Posts Tagged ‘350 billion’

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Defending J-Mac’s Socialism (350 billion dollar mortgage buyout)

October 8, 2008

Last night, I was in a blogger chat with other folks and when I heard that J-Mac proposed 350 billion in additional funds for a bailout, I,  like many of our brethern lost my head and called him a socialist.  Anyway, as Hannity says, “let not your heart be troubled”:

Marc Ambinder in the Atlantic notes how the 300 billion or so is already incorporated into the bill that was passed last week. J-Mac is not asking for additional funds:

On a conference call with reporters, McCain policy chief Douglas Holtz-Eakin spelled out how McCain would pay for his plan for the government to buy troubled mortgages and replace when with more favorable fixed-rate mortgages at minimal direct cost to the homeowners. The government could use some of the $700 billion authorized for the bailout and tap other accounts, although the campaign estimates that, owing to negative equity — the government can’t magically turn bad mortgages into good ones without taking a hit — would be $300 billion.  The McCain team hopes that by buying mortgages directly, the government wouldn’t have to buy as many distressed assets from big banks, thus reducing the net cost. McCain claims this idea as his own, although the bailout/rescue bill already gives the government the authority to deal directly with homeowners, and Obama has suggested that the government do the same — although McCain’s certainly being more aggressive here.

Second, let’s look at the Hope for Homegrowers plan in crap sandwich 2.0:

HOPE for Homeowners (H4H) is a program designed to assist borrowers at risk of default or foreclosure in refinancing to an affordable 30-year fixed rate FHA loan. The program is effective October 1, 2008 and will conclude on September 30, 2011. …

The loan amount may not exceed a nationwide maximum of $550,440.

The new mortgage will be no more than 90% of the new appraised value including any financed UFMIP with the lender essentially writing down the current mortgage to that amount.

Upfront MIP is 3% and the monthly MIP is 1.5%

The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.

The existing first mortgage must accept the proceeds of the H4H loan as full settlement of all outstanding indebtedness.

Existing subordinate lenders must release their outstanding mortgage liens.

So, the mechanism for what John McCain said last night exists. It is still wrong that we are buying out bad mortgages, but at least he isn’t adding to it

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McCain’s Mortgage Buyout Plan

October 8, 2008

Michelle reports:

AMERICAN HOMEOWNERSHIP RESURGENCE PLAN

John McCain will direct his Treasury Secretary to implement an American Homeownership Resurgence Plan (McCain Resurgence Plan) to keep families in their homes, avoid foreclosures, save failing neighborhoods, stabilize the housing market and attack the roots of our financial crisis. America’s families are bearing a heavy burden from falling housing prices, mortgage delinquencies, foreclosures, and a weak economy. It is important that those families who have worked hard enough to finance homeownership not have that dream crushed under the weight of the wrong mortgage. The existing debts are too large compared to the value of housing. For those that cannot make payments, mortgages must be re-structured to put losses on the books and put homeowners in manageable mortgages. Lenders in these cases must recognize the loss that they’ve already suffered.

The McCain Resurgence Plan would purchase mortgages directly from homeowners and mortgage servicers, and replace them with manageable, fixed-rate mortgages that will keep families in their homes. By purchasing the existing, failing mortgages the McCain resurgence plan will eliminate uncertainty over defaults, support the value of mortgage-backed derivatives and alleviate risks that are freezing financial markets.

The McCain resurgence plan would be available to mortgage holders that:

· Live in the home (primary residence only)

· Can prove their creditworthiness at the time of the original loan (no falsifications and provided a down payment).

The new mortgage would be an FHA-guaranteed fixed-rate mortgage at terms manageable for the homeowner. The direct cost of this plan would be roughly $300 billion because the purchase of mortgages would relieve homeowners of “negative equity” in some homes. Funds provided by Congress in recent financial market stabilization bill can be used for this purpose; indeed by stabilizing mortgages it will likely be possible to avoid some purposes previously assumed needed in that bill.

The plan could be implemented quickly as a result of the authorities provided in the stabilization bill, the recent housing bill, and the U.S. government’s conservatorship of Fannie Mae and Freddie Mac. It may be necessary for Congress to raise the overall borrowing limit.

just think. obama’s health care. obama;’s health care. obama’s health care