Politics and Mortgages: Know Your Candidates

The state of the mortgage industry is high on the list of economic problems facing the U.S. today, and the presidential candidates are already talking about their proposed solutions.

In the 1993 film Dave, a regular guy finds himself running the country when the president's advisors try to cover up a scandal. To the dismay of those advisors, Dave takes charge, and wins over the American public on the strength of his sincerity. As the 2008 U.S. presidential campaign heats up, American homeowners are hoping that the new president will tackle the mortgage issue with that same level of sincerity.

It looks like 2008 won't be the year that presidential candidates shy away from big promises. With tens of thousands of homeowners facing the looming threat of foreclosure, Senators McCain, Obama, and Clinton have added mortgage solutions to their arsenal of campaign speak. Here's an overview of what they're saying.

Ready to lead on day one

John McCain's perspective is, not surprisingly, the most conservative of the three. He's said that he wouldn't normally support government intervention but, given the depth of the mortgage problem, federal help is warranted. The Republic nominee's preferred course of action at this point includes throwing more resources behind the FHA, Hope Now, and Project Lifeline. The FHA offers low-cost, federally-insured refinance mortgages to qualified borrowers, while Hope Now provides individualized credit counseling services. Project Lifeline puts off the foreclosure process for 30 days, so borrowers can (hopefully) work out a deal with their lenders. McCain also supports a clampdown on aggressive and fraudulent lending practices.

Change we can believe in

Barrack Obama's preferred approach is somewhat more hands-on. Obama wants to provide federal bankruptcy judges with the authority to wipe away a portion of a borrower's mortgage debt. Additionally, the Illinois senator has talked of designing a universal tax credit for lower income taxpayers who don't itemize their deductions. Obama would also like to create a $10 billion fund earmarked for "foreclosure prevention." Just like McCain, Obama supports increased support for the FHA, and tougher legislation on predatory lending practices.

McCain and Obama have both commented on the difficulty of finding the middle ground between easing the crisis and rewarding irresponsible behavior.

Help make history

Hillary Clinton favors a double-freeze tactic, where foreclosures would be halted for 90 days, and adjustable-rate mortgage rates would be locked for five years. The New York Senator also believes that Obama's $10 billion foreclosure prevention fund is insufficient; she'd like to see a fund that's three times that size. Like her opponents, the former First Lady wants to empower the FHA to step up its activity. Unlike her opponents, Clinton has not commented on the potential for negative consequences associated with government intervention in the mortgage lending industry.

American voters hope to see the winning candidate stick to these campaign ideals with the earnestness of movie character Dave Kovic. Time will tell whether such big campaign promises will translate into realistic help for struggling homeowners.