American Homeownership Resurgence Plan

John McCain has announced an American Homeownership Resurgence Plan that he says will get at the very root of the financial crisis, the failing housing market:

(1) Our current economic crisis largely brought on by corruption and greed at Fannie Mae, Freddie Mac and Wall Street.

(2) America's families are bearing a heavy burden from falling housing prices, mortgage delinquencies, foreclosures, and a weak economy.

(3) The goal is to keep families in their homes, avoid foreclosures, save failing neighborhoods, stabilize the housing market, and attack the roots of our financial crisis so that families who have worked hard enough to finance homeownership should not have that dream crushed under the weight of the wrong mortgage.

(4) For those that cannot make inflated payments or their mortgage exceeds the value of their home, mortgages must be re-structured to put losses on the books, eliminate uncertainty over defaults, support the value of mortgage-backed derivatives and alleviate risks that are freezing financial markets.

(5) To qualify, mortgage holders would have to live in the home (primary residence only) and prove their creditworthiness at the time of the original loan (no falsifications and provided a down payment). The new mortgage would be an FHA-guaranteed fixed-rate mortgage at payment terms manageable for the homeowner.

(6) The direct cost of this plan would be roughly $300 billion because the purchase of mortgages would relieve homeowners of "negative equity" in some homes. This cost may be able to come out of the $700 billion fund recently approved by Congress but it may be necessary for Congress to raise the overall borrowing limit.