This is the second in a series of weekly posts examining the positions of the major presidential candidates on bankruptcy, debt, and personal finance issues. Last week’s post, in cased you missed it, dealt with individual bankruptcy. This week, it’s time to look at where the candidates stand on mortgage and foreclosure issues.

Barack Obama on the Mortgage Crisis (Issues Page)

Sen. Obama’s mortgage plan focuses on increasing the transparency of the lending business and giving borrowers more options for relief from onerous loans.

Sen. Obama proposes to make it easier for borrowers to obtain and understand information about the mortgage products available to them, creating “a simplified, standardized borrower metric (similar to APR)” for home mortgages. A 10 percent universal mortgage credit would apply to homeowners who don’t itemize their deductions; Obama says this would equal an average of $500 a year for 10 million homeowners. Obama would also create a fund to help homeowners escape foreclosure through refinancing, funded in part by penalties on fraudulent lenders.

Obama was an early critic of mortgage fraud and abusive lending practices. With Sen. Richard Durbin (D-Ill.), he sponsored the Stopping Transactions which Operate to Promote Fraud, Risk, and Underdevelopment (STOP FRAUD) Act, which would criminalize mortgage fraud on the federal level and increase funding to federal and state law enforcement to fight it. The STOP FRAUD Act is currently in committee and has not become law. He also proposes allowing bankruptcy courts to modify the mortgage payment of an individual in bankruptcy; Obama calls the current bankruptcy law “outdated” and says that it shields the subprime mortgage industry from the consequences of its “dangerous and sometimes unscrupulous” business practices.

John McCain on the Mortgage Crisis (Issues Page)

Sen. McCain’s main mortgage-related plank calls for a “HOME Plan” that would help distressed homeowners trade in an unmanageable mortgage for a less expensive one with payments they can afford. McCain’s plan would have more restrictive terms than Obama’s: eligibility is limited to “[h]olders of a non-conventional mortgage taken after 2005 who live in their home (primary residence only); can prove creditworthiness at the time of the original loan; are either delinquent, in arrears on payments, facing a reset or otherwise demonstrate that they will be unable to continue to meet their mortgage obligations; and can meet the terms of a new 30-year fixed-rate mortgage on the existing home.” The part about proving creditworthiness is a bit troubling: What happens to people who were duped by predatory lenders into taking on mortgages they couldn’t afford? It’s not clear. McCain’s plan also involves lenders voluntarily agreeing to write down delinquent mortgages to the current market value of the home, which lenders have not historically shown a great willingness to do.

On the law & justice front, McCain has called for the Justice Department to form a Mortgage Abuse Task Force to investigate potential criminal wrongdoing in the mortgage industry and prosecute any offenders. The task force would also offer assistance to state attorneys general as they investigate and prosecute mortgage abuse cases on the local level.

For more on the candidates’ proposals and differences on mortgage-related issues, watch this video report from the Associated Press:

Coming next week: The Candidates on Credit Card Issues