McCain and Obama differ on housing after new law is signed by Bush

(EMAILWIRE.COM, August 04, 2008 ) NEW YORK Â– President Bush just signed a housing bill designed to help Americans deal with the housing downturn and tight home mortgage credit markets, and his successor, whether it will be John McCain or Barack Obama, will have much more work to do to help the real estate market.

While it is far from certain what policies either candidate for president will choose to implement once he is elected, the Democrat, Barack Obama, has indicated that he sees a role for the government sponsored mortgage related companies Fannie Mae and Freddie Mac. Republican John McCain, on the other hand, has called for a significant reduction of the operational scope of the two companies that collectively manage trillions of dollars worth of home mortgages.

The current housing market is marked by house prices down more than 15% on average since their peak in 2006 and by 4% of American homeowners in default on their mortgage loans. Some of the legislative provisions recently enacted provide for some refinancing of mortgages, up to 400,000 by some estimates, but many industry watchers doubt that this will staunch the flow of foreclosures.

Real estate and foreclosure expert Patrick McGilvray, president of www.TheHomeBuyingCenter.com commented, Â“Millions of Americans would love to sell their house fast to avoid the pain, shame, and expense of foreclosure, but the recent legislation will do little to actually stop many foreclosures from happening. There are many more problem loans that will become unaffordable to their borrowers when the adjustable rate mortgages rest to higher payments. We buy houses, but our network of investors can't afford to pay market prices in a falling market.Â”

Some of the ideas that McCain has proposed are as follows:

1. Make Fannie Mae and Freddie Mac completely independent of the government and pass some of their mortgage buying activities to other private banks and banking institutions.
2. Step up criminal investigations into mortgage industry abuses.
3. DonÂ’t reward real estate speculators by giving them access to a bailout.

For his part, Obama suggests:

1. Provide a $500 tax credit to 10 million homeowners. His campaign calls this a 10% Â“universal mortgage credit.Â’
2. Like McCain direct greater criminal scrutiny of the mortgage industry, especially targeting the subprime loan lenders.
3. Require more loan disclosures in plain language.
4. Permit bankruptcy judges to modify mortgage balances, something currently prohibited.

www.TheHomeBuyingCenter.com
Patrick McGilvray
916-821-6200
patrick @ thehomebuyingcenter.com