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Paul Kiesel
Paul Kiesel
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On Fighting Foreclosure: McCain vs. Obama

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Barack Obama wants to see the government step in to help homeowners facing foreclosure. John McCain, who several months ago stated he wouldn’t support a foreclosure bailout, has recently changed his attitude towards the mortgage meltdown:

“[. . . ] According to John McCain, it’s the borrowers’ fault for why we’re in this mortgage mess and McCain couldn’t understand how such a small percentage of foreclosures and/or troubled mortgages are causing this much financial turmoil, “[Americans] bought homes they couldn’t afford [. . .] Only 55 million [homeowners] have a mortgage at all and 51 million are doing what is necessary [. . .] to make their payments on time. That leaves us with a puzzling situation: How could 4 million mortgages cause this much trouble for us all?” (New York Times, 3/25/08). He also said in March that government intervention is unnecessary and he wouldn’t support it, but clearly his statements today contradict his former ones.

“With news of Fannie Mae and Freddie Mac having liquidity problems (which federal regulators are denying) and possibly needing a government bailout soon, McCain said, “Those institutions, Fannie and Freddie, have been responsible for millions of Americans to be able to own their own homes, and they will not fail, we will not allow them to fail [. . .] They are vital to Americans’ ability to own their own homes. And we will do what’s necessary to make sure that they continue to function,” (The New York Times, 7/10/08).”

(LosAngeles.InjuryBoard.com, 7/10/08)

McCain gradually broadened his position to support government intervention, legislation for which Congress passed in July, but had wanted stricter requirements for borrowers seeking aid.

Below are the two candidates’ stances on “Fighting Foreclosure.” To see the candidates’ other economic policies, click here: CNNMoney.com.

McCain

· Give homeowners the chance to have their loan modified, provided they meet certain criteria.

· Offer of financial assistance to borrowers contingent upon lending reform.

· Provide more funding for community development groups so they can expand their home rescue efforts.

“…Lenders and borrowers alike were caught up in the speculative frenzy that has harmed the housing market. And it is not the responsibility of the American public to spare them from the consequences of their own bad judgment.” – McCain

Obama

· Allow troubled homeowners to refinance to a loan insured by the Federal Housing Administration.

· Allow subprime borrowers to challenge foreclosure proceedings if they’ve been subjected to abusive lending practices.

· Create a 10% tax credit for homeowners who do not itemize their taxes.

· Create a $10 billion fund to help victims of predatory loans.

· Create a separate $10 billion fund to help state and local governments maintain critical infrastructure.

· Authorize bankruptcy judges to reduce mortgage principal.

“…If the government can bail out investment banks on Wall Street, then we can extend a hand to folks who are struggling on Main Street.” – Obama