Yes, but saving the bacon for underwater homeowners.

A thin line to walk in arguing against the proposal---Obama can now be portrayed now as rejecting the first way forward to allowing people to stay in "their" house.

i agree that these mortgages must be adjusted in many cases, so people can stay in their houses, neal. where i differ is who should pay for it. i feel the banks who made these dumb loans in the first place should pay for the adjustments, not the taxpayers.

orange

Obama can now be portrayed now as rejecting the first way forward to allowing people to stay in "their" house.

Actually, Obama at first seemed to agree with McCain's program, saying it was already allowed for in the bill passed last week, and that buying back these mortgages directly had been discussed with Paulson. There is also the question of whom it would help. A lot of people got mortgages with no screening, but the banks estimated how much a person in such and such a career might make. Also many required no down payments. These people would get no relief under McCain's plan. Instead, it seems to be intended to protect values in upscale neighborhoods, as well as the people who created and invested in these highly unorthodox loans.

The issue is a clear contradiction for McCain, though.

You can't be talking about smaller gov't and the gov't getting out of the way, and then go to Obama's left on mortgages. It's a blatant ploy.

Obama can now be portrayed now as rejecting the first way forward to allowing people to stay in "their" house.

Obama supports allowing Bankrupcy judges to reset the the interest rate and potentially the value of the mortgage (Biden covered this in the VP debate and Palin seemed to agree). That way people can stay in their houses but the burden shifts to the lender to absorb the costs.

McCain's plan would essentially buy up the mortgages at face value (an enormous cost to taxpayers). Salon's Andrew Leonard had a good overview of way this might not even be possible given the tangled mess of ownership the derivatives market has created. But more importantly it allows the lenders and the people who made all the bad bets on mortgage backed securities to get back their losses and puts the ENTIRE burden on the taxpayer.

Standard Republican plan, privatize profit, socialize risk.

Obama can now be portrayed now as rejecting the first way forward to allowing people to stay in "their" house.

I think that's a misread neal. That is to say, I think that most people will not read this as a way to help them but rather as a way to use their tax dollars to help people who took out loans they couldn't afford and the banks that did the lending. Obviously I could be wrong but I suspect that that is the way it will play because, after all, most people are actually paying their mortgages.

Under present tax law, McCain's plan would generate significant taxable income for any homeowner whose mortgage is renegotiated.

For example, if Uncle Sugar pays off a homeowner's $120,000 mortgage and then accepts a new mortgage on the same property for only $100,000, the homeowner will receive a 1099 form reporting $20,000 in taxable income to the IRS. This kind of income is called "forgiveness of indebtedness." The amount of income tax that would be due will depend on the homeowner's other taxable income. Gotcha!

Of course McCain has thought of this. Hasn't he?

"You can't be talking about smaller gov't and the gov't getting out of the way, and then go to Obama's left on mortgages."

Sorry, but that line is a load of crap. People of the left believe government should do what business can't do/ won't do/ does badly. People of the right believe that government is some trash can where all the garbage gets dumped and takes the fall for every problem. Privatizing gain and socializing losses are a right wing phenomenon, it's not the politics of the left at all.

And let's not forget that even Karl Rove admits the McCain brainfart is just a bastardized Hillary Clinton idea.

For those open to Mr. McCain, it is unclear how they will respond to his plan to order the Treasury secretary "to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes." It came across as both impulsive and badly explained. No experts were ready to defend it. No explanatory paper was flung at journalists. Nor were surrogates like Mitt Romney briefed. But the campaign did admit it borrowed the idea from Hillary Clinton.

http://online.wsj.com/article/SB122350996821817371.html

Suck on that, GOopers.

I have a better idea. Why don't you let someone who can afford it have the underwater "homeowner"'s house. Maybe someone who settled for a townhouse because they knew they couldn't afford the house he wanted because some fool who signed a no interest balloon loan outbid him.

There's lots of people who should lose "their" house. Perhaps they can truly have "their" condo. They can buy it from the guy who knew he couldn't afford the price this babe-in-the-woods was conned into paying and that fellow can upgrade to what he should have been able to afford.

Let the free market play slo-mo musical chairs until everyone is where they should have been before deregulation roulette screwed everyone top to bottom.

If the government needs to assist some forbearance in order to avoid a market crash, okay. But let's not provide any permanent reward for recklessness / ignorance. Ignorance has my sympathy, but not my congratulations. Too many hard working Americans deserve more of the latter and less of the former.

Obama needs to come up with a few new ideas of his own. See who agrees:

http://www.huffingtonpost.com/amb-marc-ginsberg/obamas-new-deal-for-ameri_b_133041.html

THe odd thing about the housing bubble is the only true winners are the ones who sold their houses at inflated prices and held the money.

Nowhere in this equation, do they ever have give back the money, since they are long gone, maybe laughing at the other players.

I can perhaps be excused from wondering who on the McCain campaign came up with the various iterations of this mortgage plan. It seems like they've all been sent packing for being inconveniences, so I'm seriously curious who's left minding the economic policy shop.

Sorry, but that line is a load of crap. People of the left believe government should do what business can't do/ won't do/ does badly. People of the right believe that government is some trash can where all the garbage gets dumped and takes the fall for every problem. Privatizing gain and socializing losses are a right wing phenomenon, it's not the politics of the left at all.

Right, and buying up bad paper is what businesses right now will not do, cannot do and does badly. That's why this is moving to the left of Obama.

And that's what McCain does. He pivots when in a corner. He pivoted in choosing Palin, a right-winger. He pivoted in "suspending" his campaign.

Anyone who sees the reaction from the right on this issue can plainly see that.