FACTBOX: McCain mortgage proposal

(Reuters) - Republican presidential candidate John McCain has proposed a $300 billion plan for the government to buy up troubled loans from homeowners who have seen values fall below their debt and restructure them into more affordable mortgages.

Barack Obama's campaign says there is little new in the proposal, that Democrats have been calling for direct aid to borrowers and that the $700 billion financial rescue package already provides for mortgage mitigation.

Here is how a McCain campaign official described the plan, which McCain proposed during Tuesday's second presidential debate:

--It would not require new money to be authorized by Congress. Instead it would use programs already approved to address the financial crisis.

--The plan would rely on money provided under the massive $700 billion financial industry bailout bill just enacted and a new $300 billion fund under the Federal Housing Administration that was approved last July by Congress to help distressed homeowners get more affordable government-backed mortgages. That program went into effect and is expected to help about 400,000 homeowners.

--In a change from current law, the Treasury Secretary would be directed to purchase troubled loans to help families avoid foreclosure. The $700 billion bailout gives the Treasury Secretary broad authority to buy troubled assets including mortgages, but does not direct him on how to apportion the money.

--McCain's plan also would also leverage government control of Fannie Mae and Freddie Mac to help distressed mortgage holders.

--Lenders would have to realize any losses they have already suffered. The McCain camp says that by purchasing existing failing mortgages the government can eliminate uncertainty over defaults, support the value of mortgage-backed securities and help provide liquidity to financial markets.

(Reporting by Donna Smith, editing by Vicki Allen)