McCain Vs. Obama in the Housing Market

Real Estate Agent with The Allen Group

It seems to me that both of our presidential candidates care about the future of the American people.  The problem for me is always deciphering what their plans for us really mean.  Here is what each candidate has posted on their websites on the economy and real estate. Happy Reading- Natalie

John McCain  believes there is nothing more important than keeping alive the American dream of owning a home.  Priority number one is to keep well-meaning, deserving home owners who are facing foreclosure in their homes.

John McCain's approach to helping sub-prim or other financially strapped mortgage borrowers is built on sound principles:

     No taxpayer money should bail out real estate speculators or financial market                 participants who failed to perform due diligence in assessing credit risks.  Any assistance for borrowers should be focused solely on homeowners and any government assistance to the banking system should be based solely on preventing systemic risk.

     Any policy of financial assistance should be accompanied by reforms that promote greater transparency and accountability to ensure we never face this problem again.

John McCain has proposed a new "HOME Plan" to provide robust, timely and targeted help to those hurt by the housing crisis.  Under his HOME Plan, every deserving American family or homeowner will be afforded the opportunity to trade a burdensome mortgage for a manageable loan that reflects their home's market value.

Elgibility:  Holders of a sub-prime mortgage taken after 2005 who live in their home (primary residence only); can prove creditworthiness at the time of original loan; are either delinquent, in arrears on payments, facing a reset or otherwise demonstate that they will be unable to continue to meet their mortgage obligations; and can meet the terms of a new 30 year fixed-rate mortgage on the existing home.

   John McCain's HOME Plan Will Keep 200,000 to 400,000 Families From Losing Their Homes.  "But at the same time, McCain is calling for agressive federal plan has many of the elements of a proposal by Rep. Barney Frank, D-Mass., and loan principal and then write a new loan that would be backed by the federal government through the Federal Housing Administrating." (Tom Raum, "Everyone's Invited: McCain Economic Plan Draws From Both Parties," Tucson Citizen, 4/17/08)

How It Works:  Individuals pick up form at any Post Office or download the form over the Internet and apply for a HOME loan.  The FHA Home Office certifies that the individual is qualified, and contacts the individual's mortgage servicer.  The mortgage servicer writes down and retires the existing loan, which is replaced by an FHA guaranteed HOME loan from a lender.

John McCain will bolster groups like Neighborworks America that provide mortgage assistance to homeowners in their communities.

                 Protect Homeownership and Crack Down on Mortage Fraud

will crack down on fraudulent brokers and lenders.  He will also make sure homebuyers have honest and complete information about their mortage options, and he will give a tax credit to all middle-class homeowners.
         Create a Universal Mortgage Credit: Obama will create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief.  This credit will provide an average of $500 to 10 million homeowners, the majority of whom earn less than $50,000 per year.
         Ensure More Accountability in the Subprime Mortgage Industry:  Obama has been closely monitoring the subprime mortgage situation for years, and introduced comprehensive legislation over a year ago to fight mortgage fraud and protect consumers against abusive lending practices.  Obama's STOP FRAUD Act provides the first federeal definition of mortgage fraud, increases funding for federal and state law enforcement programs, creates new criminal penalties for mortgage professionals found guilty of fraud, and requires industry insiders to report suspicious activity.
          Mandate Accurate Loan Disclosure:  Obama will create  Homeowner Obligation Made Explicit (HOME) score, which will provide potential borrowers with a simplified, standardized borrower metrick (similar to APR) for home mortgages.  The HOME score will allow individuals to easily compare various mortgage products and understand the full cost of the loan.
          Close Bankruptcy Loophole for Mortgage Companies: Obama will work to eliminate the provision that prevents bankruptcy courts from modifying an individual's mortage payments.  Obama believes that the subprime mortage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law.

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According to the New York Times, Democrats blocked Bush's Fannie Mae and Freddie Mac reforms so low income people with bad credit could buy houses.
''These two entities -Fannie Mae and Freddie Mac - are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, and the less we will see in terms of affordable housing.'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee.

Sep 18, 2008 09:30 AM