Presidential Politics: Will Candidates Clean Up Mortgage Mess?

History's most famous storytellers include Hans Christian Andersen, the Brothers Grimm, and a queen named Scheherazade. Time will tell if the 2008 presidential candidates should be included in that list, or if they're serious about implementing mortgage reform.

McCain: His lips are sealed

John McCain has been relatively silent on mortgage reform. His economic policy, as published on his website, focuses on balancing the budget, stimulating job growth, patching up Social Security, and controlling Medicare spending-but it doesn't address the mortgage problem. He's communicated his opinions in snippets, arguing for improved disclosures and against bailouts. He's also implied that lenders need to take the initiative to work with their borrowers and restructure bad loans.

Interestingly, McCain has some odd ties to the mortgage lending industry. Several weeks ago, his son, Andrew, made headlines when he suddenly resigned from his position as a Director of Silver State Bank, which dabbled in residential mortgage, as well as construction lending. Back in the 1980s, McCain himself was one of the infamous Keating Five-five senators accused of corruption. McCain and one other senator were cleared of wrongdoing, but the other three were found guilty of impeding a federal investigation into a failed savings and loan institution.

Obama: Ready to write checks

Barack Obama prefers a multipronged approach to mortgage reform. The core of his plan is a $10 billion fund that would pay for initiatives like counseling, and refinancing and financial assistance. The Democratic candidate is also a big believer in loan modification; he'd allow bankruptcy courts to alter mortgages, and he'd build partnerships with community organizations that would help borrowers restructure their loans.

Enforcement of predatory lending laws is also on Obama's to-do list. He'd like to provide increased funding for the enforcement agencies that crack down on unethical lending practices. He points a finger at the big banks and lobbyists who seek to protect them, calling for an end to lobby-driven politics.

Barr: Bigger picture

Bob Barr, the Libertarian candidate, has a broader angle on the mortgage crisis. He's rallying against the uncontrolled and irresponsible activities of the Federal Reserve, Fannie Mae, and Freddie Mac, activities that have manipulated the market and cost taxpayers lots of money. While the third-party candidate calls for an end to federal bailouts, he admits that the government will have to provide immediate loan guarantees on the portfolios of Fannie Mae and Freddie Mac, just to stop the economic bleeding. But he believes this shouldn't be done without a clear plan to privatize Fannie and Freddie and to rein in the Federal Reserve. In Barr's mind, full privatization will force Fannie and Freddie to operate more prudently and take greater care of their assets.

One candidate will have the chance to prove his mortgage reform ideas aren't just fairy tales. The American public will have to wait and see if homeowners can avoid foreclosure and live happily ever after.