Wednesday
Oct082008
The McCain campaign has a 'new housing plan' to save our economy
Wednesday, October 8, 2008 at 3:11PM
The campaign of Senator John McCain (R-Ariz.) says they have an answer to the current housing crisis. This answer comes in the form of the "American Homeownership Resurgence Plan". Doug Holtz-Eakin, McCain-Palin 2008 senior policy adviser, held a teleconference to outline this new plan. Holtz-Eakin said the plan would provide direct help to home owners, allowing them to stay in their homes and avoid foreclosures that would damage he property values in their neighborhoods. The plan would also provide to the housing market lower interest rates, around five percent.
Holtz-Eakin said, "Starting with the home owner and moving up, you accomplish some of the objectives of the financial stabilization plan that we've seen come out of congress and proposed by the administration in recent weeks. Senator McCain believes this is exactly the right kind of policy, providing direct help to homeowners, at the same time supporting the financial markets and keeping them from further damaging the availability of credit to mainstream America, one of the real threats to the economy at this time." Funding for the initiative would come from authorities, including the $300 billion worth of refinance capacity provided by the Federal Housing Administration (FHA) and the $700 billion provided by the Treasury Department to Congress.
Even though the FHA and the Treasury Department already have the authority pursue this plan, the McCain campaign believes stabilizing the housing markets haven't really been publicly targeted, and were originally only geared to help four-hundred or five-hundred thousand homeowners. The new plan proposes to aid homeowners on a larger-scale than the FHA and Treasury Department have planned, and therefore be a more effective supplement to the housing crisis response.
Holtz-Eakin said, "Starting with the home owner and moving up, you accomplish some of the objectives of the financial stabilization plan that we've seen come out of congress and proposed by the administration in recent weeks. Senator McCain believes this is exactly the right kind of policy, providing direct help to homeowners, at the same time supporting the financial markets and keeping them from further damaging the availability of credit to mainstream America, one of the real threats to the economy at this time." Funding for the initiative would come from authorities, including the $300 billion worth of refinance capacity provided by the Federal Housing Administration (FHA) and the $700 billion provided by the Treasury Department to Congress.
Even though the FHA and the Treasury Department already have the authority pursue this plan, the McCain campaign believes stabilizing the housing markets haven't really been publicly targeted, and were originally only geared to help four-hundred or five-hundred thousand homeowners. The new plan proposes to aid homeowners on a larger-scale than the FHA and Treasury Department have planned, and therefore be a more effective supplement to the housing crisis response.
Reader Comments (2)
The answer to the housing crisis.
FEDERAL RESERVE WHOLESALE MORTGAGE LENDER LOLR
INTEREST-ONLY PERIOD ADJUSTABLE RATE NOTE
(One-Year FEDERAL FUNDS RATE Index)
(As Published In Federal Reserve Web Site)
http://www.federalreserve.gov/releases/h15/Current/
RATE CAPS-5 YEAR INTEREST ONLY PERIOD
2. Interest
Interest will be charged on unpaid principal until the full amount of principal has
been paid. I will pay interest at a yearly rate of 2.00%.
LOLR
Lender Of Last Resort
The Federal Reserve has the authority and financial resources to act as LOLR by extending credit to homeowners in unusual circumstances involving a national or regional emergency, where failure to obtain credit would have a severe adverse impact on the economy
1. BORROWER’S PROMISE TO PAY
In return for a loan that I have received, I promise to pay U.S. $ XXX,XXX.XX (this
amount is called “Principal”), plus interest, to the order of the Lender. Lender is Federal Reserve System Inc.”The Fed” I will make all payments under this note in the form of cash, check, or money order.
I understand the Lender may transfer the note. Lender or anyone who takes this
note by transfer and who is entitled to receive payments under this note is called the
“Note Holder.”
2. Interest
Interest will be charged on unpaid principal until the full amount of principal has
been paid. I will pay interest at a yearly rate of 2.00%. The interest rate I will pay may
change in accordance with Section 4 of this note.
The interest rate required by the Section 2 and Section 4 of this note is the rate I
will pay both before and after any default described in Section 7(B) of this note.
4. ADJUSTABLE INTEREST RATE AND MONTHLY PAYMENT CHANGES
(A) Change Dates
The initial fixed interest rate I will pay will change to an adjustable rate on the 1st
day of November, 2008, and the adjustable interest rate I will pay may change on that
day every 12th month thereafter. The date on which my initial fixed interest rate changes
to an adjustable interest rate, and each date on which my adjustable interest rate could
change, is called a “Change Date.”
(B) The Index
Beginning with the first change date, my adjustable interest rate will be based on
an Index. The “Index” is the average of FEDERAL FUNDS RATE offered rates of one-year U.S. dollar denominated “FEDERAL FUNDS RATE”), as published in The Federal Reserve Statistical Release (http://www.federalreserve.gov/releases/h15/Update/) web site . The most recent Index figure available as of the date 45 days before each
Changes Date is called the “Current Index.”
If the index is no longer available, the Note Holder will choose a new index that is
based upon comparable information. The note holder will give me notice of the choice.
(C) Calculation of Changes
Before, each Change Date, the note holder will calculate my new interest rate by
adding TWO FORTH percentage points (0.50%) to the current index. The
note holder will then round the result of this addition to the nearest one-eighth of one
percentage point (0.125%). Subject to the limits stated in Section 4(D) below, this
rounded amount will be my new interest rate until the next change date.
The note holder will then determine the amount of my monthly payment. For
payment adjustments occurring before the First Principal and Interest Due Date, the
amount of my monthly payment will be sufficient to repay all accrued interest each
month on the unpaid principal balance at the new interest rate. If I make a voluntary
payment of principal before the First Principal and Interest Payment Due Date, my
payment amount for subsequent payments will be reduced to the amount necessary to
repay all accrued interest on the reduced principal balance at the current interest rate. For
payment adjustments occurring on or after the First Principal and Interest Payment Due
Date, the amount of my monthly payment will be sufficient to repay unpaid principal and
interest that I am expected to owe in full on the maturity date at the current interest rate in
substantially equal payments.
(D) Limits on Interest Rate Changes
The interest rate I am required to pay at the first Change Date will not be greater
that 3.625% or less then 1.250%. Thereafter, my adjustable interest rate will never be
increased or decreased on any single Change Date by more that two percentage points
from the rate on interest I have been paying for the preceding TWELVE months. My
interest rate will never be greater than 3.625%.
Interest only period adjustable rate note
Mortgage interest rate= INDEX+MARGIN
Interest rate cap = index+2.125