McCain’s Response To Foreclosure Crisis

McCain’s response to the housing crisis seems as easy as walking on water – a yogic feat rather a practical one that is feasible. Experts are critical about the government purchasing soured mortgages so that the monthly loan payments of the foreclosure threatened victims go down. Pundits opine that far from solving the crisis it will do nothing to stop recession.

Most of the poisonous loans that have clogged the flow of money in the financial markets are not straight and simple. There is at one end a single borrower but on the other there are multiple purchasers of securities. The loans have been packaged, sliced and sold to investors around the globe. It is a Herculean task for the government to unravel the knot and buy back the loans.

If and when the government does manage to get to the root of the mortgages it would have to cough up far more money than what the loan is really worth. Primarily if that is done then the financial institutions facing ruin will be saved from the taxpayer’s kitty to the tune of a whopping $700 billion.

Alan M. White of Valparaiso University said, “The mortgages that are causing this credit squeeze are generally mortgages that aren’t available for purchase.” Another specialist, Andrew Jakabovics from Center for American Progress opined that solving the problem with injection of money is not going to be as easy as McCain group thinks.

The foreclosure crisis is of prime importance in the forthcoming presidential elections. Each side has to present something that will go down well with the nation. McCain is struggling hard to brush up his credentials as a savior of the economy while Obama is using this very issue to forge ahead in popularity.

Foreclosures are going to play a lead role in states like Indiana, Florida, Michigan and Ohio. Most Americans are furious about the rescue package that will bail out the financial houses. But McCain argues that it is only by putting them back on their feet that the economy will start running again. On the day of the face-to-face debate with Obama last Tuesday he said that if he came to power he would order the treasury secretary to purchase the soured loans and allow the foreclosure victims to refinance. As per the plans of McCain the government would be utilizing $300 billion to buy the soured loans and issue new fixed rate loans for longer terms.

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