Presidential hopeful John McCain addressed the ongoing mortgage crisis today during a roundtable with Hispanic business leaders in Orange County, warning against a government bailout and calling upon lenders to do more to keep borrowers in their homes.
McCain blamed the housing bubble burst on a run up of prices over the last several years, partially aggravated by speculators and securitizers, causing mortgage lenders and borrowers to become increasingly complacent.
He argued that lenders violated the basic rule of banking: “don’t lend people money who can’t pay it back,” and claimed that some Americans bought homes they couldn’t afford, assuming appreciation would facilitate a refinance to a cheaper loan later down the line.
In regard to a widespread bailout, McCain noted that government intervention should be reserved for the prevention of risk that would cripple the economy as a whole, and not for individual banks and borrowers.
He added that improved disclosure and transparency in mortgage lending was needed to avert a similar crisis in the future, but stood opposed to reducing the down payment requirement for FHA loans and the notion of the GSEs insuring underwater loans.
McCain also called on banks and lenders to convene and devise a strategy to help “cash-strapped, but credit worthy customers” stay in their homes.