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Republican presidential nominee John McCain is urging the Treasury Department to intervene aggressively to limit damage from the financial meltdown, action that McCain says President Bush can take with the stroke of a pen.
McCain said he has urged the Treasury to use its exchange stabilization fund "as creatively as possible" to backstop the market crisis. He says officials also should use the authority granted in a housing bill to purchase up to a trillion dollars in mortgages.
The GOP candidate also suggested wielding authority to purchase $1 trillion in mortgages. A housing bill Bush signed July 30 included $300 billion in new loan authority for the government to back cheaper mortgages for troubled homeowners.
The American Housing Rescue and Foreclosure Prevention Act of 2008 establishes a temporary and voluntary program beginning in October of 2008 to allow homeowners who are unable to afford their mortgage payments to refinance into fixed-rate, 30-year mortgages. The program would permit the Federal Housing Administration (FHA) to guarantee new mortgages for primary residences only if the lenders agree to reduce loan amounts to 90% of the current loan principle.
The legislation authorizes the program, which would sunset in September of 2011, to insure up to $300 billion in mortgages. Homeowners enrolled in the program must share any future profits from appreciation in home value with the FHA.