About two weeks ago, John McCain, in a high-profile speech, unveiled his response to the mortgage crisis. Despite the seriousness of the issue, the GOP presidential nominee unveiled a classic YOYO policy: “You’re on your own.”
As the New York Times noted shortly after the speech, “The real core of his speech was his argument against government action to help dig distressed homeowners — or the country — out of the mortgage mess…. His suggestion that federal aid might wrongly reward ‘undeserving’ homeowners sounded both mean-spirited and economically naive. And then there is the double standard. He seemed less concerned about the government helping reckless bankers, endorsing its role in preventing the bankruptcy of Bear Stearns.”
Yesterday, in one of the quicker flip-flops in recent memory, McCain reversed course. The Washington Post, apparently anxious to give McCain a hand, said the senator was “refining” and “revising” his plan. That’s enormously generous of the newspaper, but in reality, McCain’s proposal was an embarrassing dud, so he gave up on it.
Senator John McCain, who drew criticism last month after he warned against broad government intervention to solve the deepening mortgage crisis, pivoted Thursday and called for the federal government to aid some homeowners in danger of losing their homes, by helping them to refinance and get federally guaranteed 30-year mortgages.
“There is nothing more important than keeping alive the American dream to own your home, and priority No. 1 is to keep well-meaning, deserving homeowners who are facing foreclosure in their homes,” Mr. McCain said in a speech on economic themes that he gave at a window company in the Bay Ridge section of Brooklyn.
Funny, two weeks ago he thought these same homeowners shouldn’t be “rewarded” for acting “irresponsibly.”
Perhaps the nation’s callous constituency is not quite as large as the McCain campaign had hoped.
Filed Under: Economy, Election 08, Government Policy, John McCain
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McFrist.
Sadly, the press continues to ignore the difference between the candidate they are reporting on and the ’straight talker’ myth they have chosen to promote. The voters are not so sanguine.
Mc Cain can’t think in terms of a 30 year mortgage. He’d be 101 by then wtih about the same ideas as he has now.
None.
McCains not serious about it to begin with. Because he knows it’s a complete disaster and the first thing he would have to do to even begin fixing the U.S. is STOP-END the “war”. Cut off the Neocons and MIC from the hog trough. Put Wall Street on notice the free ride is over. Etc, Etc.
And it’s time to help the people and rebuild this country and it’s reputation.
He’ll never be able to rise to that challenge.
And where was Bush Co when these con artists we’re pulling off all this stuff the past 7 years on an American Public that was led to believe . . . hey we got you covered just sign on the dotted line and you’ll be the proud owner of a big shiny new home.
“well-meaning, deserving homeowners”
See, the well-meaning, deserving homeowners didn’t buy out of their price range or take risky loans. Have to say I’m not exactly opposed to the “on your own” strategy, except for the fact that extremely poor financial planning by some people will cause huge impacts in communities and neighborhoods due to foreclosed homes and loss of taxes. I don’t understand rewarding bad behavior. Keep in mind, this same strategy should be held with corporate America as well.
This whole “homeowner” fiasco has gotten out of hand. These people aren’t homeowners - they are mortgage holders. They gambled at the poker table and lost. OTOH, the lenders - in the gambling analogy, the “house” - didn’t win either, as they knew full well the gamblers couldn’t afford the risk of losing. The result is that both sides lose. Why, and under what authority, should there be a bail-out of either player? Too big to fail? Bullshit. If we keep bailing out the “players” we will learn, the hard way, that no entity is too big to fail. Including the US as a whole.
While I detest the BA to the very core of my being, I’m appalled that the Democratic Congress would choose to support the developers, of all people (there is no benefit to the greater economy by doing this, as there will be no net effect - other than greater loss of money and jobs - on the bottom line). Check your rep’s campaign contributions from builders/developers and/or the “charities” to which they (the developers) contribute.
At this point, it’s getting very difficult to tell the Dems from the Repubs.
Here is I believe an example of a person getting taken and it should have been caught but it wasn’t. A lady owned her home outright. She took out a loan on her house with payments she could afford. I can’t remember the amount of the loan or what it was for, but it was reasonable. What she wasn’t told and it was probably buried in a sea of small print was that the interest on the loan would like triple in only a few months. The new payments she owed sky rocketed. She is now in foreclosure.
That lady wasn’t buying out of her range, she wasn’t trying to make a buck on the rising home prices, she was just trying to use some of the money invested in her home for something she honestly needed. This lady deserves some breaks.
McCain or anyone else can’t group all the people effected by this mess into one category. They need to be examined on an individual basis.
Now can we go back and see what really happened at Bear Stearns? I think that’s a good place to begin.
McCain will lose bigger then Dole in 1996. Everything the guy says is a joke.
If you sign a legal document without reading it, or if you read but did not understand the document you were signing, there is no legitimate recourse for your lack of due diligence. I feel bad for the lady you mention, but she agreed to the terms of the loan - I didn’t. If the terms of the loan were fraudulent or otherwise illegal (we need to reinstitute usury laws), then she has recourse. Otherwise, she’s on the hook.
Marcus Aurelius @ 10:
I understand this woman is technically on the hook, but if anything this woman should be able to go into arbitration,as some others should be able to do.
McCain is a empty-headed empty suit. My friends, this senile codger will float on the breeze of the hot air from the host of lobbyists propping him up.
pissed off patricia @ 8:
Agreed. If an idea like this one is going to be used it must be applied on an individual basis. There are people like the woman you mentioned and then there are those that provided no documentation for an ARM loan, got into the house and then took out massive lines of credit off of that house to buy other stuff. They did this with the thinking that they could pay it all off when they sell it just after it has appreciated in value.
mudshark @ 11:
In this case Marcus, I have a feelin that this woman was taken advantage of. Not knowing all the facts, but in situations like this one(and I’m sure there are more) these people should qualify for arbitration.
Given the current republican govt’s willingness to bail out companies, McCain’s stance of telling homeowners YOYO does look kinda bad. Especially in an election year.
The problem lies in the fact that the present administration, in it’s zeal to favor it’s Corporate Masters Lowered the standard rules that the loan companies had to follow in lending.
Those of you over 40 will remember that in the past it was always a case, that in order to secure a loan for a piece of property, you (1) had to have at least 10% of the gross for a down-payment and (2) the monthly premium could not exceed 25% of your monthly Net Salary.
The same kind of thing happened with the Credit card companies, the standard was lowered and then they started just “mailing out” credit cards to students who had no jobs, no visible means of support (except their families who were probably already struggling to pay for the students education.).
I don’t know the fee for a real estate attorney today, but that is where most people missed the boat. They should have had an attorney look over the papers before they were signed.
Last April we sold a house and we had our attorney look over everything we did, the realtor did and everything at closing. Sure they charge for their work but what it could save the buyer or the seller makes it worth the $$
The lady I mentioned in my above comment was elderly and sadly very trusting. She was taken advantage of in the most horrible financial way. She was robbed of her home. There is just no other way to look at it.
mudshark @ 14:
I doubt very seriously if a clause that the interest rate on her loan could go up dramatically in a few short months would’ve been buried in fine print. But if that is the case, then yes, she should be able to go to arbitration or seek some some legal recourse, especially if the loan officer didn’t point that out to her and made absolutely sure she knew and understood that. She doesn’t have to wait for any legislation to be able to take action if that were the case.
Whether it was housing or credit cards, they were used as bait and many people took the bait because it looked so tempting they couldn’t say no. Now the hook’s barb has appeared in that bait and the people can’t spit it out. They will be in debt to someone for a long long time. They will be working basically for the banks as they try to scrape together principle and interest for years to come.
Seems to me the banks should be punished along with the borrowers. Banks took advantage and people were gullible.
realclearpolitics dot com just ran a piece (yesterday??) arguing that a huge percentage of the bad mortgages can be blamed on the borrowers. Here it is then, the right wing official story. Blame individuals, bail out corporations. Individuals are supposed to have sufficient knowledge (despite real clear asymmetries) to avoid making bad decisions. The poor banks were DUPED into making loans without checking documents. 40 year mortgages, interest only mortgages, ARMs…. Many of these should simply not be available. Without them, housing prices can’t inflate beyond what people can REALLY afford.
As a notary public in a rural area, I am hired to witness home loan closings with national companies. Some loans are good with low, fixed interest rates, some not so good. The worst I have seen was for a family with a child with medical problems. They knew the loan had an adjustable interest rate but were desperate to get money to pay the medical bills. Their home was a very modest one and I often wonder how they are doing in this economy. They were “on their own” and having a very difficult time when things were looking OK several years ago.
The holders of the newly fangled mortgages DO bear some of the blame for the mess they’re in. I’m sorry but if one is stupid enough to think that by earning $20,000/yr qualifies you for a $300,000 mortgage, you are a MORON.
pissed off patricia @ 19:
Don’t get me wrong - the bankers should lose all they have (even if it means we take our collective lumps), followed by lengthy imprisonment at hard labor.
Why is it ,that the government can bail out big business with tax-payers money,but not homeowners (taxpayers) with “dodgy mortgages?????
Don’t you just LOVE how it’s always the consumer’s fault? When predatory lenders and bad banking make the mortgage industry go boom, it’s the consumer’s fault. Economy is shaky? You’re not shopping enough! [never mind that the dollar is in a free fall] Jobs going over seas? You’re wages are too high! [but CEOs of bankrupt companies still get their million dollar bonuses]
mcstain is an idiot and C&L is doing the world a service by pointing this out as often as possible.
dennis @ 18:
I agree with Dennis. If that is indeed the case then she has other avenues available to her that do not require legislation.
Aged 32, I’ve saved over $1 million in cash over the last 5 years by being prudent with my savings. I did this so I could afford a home when the unreasonable house prices finally crashed. I did this by saving 70%+ of my income and making a few timely investments so that i could buy a decent house outright. While doing this, I have lived in what can only be called “substandard” accomodation and working 80+ hour weeks.
By any measure of fairness, I should be a windfall winner now for my prudence, sacrifice, and patience. But, no, beause of pandering to the center, house prices will continue to remain artificially high and inflation will increase. I support obama in most things, but this bailout of homeowners is ridiculous. Let them lose their houses, let the mortgage banks fail, and let the market do what it does best.
Dr. Acula @ 22:
i agree. the problem is how SOME where trapped in the illusion that they were making a short term investment of some kind. meaning my $200,000 home in only 5 years will be worth $280,000 and all i have to pay is the interest…. oops now their payment has doubled and their home is only worth $120,000. these “investors” went all in with their money, if the would have made out, great, unfortunately they did not.
now, if they were talked into the loan with the promise of profits the mortgage company better be doing something about it.
Just to add to my comment at #28
i would also like to know this was their primary residence or if some of these people just got caught trying to flip houses using this types of loans. these “flippers” no way in hell should be bailed out.
L.A. Confidential @ 4:
By the second year of his term, he won’t be able to rise from the toilet on his own.
The real estate bubble will deflate regardless what folly of a government program is developed to put losses on the government balance sheet.
everybody wants to manipulate the market after it begins to crash. Too late. A bust follows every boom.
A cycle has an up phase and a down phase. After one cycle, one arrives back at zero. +5 -5 = zero.
A median house in Los Angeles should never have reached 500,000 dollars. Thus prices will fall.
“Despite the seriousness of this issue…” Where were you when Greenspan dropped the rate to 1% and told home buyers to get adjustable rate mortgages? That was when this was a serious issue, not after the bubble bursts.
The cart comes after the horse, not before it. The boom comes before the bust. Every boom will end in a bust.
You do not get yin without yang. A bailout program will not work. The record credit bubble will deflate, as the virtuous cycle becomes the viscious cycle. Hoover raised taxes. A recession turned into a depression- a credit bubble deflated. This credit bubble will deflate as well. The governmen tcannot prevent the inevitable.
pissed off patricia @ 8:
Thanks Patricia, I agree with you. There was a lot of predatory lending going on. NY’s former governor Eliot Spitzer was trying to stop these banks too, until he was forced to resign. I’m sure it was just a coincidence. [snark]
The holders of the newly fangled mortgages DO bear some of the blame for the mess they’re in. I’m sorry but if one is stupid enough to think that by earning $20,000/yr qualifies you for a $300,000 mortgage, you are a MORON.
——————
You are not a moron when Alan Greenspan, head of the Federal Reserve at the time, and the banks say you are qualified for such a loan.
left of center @ 28:
Yeah, Left of Center, you’re describing another aspect of the crisis, which I’ve read in the papers too: That homeowners thought their homes would increase in value. Instead they wound up with mortgages worth more than their homes, and they couldn’t afford the usury interest rates on the mortgage.
You know, when you close on your mortgage: The bank has its representative at the closing, a lawyer, the seller is there with their lawyer, and you’re there with your lawyer. And your lawyer is supposed to guide you through the signing of a mountain of paperwork. There’s no time to stop and read every paper. Because it’s literally a huge stack of paper and everyone is trying to proceed swiftly.
Ron.j @ 33:
Ron, you are 100% right. And we’re is the responsibility on the part of the LENDERS to do due diligence and QUALIFY who they lend money to.
Banks don’t GIVE money away. Regulation WAS there to protect against GREED on the part of predatory lenders. These investment houses, mortgage houses knew EXACTLY what they were doing. They got the green light from the Fed and from the GOP Congresses that have been calling the shots for the last 25 years. They got the green light from happy talk economic forecasts with NO BASIS IN REALITY, a misguided simplistic view that cheap money guarantees growth, and a misguided monetary policy that has led to a destroyed currency, chronic and literally unmanageable trade and budget deficits, and a hollowing out of the American economy.
Larry Lessig @ 27:
Yeah, the new Bushvilles… Not everyone deserves to live in a tent city.
I guess *I* am part of the nation’s “callous constituency.” I am 28 with a good-paying job and yet my wife and I can not possibly afford to buy a house in our area given how much prices have risen over the last 5 years. Even with the mild “adjustment” downwards, everything is still way to expensive because homeowners don’t want to take a “loss.”
Look, I’m not in favor of bank bailouts, but neither do I have a high degree of sympathy for people who took out interest-only mortgages or used other fancy means to buy more house than they could really afford. The whole concept - from Wall Street down to many of those who used these clever new mortgages - was that everyone would get rich when they sold their houses for a lot more money. And who would make them rich? Me and other new homebuyers who happend to be younger and looking for a first house. At least that was the plan.
Homeowners who used these mortgages to buy houses beyond their means took a risk. If they were right and prices kept going up, they would have made easy money. No one would have been looking to tax them on their gains to help me buy a house today. But it didn’t work. The only way my wife and I can hope to own a house is if housing prices in our area come down. Please explain to me why it is callous to NOT want to help subsidize homeowners to help 1) stabalize housing prices 2) thereby ensuring that we will continue to not be able to afford a home.
Give me a break!
Apt Dweller @ 37:
I agree with you to a point. Those “interest only” borrowers are SPECULATORS, and yes they do not deserve sympathy. However, the typical GOP right wing response is to throw the baby out with the bath water. There are HOMEOWNERS out there in real trouble. These are middle to low income borrowers who bought homes to live in and raise their families. ARMS and other lending schemes were put in place and marketed to provide opportunity. However, again…the onus is on the lending institutions to be diligent in who they lend to. The majority of this population does not work in finance and is not fully knowledgeable in the ways of finance. They rely on the professionalism of the professionals to do their jobs. Those professionals are kept honest by regulation. Without regulation there is greed and predation, and I’m sorry…we do NOT live in the jungle. This is a SOCIETY, and society is about PEOPLE…not corporations.
Bear Stearns should have