McCain’s Mum on Mortgage Reform

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John McCain is a bit of an enigma when it comes to mortgage reform. While candidates Obama and Clinton are making subprime mortgage lending and mortgage reform a big part of their stumping; McCain has been relatively quiet with his thoughts on the issue. It’s easy to see just by looking at the candidates web sites. Both Obama and Clinton have sections devoted to their thoughts on mortgage reform. McCain doesn’t address it at all.

Google searches on Obama and mortgage and Clinton and mortgage return copious results replete with speeches, policy initiatives and detailed reform plans. The information on McCain’s mortgage reform plans are spartan at best. This seems to make some sense, however; as Democrats are more-than-willing to wield the power of government in the private sector while Republicans (maybe save George W.) are typically less inclined. But with that said lets look at where McCain lies on the issue of mortgage reform.

John McCain on Mortgage Disclosure Reform

McCain appears to be for a simplified disclosure process with more common-sense disclosures that are easier to understand and acknowledge. He hasn’t announced any plans on how such a mortgage loan disclosure reform program would work. Mr. McCain seems happy with aphorisms that punctuate his stump speeches without providing much substance.

From a Baltimore Sun article covering the differences between the candidates and their policies towards the mortgage crisis:

Republican John McCain … encourages lenders to work with homeowners. But McCain’s main mortgage palliatives are better disclosure for borrowers and fiscal stimulus that will help middle- and lower-class Americans whether they have mortgage problems or not.

“A mortgage should be one page and there should be big letters at the bottom that say, ‘I understand this document,’” he said a week ago.

This is a universal reform that legislators on both sides of the aisle have called for and one that makes sense to me. Easier disclosures that clearly articulate the key areas of mortgage loans: loan amount, amortization, payments, rate, fees and whether your rate is adjustable or fixed are an important step to improving mortgage literacy amongst the American public. Either that or let the lenders pay for a third-party counseling session similar to the reverse mortgage counseling requirements.

McCain on Fiscal Stimulus

As the above quote alludes Mr. McCain is also in favor of a fiscal stimulus package that would help kick-start the economy and improve consumer confidence. Whether the stimulus package is enough is certainly up for debate. But one has to wonder (as they did over at Minyanville) how much is $300 going to help the average American debtor? The conforming loan limit increases are of questionable value, although they should certainly help to a greater extent.

Bailout May be Necessity

McCain is also on the record as rather pragmatic about a mortgage crisis fueled bailout:

“You don’t want to reward speculators. You’d like to take each individual case on its own, but there’s no time to do that. What’s important is to stop the bleeding.”
» The New York Times, Dec. 5, 2007.

But above and beyond this quote there is little of McCain on the record about the details of any type of further bailout.

Asleep at the Wheel?

Is Mr. McCain asleep at the wheel? His lack of opinion on what may perhaps be the defining economic event of our generation is disturbing. I’m a McCain supporter, but I must admit that my inability to find much about his thoughts on reviving the economy and reforming some of the wrongs in the existing mortgage industry structure are a bit alarming.

There is hands off and then there is avoidance. It is critical that Mr. McCain address some fundamental problems in the current mortgage industry that must be fixed. The free marketplace needs some structure or more Americans will continue to be hurt by unscrupulous brokers and banks.

My Next Move

I have chosen to write the McCain campaign for their position on the mortgage mess and credit crunch to get their opinion on what type of mortgage reform they feel is necessary and what Mr. McCain’s policies are to ensure that the recent past is not repeated. I’ll let you know what I hear and help close the book on Mr. McCain.