Palin Gets McCain Stance on Homeowner Protections Wrong

By Julia Hoppock

Oct 3, 2008 12:46am

ABC News’ Teddy Davis Reports:

Sarah Palin got her facts wrong in Thursday’s debate with Joe Biden when discussing where John McCain stands on new protections for homeowners facing foreclosures.

The Alaska governor incorrectly made it sound like McCain supports giving bankruptcy judges the power to rewrite mortgage payment terms on first homes.

He doesn’t.

The McCain campaign confirms to ABC News that Palin misstated McCain’s position.

"No, that is what is called the cramdowns, which is so objectionable that Obama didn’t even want it jammed into the stabilization bill," said McCain spokesman Brian Rogers when asked if McCain supports giving bankruptcy judges the power to re-adjust the interest rate and principal to help people stay in their homes.

Palin’s mistake came when the debate’s moderator asked her if Biden was right in thinking that she and McCain oppose giving bankruptcy judges this new power.

"[W]e should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you’re paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal that you owe," said Biden. "That would keep people in their homes, actually help banks by keeping it from going under.

"But John McCain, as I understand it," he continued, "I’m not sure of this, but I believe John McCain and the governor don’t support that. There are ways to help people now. And there — ways that we’re offering are not being supported by — by the Bush administration nor do I believe by John McCain and Governor Palin."

"Governor Palin, is that so?" asked PBS’ Gwen Ifill.

"That is not so," said Palin, "but because that’s just a quick answer."

The Alaska governor then quickly changed the subject to energy.

ACORN, a liberal group which advocates on behalf of low- and moderate-income people, seized on Palin’s seeming endorsement of the Obama-Biden position and is now trying to use them to pressure McCain to change his official position.

"Sarah was just being Sarah," ACORN’s Charles Jackson told ABC News. "It’s clear from the transcript that she supported the provision that Senator Biden  brought up.  We’ll see if McCain’s handlers will allow her to continue to hold that position tomorrow." 

ACORN would like the Republican presidential nominee to change his position but the McCain campaign has already made it clear that is not going to happen.

While giving bankruptcy judges the power to rewrite mortgage terms would keep more Americans in their homes, opponents of the idea worry that it could scare investors away from wanting to securitize mortgages for fear that their steady payment schedule could be disrupted by a bankruptcy judge.

"A better approach would reflect the HOME Plan which John McCain proposed in April, which would have allowed credit worthy mortgage holders to rework their troubled mortgages," said Rogers, the McCain spokesman. "A component of the FHA insured proposal included a work-out formula that provided the homeowner with a 10 percent equity stake."

ABC News’ Terry Moran and Z. Byron Wolf contributed to this report.

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