Will presidential candidates say anything to pander to voters? Last week I took John McCain to task for his dumb idea of spending $300 billion to buy mortgages so that so-called homeowners can be bailed out instead of Wall Street banks. The highlights of the McCain plan are the determination of who is creditworthy as well as a pre-determined, finger-in-the-wind interest rate of 5%, which sounds so attractive to me that I’d like one of those too.
Even better would be the ability of those of us who are current on our mortgages to participate in one of Barack Obama’s latest proposals to save the economy, a three-month moratorium on foreclosures for mortgage holders who are trying “in good faith” to pay their mortgages but can’t. I wouldn’t mind skipping three months of mortgage payments, assuming I didn’t face a penalty for doing so. I promise I’d put the money to good use too. Maybe I’d buy a car.
Obama has done a relatively good job so far on the pander-meter, such as when he stayed away from the gas-tax holiday McCain and Hillary Clinton advocated last summer. Then there’s this idea, which might buy some votes but isn’t likely to sit right with people who really do own a piece of their homes because they are current on their mortgages.
The execution of a moratorium would be interesting. Would borrowers still owe the full amount, including interest, they didn’t pay during their mortgage holiday? How to determine “good faith?” Does Obama plan for the Treasury to compensate banks for the non-payments or for the time the bank loses between foreclosing and attempting to recover something for their seized asset?
The good news is that, as far as whose plan wins out, we’ll know soon enough.