McCain proposes $300 billion plan to buy bad mortgages

WASHINGTON (AP) -- John McCain's home mortgage relief plan would use nearly half the 700 billion dollar financial rescue plan to buy up bad home mortgages and renegotiate them.

McCain announced the plan during last night's debate, saying the new mortgages should based on the "diminished values of those homes" so that people can make their payments and stay in those homes.

A McCain economic adviser says the plan would provide direct help to homeowners, rather than helping them indirectly by bolstering financial markets. Douglas Holtz-Eakin says the move would also serve to stabilize the plunging values of mortgage-backed securities, which have been at the center of the financial crisis.

Barack Obama has made similar though less categorical suggestions in recent weeks. An Obama economic adviser says the Democrat has "consistently" backed policies to buy and restructure home mortgages and continues to support the idea.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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