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McCain wants to spend $300 billion more to buy up bad mortgages
michellemalkin.com ^ | 10/7/08 | Michelle Malkin

Posted on 10/07/2008 9:04:34 PM PDT by jddqr

I can’t underscore enough what a rotten idea John McCain’s ACORN-like government mortgage buy-up is. I said it during my liveblog. And I’ll say it again: “HE WANTS TO EXPAND THE BAILOUT. He wants to do what ACORN wants to do. We’re Screwed ‘08.”

This was his supposed “game-changer.” This was the very first thing out of his mouth during the debate tonight — his big pitch right off the bat. The McCain campaign immediately sent out this fact sheet on the proposal, which will cost at least $300 billion. The proposal involves directing the Treasury Secretary to “purchase mortgages directly from homeowners and mortgage servicers.” That’s on top of the trillion-dollar crap sandwich, the $85 billion to AIG, the $25 billion to automakers, the $200 billion in capital and credit lines to Fannie and Freddie, and who knows what else we’ll be forking over to California, Massachusetts, etc., etc., etc.

He spent the entire debate assailing massive government spending — while his featured proposal of the night was to heap on more massive government spending to pursue home ownership/retention at all costs. If Obama had proposed this, the Right would be screaming bloody murder about this socialist grab.

(Excerpt) Read more at michellemalkin.com ...


TOPICS: Constitution/Conservatism; Government; News/Current Events; Politics/Elections
KEYWORDS: 2008debates; backstabber; bailout; betrayed; fundedbysoros; malkin; mccain; mccainpolicy; mccaintruthfile; mccrazy; mcinsane; mcsoros; mortgages; obama; rino; rinomccain; sorosboy
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To: ravinson
They had a huge say in their approval, both by applying for the loans and by voting for the politicians who promised and gave them subsidized housing.

Nice try. But incorrect. Applying for a loan and getting authorization for a loan approval are two VERY different things.

You can apply for a loan to purchase a 15 million dollar yacht while making 30k a year. Think you'll get the loan?

When you apply for a loan, the one wanting the money, has ZIP authority, or any say whatsoever as to whether their loan is approved. Zip, nada.

241 posted on 10/08/2008 4:54:02 PM PDT by dragnet2 (We witnessed the biggest expansion of government in American history)
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To: adorno
What McCain proposed is, quite frankly, socialism and itself, risky. But, we need to get over the past and into programs that can start getting us over the problems. We need to try to stabilize the real estate market and the credit markets. I'm not sure that socialism, in the form of rescue packages, will work, but, at least we can try to stabilize the situation.

Stability isn't always a good thing. The deeper the pain, the better the lesson is learned.

There are things the govenment could legitimately do without compounding the problem, such as accelerating the foreclosure/eviction process to clean out the deadbeats ASAP and cutting (better yet eliminating) taxes on income, investments, and inheritances.

Any program that involves government subsidies is bound to fail and lead us further down the road to absolute socialism and other forms of institutional corruption. It would be like giving alcoholics free liquor to keep them from stealing it.

242 posted on 10/08/2008 5:03:44 PM PDT by ravinson
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To: dragnet2
Nice try. But incorrect. Applying for a loan and getting authorization for a loan approval are two VERY different things.

Actually, both side have to approve of the loan before it is made. I get calls and letters all the time from companies telling me I've been approved for a loan, but if I don't approve those offers they don't become loans.

Incidentally, there were no mortgage loans made that anyone knew could not be paid. They just all knew (or should have known) that some loans couldn't be paid unless the home values continued to rise rapidly.

You can apply for a loan to purchase a 15 million dollar yacht while making 30k a year. Think you'll get the loan?

I almost certainly would if I had an underwriter nicknamed Fannie or Freddie (or if I put up sufficient collateral).

When you apply for a loan, the one wanting the money, has ZIP authority, or any say whatsoever as to whether their loan is approved. Zip, nada.

Despite what passes today for common sense, there is no such thing as a contract approved by only one party. Anyone who consciously signs a loan agreement is signifying their approval of the terms.

243 posted on 10/08/2008 5:35:53 PM PDT by ravinson
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To: ravinson
Actually, both side have to approve of the loan before it is made.

LOL!

OK, I give up. Anyone wanting a big fat loan are legally authorized to approved the loan themselves.

:o

244 posted on 10/08/2008 5:40:57 PM PDT by dragnet2 (We witnessed the biggest expansion of government in American history)
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To: PhatHead

You are correct in that the value of the home has no effect on the lender’s liquidity once the home sale has already gone through. I didn’t say that it did. What I said was that purchasing the mortgage increases the liquidity, which is a true statement. Those banks now have more cash on hand to lend since one of their assets (the home) has been made liquid (cash). That’s simple enough.


245 posted on 10/09/2008 10:46:05 AM PDT by flintsilver7
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To: wardaddy
but it’s like choosing tween a fat girl and one with bad teeth

It's far worse than that. It's more like choosing between cell mates. BOHICA.

What a mess our primary was. We had Duncan Hunter, who, bless is heart, isn't ready for prime time. And we had Ron Paul, who wants to surrender to Al Quaeda. Other than that, we had a bunch of big gubmint statists.

246 posted on 10/09/2008 10:53:06 AM PDT by Huck (America's epitaph: At least we tried. Better luck next time.)
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To: Sunnyflorida

Purchasing a mortgage that is being paid is profitable. Today, as it were, you’d be making around 6% annually on that investment. (I hope I don’t need to explain why mortgages are used for investing.) If defaulted loans have caused banks to lose liquidity, then they can increase their liquidity by selling their assets (the mortgages). They may or may not need or want to do that, but that’s not the point. The buyer (or the buyer’s party) in nearly all cases has the right to pay off the loan at any time.

Consider the four years in question. If a first-time homebuyer purchased during that time, depending on their market they most likely paid between 5% and 20% more than the house’s current fair market value. If the original purchase price was $100,000 and the mortgage was “exotic” (90-10-10 and 80-15-5 loans were very common), then the bank was initially owed, say, either $90,000 or $95,000. The house may now be worth $80,000. If you purchase that loan for the remaining value of the principal and restructure the note for $80,000 at a fixed rate of 6%, you will earn, on that investment, $92,670 in interest. This is not ideal because you must deduct the difference in the purchase price and the principal, so in this case you make either $77,670 or $82,670 over a 30-year period. (Note that when considering the rate of inflation, the investment neither gains nor loses money on average).


247 posted on 10/09/2008 11:02:03 AM PDT by flintsilver7
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To: jddqr

Sounds like all standards are now going overboard.


248 posted on 10/09/2008 12:44:34 PM PDT by life is not fair
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To: flintsilver7

I didn’t disagree that giving money to people or organizations increases liquidity. I am only pointing out that this approach has nothing to do with the current “liquidity problem” that some lenders may have. (Nor, it may be worth pointing out, is that what McCain suggested it was meant to do.) It is a government handout that will, by design, pervert markets (in many ways) without addressing any real problems, and it will vastly expand government. I think it is a really bad idea.


249 posted on 10/09/2008 12:57:42 PM PDT by PhatHead
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