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Fed To Buy My Mortgage?

Did my ears just malfunction?

Did John McCain say minutes ago that part of the solution should be for the Fed to buy my mortgage, then "renegotiate" the mortgage based on the newer, lower property value?

Riddle me this, Batman:

John Q. Public has a mortgage on a property at $250,000. His new property value since the decline is appraised at $150,000. Is John McCain saying that the Fed should buy the $250,000 mortgage, let Uncle Sam (Errr... me & you) swallow $100,000 and sign a new mortgage for $150,000? That's sure what it sounded like.

What do you have to do to qualify, miss a couple payments?

No wonder Obama didn't have a response to that new tack. He's kicking himself for not thinking of it first.

Has anyone an earthly clue how much that would cost the government (err... me & you) to do? You don't want to know, because you, your children, your grandchildren and your great grandchildren can't pay for it.


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Comments (26)

McCain deserves to lose the... (Below threshold)
Billy in Texas:

McCain deserves to lose the election because of this statement. This would make a bad situation much much worse.

I say keep the morgage the ... (Below threshold)
retired military:

I say keep the morgage the same. Freeze the interest rate as it is and instead of a 30 year morgage extend it out to 40 or 50 years. That would lower payments and enable people WHO WANT TO Keep their houses to do so.

Fedco has already set up th... (Below threshold)
Gmac:

Fedco has already set up the option for your mortgage company to renegotiate the actual value of your home and adjust the mortgage accordingly. Fedco absorbs the difference.

The 700 Billion dollar bailout bill has that in it, McCain just doesn't know it because it went from a pork free 3 page document to a 400 page cash cow for every pork project not included in the continuing resolutions congress passed before they ran for the hills.

Actually, it was a perfect ... (Below threshold)
The Wise One:

Actually, it was a perfect statement by McCain, since it counters the ridiculous promises uttered by Obama so far.

McCain needs to get voters to pay attention to him, and man does that do the trick. However, it is NOT a good deal for those of us having our houses already paid in full. But you know, I would be willing to take one for the team to not get Obama elected!

I've been stupid. I've bee... (Below threshold)
Codekeyguy Author Profile Page:

I've been stupid. I've been paying my mortgage every month. Wrong way to go, since I could have had John just write it down. But being such a dumbass (good credit risk) I miss out on the dole.
This is leverage taken to the max.
I'll still vote for McCain, but now only because of SARAH!!

I thought the Republicans s... (Below threshold)
Mike in Oregon:

I thought the Republicans stripped from the bailout package a Democrat provision that would have given bankruptcy judges the right to modify mortgage terms. Obama has pushed allowing those modifications to include the mortgage amount. If McCain has bought into this, he's a fool. It makes suckers out of those who have played by the rules, saved their 20% down and made sacrifices to have a house, and now with falling prices are lucky to have any equity. Shame on all these politicians.

If you are listening to FOX... (Below threshold)
Calpurnia:

If you are listening to FOX Cable panel right now, Bill Kristol is explaining that this mortgage buying strategy mentioned by McCain is a CONSERVATIVE position that had been proposed and explained by other conservative economists. Listen to Fox for more details...

I think that was the single... (Below threshold)
Dee:

I think that was the single worst thing he has ever said. He just lost the election in my opinion. The best question tonight was by the woman who asked how America could trust either one of these guys? Great question because the answer is that YOU CANNOT. This country is SCREWED either way.

We will run deficits until the end of time. This bailout was bullshit. Banks don't trust each other regardless of whether or not the government bails out anyone! Hello! It's about trusting the other guy to tell you the truth about their balance sheets!

Gee, I sure hope that most ... (Below threshold)
Calpurnia:

Gee, I sure hope that most of America decided not to watch the debate tonight, because McCain was not as good as he was the last time...which wasn't great. That said, Obama kind of sucked, also, but he is a smooth BS artist, so it may not have been that obvious.

I don't think McCain's ideas suck, but he sure sucks at explaining his positions.

Barry's ideas are not realistic, but he has the used car salesman routine down pat and probably fools most of America who are just looking for an excuse to vote for him.

Mitt Romney is explaining o... (Below threshold)
Calpurnia:

Mitt Romney is explaining on Fox right now why that mortgage-buying plan is plausible.

So someone who bought more ... (Below threshold)
jpm100:

So someone who bought more mortgage than they could afford or they're just plain scumbags gets a big chunk of equity in that house courtesy of those of us who've kept a steady job and good credit history?

Can we get some Republicans in the Republican Party Please?

"With 300 million people, h... (Below threshold)
Bob:

"With 300 million people, how did we end up with these two guys? Talk about Sophie's choice." - Rush

When we just passed a $700 (or is it $800?) billion dollar Rescue (or is it a bail out?), why would Mac think the public would want to spend another $300 billion to buy up bad mortgages, revalue and renegotiate them at lower rates? If it wasn't for Sarah, I'd find something other than voting to do Nov. 4.

I cannot recognize my count... (Below threshold)
A Stoner:

I cannot recognize my country any more. I do not even recognize what it means to be a conservative.

I guess McCain wants to get the vote of the irresponsible home buyer (10% of mortgage holders?) at the expense of the responsible home buyer (90% of mortgage holders and 100% of home owners) along with losing the vote of the people who eventually want to own a home someday, and that would be people like me.

House prices went up over 100% and have fallen 25% or so. They need to drop another 25% from highs or 35% from current prices to be in the range of affordable, which is about 12% higher than they were in 1998. John McCain continues to isolate himself from his base, and while Palin may give some level of benifit, McCain is tossing all of that benifit out the window. The only thing we have left is that he at least put Palin into the national spotlight so we know we have someone to look forward to in 4 to 8 years.

I yelled out to the TV, "WT... (Below threshold)

I yelled out to the TV, "WTF????" when he said that. But then, when he brought up that Obama had taken Fannie/Freddie money, I was happy. I would have been ecstatic, though, if he had asked Obama to give the money back to the taxpayers!

Give it back! Give it back!

The mortgage market is not ... (Below threshold)

The mortgage market is not a free market -- not since the CRA turned Fannie and Freddie into clearinghouses for subprime mortgages, not since the sudden entry of these borrowers caused the housing bubble in the first place.

McCain knows that, one way or another, America is going to pay the price for this descent into socialism, and is willing to pay (and thus eliminate) that price up front rather than behind closed doors, hidden in the cost of NASA screwdrivers or Pentagon pencils.

He wants to consolidate the government interference into a single program, and eliminate it. That's the kind of thing they teach you in the military: get all your enemies in the same place and blow them all up at once.

Can't pay for the Iraq war ... (Below threshold)
jmc:

Can't pay for the Iraq war either. That hasn't stopped you.

"Thish ish John McCain and ... (Below threshold)

"Thish ish John McCain and I jush wanna tell you: My frensh, I can crosh the isle, I can gain the isle, hell, I'll even take over and BECOME the isle if thatsh what it taksh to win your vote my frensh. Put that in yer peyote pipe and shmoke it meshiah-boy! Get the hell out of my way, I've got a farm to give away and only 4 weeksh to dole it out!

I'm John McCain, and I approve thish meshish."

Sarah Palin is NOT responsible for all, part of, or even a little smidge of the foregoing message. She wouldn't be and besides, when she heard of it, she tossed her cookies and boarded the first flight away from this crazy old guy.

As I understand it, there i... (Below threshold)
Mike:

As I understand it, there is a difference here between what McCain proposed and what Biden alluded to in last week's debate. Correct me if I'm wrong.

Biden wants to give bankruptcy judges the power to renegotiate mortgage terms with mortgage lenders, including lowering the loan principal. Under his plan, the lenders would fully eat the cost of the settlement.

McCain wants the government to buy foreclosed mortgages from lenders (at a discount, to be sure) and then have the government reset the terms of the mortgage including the interest rate and the principal owed. Under his plan, the government and the lender would share the cost of the settlement.

(retired military: I like your idea of simply adding 15 or 20 years to the existing mortgage in order to lower payments.)

Either way, homeowners who are paying or who have paid off their mortgages according to contract terms will get screwed, because we played by the rules and received zero cash incentives for it. Also, people who live in the Northeast or the West Coast, where the real estate market boomed out of control, will benefit greatly from either of these programs, while those of us in areas with low real estate inflation (like my city of residence, Oklahoma City) will see little. And as other critics have pointed out, both of these schemes are simply real estate appraisal fraud waiting to happen.

What really scares the living hell out of me is the possibility of something like this turning into full-blown "everything has to be fair" socialism -- and eventually someone will propose that for those of us who are current on our mortgages and whose homes are now worth more than we paid for them, we should be taxed on this appreciation as a part of our monthly mortgage payment, because we are "unfairly benefiting" from the system.

In the good old days a mort... (Below threshold)
hcddbz:

In the good old days a mortgage would double in value every 10 years. So 100K 2009 should be 200K by 2019. SO if the government guys it for 100K then sells it in 20016 for 150K well there the profit everyone is saying we will make in 5 years. Since many of these homes were in cluster property values will drop in that area and so will property taxes.

However, mortgage back securities will now have a real value. I have heard our next step is to buy up payday loans, after that student loans. The government will be renegotiate all private debt pretty soon.
They manage accounts so well, like social security

To paraphrase a statements 1T here 1 T there soon we are talking real money.

. If we can negotiate prices on just mortgages to something particle we can at least make money back. It also means that some folks will need to vacate the property if they cannot pay back and new buyers need to come in. We know that if that happen it will be called racist so some % of the loans will never be repaid.

We are screwed the question is how much.

I still think <a href="http... (Below threshold)

I still think this was a good idea:

Let's say someone bought a house for $200k and is now in foreclosure. The government wants to keep them in that house so they're given the option to refinance. The individual cannot afford a $200k house, obviously, but he CAN afford a $150k house. So the house is refinanced at a low fixed rate for $150k for them and the lender keeps a 25% interest in it. They make money when it's sold. Even though the value of the property has dropped to that $150k, at some point it will increase back to the 200k, and then some if the homowner keeps it for any length of time.

That doesn't sound at all like what McCain is saying though.

I don't watch FOX News (or any other cable news for that matter) so I'm wondering if anyone has a link to what's been said by Kristol or Romney on the refinancing deal suggested by McCain?

"...at some point it will i... (Below threshold)
hyperbolist:

"...at some point it will increase back to the 200k..."

Ever been to Flint, Michigan, Oyster?

I think 'conservatives' nee... (Below threshold)
Bamaman:

I think 'conservatives' need to calm down a bit, get the facts, and ground themselves in some common sense here for a second. What I heard tonight was that the proposal was to use part of the 700B already allocated by the bailout to go more directly to the homeowners.

Lets face it, the bailout ALREADY was going to buy off this debt in one way or the other. If you give it directly to the banks, all that does is cover their butts, allows the banks to continue making the interest, and the homeowners are in the same fix as before, and the problem will only get bad again, probably worse than before. The government is STILL on the hook for the bailout and we would lose a very large percentage of the 'investment'.

At least by buying the laons and refinancing them, the loans are less likely to default, and thus less of the bailout would go down the drain, and the economy gets a boost from the extra spending power of the family that just freed up some budget.

He specifically stated only primary residences would qualify, thus the investment properties would still go default. I am certainly no fan of bailing people out of debt when they have made the mistake of buying more than they can afford, but since the time for that debate is past, and the money is already going to be spent, I dont think this idea is too bad compared to the alternatives. Lets not let this turn into another bailout like AIG.

I must backtrack a bit on m... (Below threshold)
Bamaman:

I must backtrack a bit on my previous statement, it does indeed seem to be in addition to the recent bailout. I guess I was hearing what i hoped I was hearing. Now im more depressed than ever.

Too bad I'm already in debt... (Below threshold)
jcm:

Too bad I'm already in debt forever with a school loan. Who will be talking about these next?

What's your point, hyper?</... (Below threshold)

What's your point, hyper?

Dang, More research reveals... (Below threshold)
Bamaman:

Dang, More research reveals i was right the first time.

"McCain economic advisor Doug Holtz-Eakin said that instead of the lenders taking the loss on the mortgages, federal funding already provided by the $700 billion bailout bill approved last week would pay for it."




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