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Thanks for showing how much you guys will defend your guy no matter how wrong they are!!
Maybe I'm wrong, but I thought Biden was talking about making the banks readjust peoples' mortgages to reflect a lower interest rate, but not having the government buy the bad loans. That still rewards people to a certain extent for making a bad mortgage deal, but it's the banks that take the hit on it, rather than the tax payer. I may have misunderstood Biden's proposal, but I thought that's what he said.
Maybe I'm wrong, but I thought Biden was talking about making the banks readjust peoples' mortgages to reflect a lower interest rate, but not having the government buy the bad loans. That still rewards people to a certain extent for making a bad mortgage deal, but it's the banks that take the hit on it, rather than the tax payer. I may have misunderstood Biden's proposal, but I thought that's what he said.
Yes, you are correct, but both of them put the responsible people on the hook for those who are not.
There is one difference though, McCains "request" has already been passed into law and has been signed off by Obama.
Person A, (Obama) loses the ability to criticize person B (McCain) if person A signed the law putting the plan into place..
Yes, you are correct, but both of them put the responsible people on the hook for those who are not.
There is one difference though, McCains "request" has already been passed into law and has been signed off by Obama.
Person A, (Obama) loses the ability to criticize person B (McCain) if person A signed the law putting the plan into place..
Well, I think there is a significant difference between the two plans if the governent buys the loans (McCain) or banks keep the loans but make less money on them (Biden). If a borrower walks away in the first instance the it's the banks' responsibility to deal with the loss. If a borrower walks away in the second situation, the government loses and then has to sell the house, all at the expense of the taxpayer.
Also, I don't think that the bailout encompassed this provision--the direct buying out of mortgages. If it did, why would McCain be proposing it at this point?
Well, I think there is a significant difference between the two plans if the governent buys the loans (McCain) or banks keep the loans but make less money on them (Biden). If a borrower walks away in the first instance the it's the banks' responsibility to deal with the loss. If a borrower walks away in the second situation, the government loses and then has to sell the house, all at the expense of the taxpayer.
Also, I don't think that the bailout encompassed this provision--the direct buying out of mortgages. If it did, why would McCain be proposing it at this point?
I don't think the courts would uphold the banks being forced to do that, though I'd love to see them stuck like that.
I don't see how McCain's plan is any different from the $700 BIL BANK BAILOUT PLAN. The only difference is he is selling the repackaged loan back to the original owner. It is virtually a carbon copy of the $700 bill bailout.
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EXAMPLE $700 bil BANK BAILOUT PLAN
1) Bank has a bad asset (foreclosed home) -$300K
2) Govt (Treasury) buys foreclosed home -$300K from bank
3) Govt sells home to public at $200K (Current value of home) using FHA
(In this case, the owner would not be buying the home back because of bad credit)
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EXAMPLE MCCAIN HOMEOWNER BAILOUT PLAN
McCain said, "I would order the Secretary of Treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes, at the diminished values of those homes, and let people make those - be able to make those payments and stay in their homes." The government would convert failing mortgages into low-interest, FHA-insured loans.
FOR EXAMPLE:
Treasury bought a $300K mortgage Loan from bank.
But the value of the home is $200K
They repackage the loan using FHA at $200K at 5% interest rate for a 30 year term.
That's $1073.64/month for the borrower for 30 years.
1073.64 x 12 months x 30 years = $386,510.40
So McCain is still ahead by $86,510.40 with a repackaged loan.
I am sure the government will repackage it so they can get all their money back and even gain. That would be stupid if they didn't.
McCain will never try to lose money over this. He would have it all figured out.
McCain should give the borrower a chance to accept or reject the repackaged loan.
If the borrower rejects the new loan, then the house goes into foreclosure.
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THEREFORE, McCain's plain is virtually identical to the Bank bailout plan that he and Obama signed. The only difference is that he is giving the owner a chance to buy back the home.
Last edited by ShoppingCartLaw; 10-09-2008 at 04:14 PM..
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