Palin Misstates McCain Stance on Homeowner Protections

ABC News' Teddy Davis and Z. Byron Wolf Report: Alaska Gov. Sarah Palin stumbled in Thursday's vice presidential debate when discussing new bankruptcy protections for homeowners facing foreclosures.

Palin incorrectly indicated that John 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 McCain opposes what are called "cramdowns."

This is how the topic came up:

BIDEN: "[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. That would keep people in their homes, actually help banks by keeping it from going under. But John McCain, as I understand it -- 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 debate moderator Gwen Ifill of PBS News.

"That is not so," said Palin, "but because that's just a quick answer, I want to talk about, again, my record on energy versus your ticket's energy ticket . . ."

ACORN, a liberal group which advocates on behalf of low- and moderate-income people, seized on Palin's remarks and is now trying to use them to pressure McCain to change his 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 McCain to change his position but the McCain campaign has already made clear to ABC News that that is not going to happen.

"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 McCain spokesman Brian Rogers. "A component of the FHA insured proposal included a work-out formula that provided the homeowner with a 10 percent equity stake."

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