax haven jurisdictions like the Channel Islands. And some of them higher up on the chain feel – probably justly – that others lower down have defrauded them. They’re going to be seeking damages. How is McCain going to persuade them give up their rights and accept losses?
October 8th, 2008 at 2:26 pm
Brad DeLong says I was right when I said that this is a 100% bailout of the lenders. McCain is lying when he says that lenders will have to accept losses.
http://delong.typepad.com/sdj/2008/10/john-mccains-ne.html
October 8th, 2008 at 2:53 pm
I believe the bill allows treasury to do this, but does not mandate that it be done. There is no expectation that a Paulson-run treasury will use this power.
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