The Housing Chronicles Blog: Experts don't like McCain's mortgage buy-up plan

Friday, October 10, 2008

Experts don't like McCain's mortgage buy-up plan

Citing the complexity of mortgages that have been sliced and diced up into securities held by multiple owners, many financial experts think that the plan announced by John McCain at the second presidential debate for the government to directly purchase troubled mortgages probably won't work. From an AP story via

Ordering the government to buy up bad mortgages to cut homeowners' monthly payments might sound good, but experts are skeptical. They say the plan John McCain is promoting is unlikely to solve the housing crisis that's pushing the economy toward recession.

One big problem: The vast majority of the toxic home loans that are clogging financial markets and freezing up credit have been sliced, diced and repackaged into complex investments that the government would be hard-pressed to unravel and buy.

Even if the government did gain access to the mortgages, it would have to pay far more than they would ever be worth, housing specialists said Wednesday. That would effectively bail out banks and lenders with taxpayer money to a greater degree than Congress and the Bush administration are already doing through the $700 billion financial industry rescue enacted last week...

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