Mortgage Lenders Nationwide

Senator John McCain introduced a new plan during the second presidential candidates’ debate on Tuesday night that he believes will rescue the housing market and bolster the economy.  The McCain plan, dubbed the American Homeownership Resurgence Plan, would allow the Secretary of Treasury to buy up bad home mortgage loans, convert them into low-interest FHA-insured loans, and reset the loan principal (therefore decreasing monthly payments) based on a decrease in the value of the home.  The McCain camp thinks his plan will save homeowners from foreclosure.

The plan is aimed at helping those 1 in 6 Americans that are now upside down in their mortgages due, in part, to sinking home values.  McCain’s home financing plan would give these people a chance to refinance based on the current value of their home.  McCain’s plan would be paid for by U.S. taxpayers under funding that’s already been approved in the $700 billion bailout.  According to Scott Hess, former WMC executive, “Americans need a new alternative to refinancing, because sadly, most homeowners do not qualify to refinance their home because of tightened lending guidelines nobody anticipated.”  Hess continued, “At least with a loan modification, homeowners can restructure their mortgage with a fixed rate and a payment that they can afford.”

Opponents, say his proposal are unfair to homeowners who are paying their mortgage loans every month, and that it’s a bad financing decision.  Scott Messina, believes McCain’s plan is a place to begin, but it’s likely won’t solve the mortgage crisis. “It’s a step in the right direction because it attempts to address the issue of rising foreclosures,” said Messina.  “However, it’s important for market stability that those people who are paying their mortgages on time and don’t need a bailout are not penalized.”

“Where’s the incentive for homeowners on the brink to do the right thing?  If everyone else is getting a bail out with no repercussions, then why should you continue to struggle?” questioned Messina. Under Messina’s plan, the Congress would pass legislation that provides for a new FHA mortgage loan program, the 203S, or the 203 Save program that would be sold as Ginnie Mae securities just like many FHA loans are now and would carry the current guarantee by the U.S. Government.  All 203S mortgages would only offer fixed mortgage rates only available to homeowners currently facing foreclosure.