Which is why the answer is not "buy up all the bad mortgages." The answer is "offer assisted refinancing." Or something much closer to the latter than the former. Two fundamental rules need to apply. First, no bank will be rewarded for bad lending behavior with the gift of federal cash. Second, no borrower who could afford to stay current but has not, and no borrower who could not have afforded a reasonable loan on the same original property value at the time of purchase, will be rewarded for bad behavior with the gift of federal assistance. The people who should be helped are those who could afford to remain current if only they had been able to get a fixed-rate 30-year instead of an ARM with a balloon rate.

Also, increased federal assistance would be in order for people who could afford to own _some_ home but not the one they're in or have recently lost. That will help the system to work through the current surplus of housing stock, thereby speeding the stabilization of home prices and with it family wealth and access to credit.

Who arbitrates the ability to actually pay the mortage?  I think there could be some real moral dilemmas on who qualifies for the adjusted financing.  What about the person who has taken on a second job or expanded hours due to their sense of responsibility to make the payments?  It could get pretty murky and pretty ugly.

Whatever happened to means testing?

I can understand why the Right hate it. Because it's fair and progressive. But surely the left should embrace it and hold it close?

Why the need for a regressive prescription benefit, for example? How many Democrats voted for that?

I guess this is what happens when you're making it up as you go along...

I am not sure why all of this fuss; this is obviously one of those campaign year promises that the candidate does not intend to fulfill. It is a gimmick put forth in an enticing sound bite in order to score some cheap political points.

The Frank-Dodd bill that passed basically covers all that is necessary. From, of all places, the National Review

Under the Frank-Dodd housing bill that was signed into law last summer, borrowers qualify for a federally subsidized workout only if they meet the following criteria:

1) The borrower must live in his house — no investment properties.

2) The borrower must show that he has been spending at least a third of his income on mortgage payments since March of this year.

3) He must also show that he can afford to make lower payments if his lender agrees to a write-down.

This is obviously a narrow slice of borrowers — around 400,000, according to most estimates. It excludes people who borrowed to buy investment properties in order to flip them for a profit. It excludes people who are hopelessly in over their heads and simply cannot afford the homes they’re in. And it excludes people who could afford to pay their mortgages if they wanted to but have instead decided to mail the keys to the bank rather than continue making payments on a house that is worth less today than when they bought it.

article.nationalreview.com

sounds like Frank has bigger fiscal-policy cajones than I originally thought.

Not to quibble, but isn't calling this the McCain "PLAN" a bit geneous?  Isn't it more accurate to call it a talking point? Something cooked up on the back of a napkin as part of his new faux-populist strategy.