McCain Announces New Mortgage Plan for American Homeowners

Oct 8th, 2008 @ 8:55 PM by Amber Nelson

Struggling homeowners could get direct help from the government if Republican presidential candidate John McCain is elected. The Arizona senator announced his new $300 billion mortgage aid proposal during Tuesday night’s presidential debate.

The plan, dubbed the American Homeownership Resurgence Plan, would authorize the federal government to buy up failing home loans and refinance them into more affordable mortgages for each affected homeowner.

“I would order the Secretary of Treasury to immediately buy up the bad home loan mortgages in America," McCain said during the debate, "and renegotiate at the new value of those homes, at the diminished values of those homes, and let people make those - be able to make those payments and stay in their homes."

McCain’s campaign contends that the proposed funds for this plan would come from existing programs including the recent $700 billion financial bailout package and a $300 billion FHA homeowner rescue program that opened its doors in the latest week.

Still, many worry that the taxpayer would end up making the greatest sacrifice in this deal, as previous and current plans call for lenders to voluntarily take losses to write down mortgage balances in order for their customers to qualify for FHA refinancing. The McCain plan requires the taxpayer ultimately to foot the bill for all the soured mortgages.

In order to qualify for help from this plan, mortgage borrowers would have to show proof of good credit, income documentation, and that the home in question is the primary residence, not an investment property. Then the homeowner must show that they are either already behind on home loan payments, or that they are likely to default in the future because of adjusting interest rates or other factors.

The Barack Obama campaign has said that the McCain promises the same things that the Democrats have already been proposing and that are already available in the recently-signed bailout bill.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

Posted in Mortgage Rates, Mortgage Refinancing, Mortgages
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