Some Conservatives Don't Like McCain's Mortgage Plan

After the second presidential debate of the 2008 election took place on Tuesday, some conservatives are voicing their concern over the mortgage plan McCain announced during the debate.

CNN's Alexander Mooney reports the following,

Matt Lewis, a contributing writer for the conservative Web site Townhall.com, told CNN the plan only further riles conservatives upset with McCain's backing of the massive government bailout plan passed last week.

"Fundamentally, the problem is John McCain accepts a lot of liberal notions, unfortunately. There is somewhat of a populist streak," he said. "Most conservatives really did not like the bailout to begin with, and this was really kind of picking at the scab."

It's not just the plan conservatives are unhappy with, but how it was first unveiled as well -- out of the blue at Tuesday's town-hall debate during which Republicans were instead hoping McCain would present a spirited attack on what they view as Obama's overly liberal positions.

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"He spent the entire debate assailing massive government spending -- while his featured proposal of the right was to heap on more massive government spending to pursue home ownership retention at all costs," Malkin said.

It's a proposal that is fundamentally at odds with the conservative principle of individual responsibility, and is the latest in a string of public spats conservatives have had over the years and in this election with their party's standard bearer.

So what exactly did McCain propose? Mooney explains,

Under the plan, the government would buy up bad mortgage loans, converting them into low-interest, FHA-insured loans. To qualify, homeowners would have to be delinquent in their payments or be likely to fall behind in the near future.

They also would have to live in the home in question -- no investment properties would be eligible. They would need to have demonstrated their creditworthiness when they purchased the property by making a substantial down payment and by providing documentation of their income and other assets.

McCain economic adviser Douglas Holtz-Eakin said on a conference call Wednesday that the McCain plan could start quickly because the authority was granted by last week's passage of the $700 billion economic bailout bill. The plan could also fall under the umbrella of the Hope for Homeowners program authorized by the housing rescue bill passed in July and the government takeover of mortgage giants Fannie Mae and Freddie Mac.

But the plan, which the McCain campaign appeared to be finalizing even after the candidate announced it, significantly departs from the Arizona senator's original proposal and has left many conservatives scratching their heads:

"The original plan relied on lenders taking the hit," Holtz-Eakin said on the conference call. "This bypasses that step."

Instead, the estimated $300 billion tab essentially gets transferred to taxpayers, among the funding already provided by the bailout bill -- a proposal that may rile not only fiscal conservatives, but also struggling homeowners who have worked to keep up their mortgage payments.

"The guy who works two jobs and struggles to actually pay his mortgage is penalized. He would be better off under this plan to just quit paying his mortgage," Lewis said. "And this fundamentally goes against a lot of conservative principles and individual responsibility."

I found McCain's announcement of this plan very surprising. It's clearly not in line with conservative views that government interference ought to be limited and that individuals should be held primarily responsible for the consequences of their actions. It also seems to be a plan that alienates people who have been making payments on their mortgages and even seems to provide disincentive to those who would otherwise struggle to make those payments.