McCain outlines plan to ease U.S. housing crisis

By Jeff Mason

NEW YORK (Reuters) - Republican presidential candidate John McCain outlined plans on Thursday to ease the burden on struggling American homeowners, drawing fire from Democratic rivals who accused him of a half-hearted effort.

McCain, an Arizona senator who has clinched his party's presidential nomination for the November election, proposed a system that would allow homeowners with a high-interest, adjustable rate mortgage loan taken after 2005 to trade for a safer, 30-year loan.

"It offers every deserving American family or homeowner the opportunity to trade a burdensome mortgage for a manageable loan that reflects the market value of their home," McCain said in a speech on the economy in Brooklyn.

"My plan follows the sound economic principle that when markets decline dramatically, debts must be restructured."

His campaign estimated the cost of McCain's plan at $3 billion to $10 billion.

Political pressure is building for a dramatic government intervention to prop up a housing market that has pushed the U.S. economy to the brink of recession, if not into one, threatening global growth.

McCain rejected criticism from Democrats Barack Obama and Hillary Clinton over what they called his soft approach to the U.S. economy.

"I know the economy better than Senator Clinton and Senator Obama do," McCain told ABC's "The View," citing his years in the U.S. Congress.

The two Democratic presidential rivals took time out from their own battle to pounce on McCain's proposals. Obama said McCain's plans were much like President George W. Bush's -- "sitting by and hoping it passes while families face foreclosure and watch the value of their homes erode."

"I'm glad he's finally decided to offer a plan. Better late than never," the Illinois senator said in Gary, Indiana. "But don't expect any real answers. Don't expect it to actually help struggling families."

Obama has proposed a $10 billion Foreclosure Prevention Fund that he says would help struggling homeowners sell a home beyond their means, get emergency pre-foreclosure counseling or modify their loans to avoid foreclosure or bankruptcy.

The McCain campaign said he is against a government bailout.

"Unlike Senator Obama, John McCain doesn't believe that writing checks with other people's money is the solution to every problem," said McCain spokesman Tucker Bounds.

Clinton in a statement called McCain's plan "a warmed-over, half-hearted version" of a plan he had criticized.

"So now he's changed positions and is finally responding to a housing crisis that has been going on for months, but unfortunately his actions are only half-measures," the New York senator said.