Readers: California Mortgage Bailout Would Be Unwise
If state legislators are considering a California mortgage bailout bill because they think it’s politically popular, they might want to think again, the San Francisco Chronicle reports.
A Sunday Chronicle column by Kathleen Pender on why a taxpayer-financed bailout of bad credit mortgages is a dumb idea elicited more than 90 e-mails from readers, and only a few disagreed.
“These poor, poor people who were ‘duped’ simply got greedy and failed to do any homework. Hard lesson learned. Move on. I’m a fairly liberal person, having never voted Republican, but this talk of bailouts is beyond reason,” writes Peter Norquist of Pleasanton.
Many e-mails came from people who had considered an exotic California home loan… but chose a smaller house with a conventional mortgage or no house at all.
“As a potential ‘victim’ in the fall of 2005 I was amazed that the mortgage brokers and banks were trying to sell me insane home mortgage loans in hope of making a sale,” writes Ed Dergosits of Mill Valley.
“Now they want relief funds. I say let the banks and the homeowners (like they really own the home) take the loss. They took the gamble. Why should taxpayers bail them out? I am still a second-class ‘renter’ but I do not have to ask for public assistance to pay for my rent.”
Sarah Koenig of San Rafael writes, “My husband and I own a tiny town-home in Marin. According to mortgage brokers, we could have qualified for a much larger mortgage and larger home. However, after I explained that my husband and I had spent the previous year putting aside ‘x’ dollars over our rent so we knew what we were comfortable buying, he said he knew we didn’t want to go as high as we could qualify.
“It was very difficult bidding against other folks with our same income or lower, but were willing to go with a crazy loan, while being told we were ‘dinosaurs’ for sticking to our 30-year fixed. We eventually settled for a small town-home that we do love, but it is hard for us to imagine, as taxpayers, bailing out folks who don’t live as responsibly as we do.”
Many readers expressed sympathy for California home loan borrowers who were misled, but said they should still take responsibility.
“I’m sure there are a few cases where individuals, who were obviously misled and taken advantage of, should be helped,” writes Jim Frame of San Francisco.
“But people need to take responsibility for their fiscal irresponsibility. Sure, the strawberry picker profiled in an article (in The Chronicle) a few weeks ago may not have been told the whole story by his mortgage broker; but seriously, if you make $300/week, you should know you can’t afford a $720,000 house!”
Dean Bordigioni of Sonoma writes, “Let the market decide. Many more were helped during this land rush of ours than hurt. Markets go up and down, some people take a leap of faith they never should have, some make money, some get hurt and some want the government to fix all their problems. They made a free choice, could have prospered greatly from it and didn’t. Bada bing.”
Citing a common theme, Jason Young of Los Altos writes, “It’s true that nobody bailed out investors after the Nasdaq bust, but the government has been a serial bailout machine since the 1980s. … I’d love to believe our dear congressmen have the poor ‘victims’ in their hearts, but the cynical part of me thinks otherwise. Have you taken a look at where Chuck Schumer gets his campaign dollars? This won’t be about the borrowers. I smell a bank rescue on the near-term horizon.”
One woman who bought a property with $70,000 down and possibly could have obtained a conventional home loan, but ended up in an option ARM with a 1.75 percent introductory rate. Her monthly payment does not cover the interest and the arrearage is being added to her balance.
“My principal loan balance of $602,000 has gone up to $624,000 in a matter of seven months,” says the woman, who did not want to be identified. “I am gasping for breath every time I receive my monthly mortgage statement.”
Continue reading in the San Francisco Chronicle …