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Obama calls McCain mortgage plan costly to taxpayers

THE ASSOCIATED PRESS

October 10, 2008

DAYTON, Ohio - Barack Obama told a campaign audience yesterday that John McCain's mortgage buyout plan would cost taxpayers billions of dollars and reward bad behavior by lenders.

Speaking as he began a two-day bus tour of hotly contested Ohio, Obama said McCain's plan would force the government to absorb the full cost of renegotiating mortgages to prevent borrowers from losing their homes. Lenders should share some of the costs, he said.

The Democratic presidential candidate's campaign also criticized McCain's mortgage plan in a new 30-second ad to air nationally on cable TV.

Both candidates are competing hard for Ohio's 20 electoral votes, pivotal in President George W. Bush's victory four years ago.

Obama was to hold five Ohio rallies yesterday and today, and will return next week to Toledo to prepare for Wednesday's debate at Hofstra University on Long Island.

Obama took another jab at McCain, whose family owns several houses, when he renewed his call to change bankruptcy laws to help hard-pressed borrowers keep their homes.

"Right now, the law lets bankruptcy judges write down your mortgage if you own six or seven homes," he said, "but not if you have only one." "That might help Sen. McCain sleep easier at night, but it won't do anything for folks like you," Obama told thousands at a baseball stadium.

McCain's mortgage plan "punishes taxpayers, rewards banks, and won't solve our housing crisis," he said, adding it would "guarantee that American taxpayers lose by handing over $300 billion to underwrite the kind of greed and irresponsibility on Wall Street that got us into this mess."

McCain's campaign, meanwhile, has changed its mortgage plan. When it first distributed its description of the plan, it said the government would buy failed mortgages at discounted rates. Conservatives had pushed for that language because many of the homes are not worth the amount mortgaged. But Wednesday, the campaign deleted that line, which would mean the government would pay the full value of the mortgage.

McCain spokesman Brian Rogers said the policy didn't change, but an edit was made to remove "excess and confusing language."

McCain has said his plan is expensive but necessary to get thousands of bad mortgages off the books and to stop the fall in home values and credit availability.