Bloomberg introduces McCain at event

Mayor has yet to support a Presidential candidate
April 10, 2008 6:30:26 PM PDT
Republican Sen. John McCain called for federal aid for well-meaning homeowners who can't pay their mortgages, an attempt to fend off criticism that he has been indifferent to the housing crisis and the market upheaval it has spawned. The likely GOP presidential nominee sketched out a plan Thursday to help 200,000 to 400,000 homeowners trade burdensome mortgages for manageable loans in a speech in Brooklyn, N.Y. Aides said the plan could cost from $3 billion to $10 billion.

Still missing were details on exactly who would be eligible for help; McCain said he wants to aid those who borrowed sensibly but now can't handle their mortgages.

"There is nothing more important than keeping alive the American dream to own your home," McCain said in a speech before joining in a round-table discussion at a Brooklyn company, Windows We Are Inc.

"And priority No. 1 is to keep well-meaning, deserving homeowners who are facing foreclosure in their homes," the four-term Arizona senator said.

The Bush administration and both parties in Congress also are proposing varying degrees of federal help for burdened homeowners. McCain's plan falls in the middle; he would help at least twice as many homeowners as Bush and fewer than half as many as congressional Democrats.

In proposing specific aid, McCain struck a different tone than he did in a speech last month. Then, McCain said he opposed aggressive intervention by the government to solve the crisis and that he preferred only limited intervention and letting market forces play out.

Still, McCain's current plan would only apply to owners of a single home. Of lenders and borrowers caught up in what was once a lucrative buying-and-selling market, McCain said, "It is not the responsibility of the American public to spare them from the consequences of their own bad judgment."

Democratic rival Sen. Barack Obama, who was reiterating his call for a second $30 billion stimulus package, said McCain's plan offers little in the way of solutions.

"I'm glad he's finally offered a plan. Better late than never," Obama told a town-hall meeting in Gary, Ind. "But don't expect any real answers. Don't expect it to actually help struggling families. Because Senator McCain's solution to the housing crisis seems like a lot like the George Bush solution of sitting by and hoping it passes while families face foreclosure and watch the value of their homes decline."

Democrat Sen. Hillary Rodham Clinton called McCain's latest plan a half-hearted version of her own efforts.

"So now he's changed positions and is finally responding to a housing crisis that has been going on for months, but unfortunately his actions are only half-measures," Clinton said in a statement.

McCain was introduced by New York Mayor Michael Bloomberg, a Democrat-turned-Republican-turned-independent who had considered running for president. "He is someone who is nothing if not forthright," Bloomberg said of McCain.

All three presidential candidates are vying for Bloomberg's endorsement; the mayor also introduced Obama in New York before he gave a recent speech on the economy.

Nationwide, about 2.76 million, or 6 percent, of home loans were delinquent and about 920,000, or 2 percent, were in foreclosure at the end of last year, according to the Mortgage Bankers Association.

McCain's campaign said refinancing would be available to people who got sub-prime mortgages after 2005, can prove they were credit-worthy at the time, are unable to pay their mortgages now and can meet terms of a new, 30-year fixed-rate mortgage. The plan would help at least some people with adjustable-rate mortgages, or ARMs, as opposed to 30-year fixed loans.

Other details include:

  • Unlike the Democrats, McCain would have individual borrowers apply to have their mortgages refinanced. Democrats would have the mortgage-holders apply for refinancing.
  • Tax breaks for builders
  • McCain's plan would benefit the government as well as the original lender by giving them certificates for part of the loan's original value. If the homeowner sold for more, he or she would benefit along with the government and the original lender.

    McCain also mentioned proposals to curb rising gas and food prices. As part of that proposal, he said the United States should stop adding to the Strategic Petroleum Reserve to lessen worldwide demand for oil in an attempt to reduce its price.

    All of the Senate's 49 Democrats - including Clinton and Obama - and its two independents have called for temporarily halting the SPR deliveries. The reserve now has 701 million barrels of oil, enough to replace 58 days of imports.

    Sen. Byron Dorgan, D-N.D., who says the deliveries make no sense when oil prices are as high as they are, has offered legislation directing a stop to the shipments and said Thursday he hoped McCain would support the bill.

    But the White House has shown no sign of changing course.

    Last week the Energy Department said it would continue putting oil into the reserve, announcing a solicitation of bids for 13 million additional barrels of oil.

    Following the roundtable, McCain walked around the corner to a neighborhood pizza place, Verrazano Pizza, where he paid $20 for a $3 slice of pepperoni and greeted employees and customers.