Can The Candidates Agree On A Housing Plan?
McCain and Obama Agree That Homeowners Need Help
Both John McCain and Barack Obama support the large housing relief package that is currently weaving its way through Washington. The legislation will allow distressed homeowners to refinance their home mortgages and get into more traditional and affordable 30-year fixed-rate home loans that would be backed by the government. Only properties that are owner occupied will be eligible and the homeowner will also have to be able to afford a reasonable interest rate in order to avoid foreclosure. In order for this to work out for the homeowners, the lenders will have to agree to lower the amount of the debt to 90 percent of the home's current market value.
McCain and Obama disagree about whether or not homeowners should be allowed to retain ownership of their homes if filing bankruptcy, according to each candidate's top economic adviser.
McCain on Bankruptcy Law Changes
McCain has not taken a firm stance yet on whether or not the existing federal bankruptcy laws should be amended in order to help homeowners keep their homes. He has some concerns about possible unintended consequences and he just does not think the proposal can make it through Congress.
Obama on Bankruptcy Law Changes
Obama would like to rework the U.S. bankruptcy code in order to allow judges to order lenders to lower interest rates or modify the terms of mortgage loans for distressed homeowners. He also has recently proposed a change in the bankruptcy laws to help military families who face financial problems avoid foreclosure, according to a report by NPR.
Foreclosure Crisis is a Tricky Issue
Deciding what should and can be done about the rising rate of foreclosures in the United States is a difficult issue for the candidates and legislators. Some distressed homeowners are honest, hardworking people who were swindled by mortgage brokers or people who have been simply devastated by the poor state of the economy. Other people are financially overwhelmed by uninsured medical bills and prescription drug costs or have suddenly lost their income through no fault of their own. Most people, including McCain and Obama, agree that these people are in desperate need of help to avoid foreclosure.
However, there are some homeowners who lied about their income in order to purchase homes they could not afford and others who speculated when the housing market was strong and got in over their heads. Many people believe that these people do not deserve any assistance.
McCain and Obama initially disagreed about how to handle the foreclosure crisis, but rather than sift through the sea of families who are facing foreclosure to determine who is and is not worthy of help, both candidates now agree that something must be done to help homeowners, period.
Jabs between McCain and Obama
McCain first addressed the foreclosure crisis in March when speaking to a small business group. He acknowledged that many Americans bought homes that they could not afford and were able to do so because of the free-wheeling practices of lenders. He told the group that he has always believed that it was not the government's responsibility to bail out and reward people and businesses who make irresponsible financial decisions.
In short order, Obama made a speech criticizing McCain's view on the foreclosure crisis and characterized McCain's presidential bid as a run for George W. Bush's third term in the Oval Office. Obama said that McCain would sit back and let the housing market continue to deteriorate as more and more Americans lose their homes to foreclosure and would not help families who are suffering or lift the economy out of a recession.
After Obama's speech, McCain's campaign was quick to say that the Democrats were mischaracterizing his statements and playing politics. However, soon after these political jabs between the McCain and Obama camps, McCain began to come around on the issue of foreclosure assistance.
Shortly after Obama endorsed the housing relief package that is currently in Washington, McCain changed his view and decided that distressed homeowners do actually need help and many of them deserve some type of assistance. McCain now also endorses the housing relief package but says that he would prefer that some changes be made to it before it is finalized.
Foreclosure Legislation May Be Too Little, Too Late
Although McCain and Obama do not sharply differ on the need for a housing assistance package, some economists say the legislation is too little, too late and that hundreds of thousands of homes that could have been saved from foreclosure will still be lost.
Some homeowners may be able to avoid foreclosure by filing bankruptcy. When a person files bankruptcy, an automatic stay is issued that temporarily halts all collection activity and legal actions the homeowner may face as a result of debts. This could mean that by filing Chapter 13 bankruptcy to reorganize debts, some homeowners may be able to avoid losing their homes in foreclosure.
If you are facing financial hardships and are concerned about foreclosure, speaking with a local bankruptcy lawyer can help you find out what options may be available for your situation. We understand that making a decision about filing bankruptcy is not easy, but we are here to help.
No matter where you live, Total Bankruptcy can connect you with a qualified bankruptcy lawyer who can advise you as to what the best path to take for you and your family would be. To speak with a local bankruptcy lawyer, call us toll free at (877) 349-1309, or use our online case evaluation form now to schedule a free consultation.