Candidates' foreclosure strategies

Republican John McCain

• Is pushing a "HOME plan" aimed at giving homeowners the chance to trade a "burdensome" mortgage for a more manageable one reflecting the home's values. Those eligible would include homeowners with a nonconventional mortgage taken after 2005 who live in their home; can prove credit worthiness at the time of the loan; are either delinquent, in arrears on payments facing a reset or can show that they can't keep meeting their mortgage obligations and can meet the terms of a new 30-year fixed-rate mortgage on their loan. Homeowners would end up with a 30-year mortgage and an equity stake in their home. The new lender would receive a federal guarantee of the mortgage. The taxpayer gets a benefit if the sale value ever recovers. The result is a restructured financial arrangement. Over the long term, financial institutions must follow suit, writing off losses, restructuring their balance sheets, and raising more capital.

• Would call for the immediate formation of a Justice Department Mortgage Abuse Task Force that would investigate criminal wrongdoing in the mortgage industry and prosecute those who broke the law. The task force will help state attorneys general who are investigating abusive lending practices. Individuals or firms that defrauded innocent homeowners or forged loan application documents would answer for their conduct in a court of law if the punishments of the market are not enough.

Democrat Barack Obama

• Would create a 10 percent universal mortgage credit to give tax relief to homeowners who do not itemize. It would provide an average of $500 to 10 million homeowners — most who earn less than $50,000 a year.

• Would push for more accountability in the subprime mortgage industry. As a senator, Obama introduced a bill that provides the first federal definition of mortgage fraud, increases funding for federal and state law enforcement programs, and creates criminal penalties for mortgage professionals found guilty of fraud.

• Would create a Homeowner Obligation Made Explicit score, providing potential borrowers with a simplified metric for home mortgages similar to the APR. The HOME score would allow individuals to easily compare various mortgage products and understand the full cost of the loan.

• Would create a $10 billion foreclosure prevention fund to increase pre-foreclosure counseling resources, help people who bought homes that were too expensive for their income levels sell their homes, and partner with state governments, community organizations and loan providers to ensure fair loan modifications made in time to avoid foreclosure or bankruptcy.

• Supports efforts to create a new Federal Housing Administration program to provide incentives for lenders to buy or refinance existing mortgages and convert them into 30-year fixed mortgages.

Source: Candidates' Web sites