You paid PMI on your mortgage? Sucker!
To the editor:
Most of us will empathize with Mike Garrison's outrage over the current government bailout of irresponsible lenders and borrowers (Tuesday letter to the editor).
Yet I do not believe that he or nine out of 10 of us are aware of the full extent of the reckless and senseless borrowing that took place over the past few years.
Most responsible borrowers have always believed that if a borrower took out a home loan without a 20 percent down payment, the lender would require the borrower to purchase private mortgage insurance.
Not so. Lenders were circumventing this requirement by loaning a second mortgage (at a higher interest rate) to use for a down payment, thereby saving the borrower the PMI premium, which could run $150 or more for a $235,000 mortgage.
All parties apparently were convinced that after home values appreciated for a few years, the loans could be refinanced.
However, we all know what happened to that idea when the housing bubble burst.
Lenders were aware that they encumbered very little risk with these subprime loans because they just bundled their garbage loans and sold them.
I will admit that I do not have a thorough understanding of how these subprime loans were bundled and used as collateral. But even with my limited knowledge of economics, I can easily see that this was financial suicide for borrowers with limited cash for a down payment.
From the very first time that I read of the subprime problem, I wondered why the problem loans were not paid off by the private mortgage insurance policies that I supposed everyone who did not put down 20 percent should have had.
I was enlightened by recent report by Jim Landers of the Dallas Morning News that was published in the Review-Journal. He described how beginning in 2000, lenders began to use "piggyback" loans to bypass this requirement, thus precipitating the downfall of our economy -- and perhaps Europe and Asia's.
Anthony J. Marinelli
LAS VEGAS
Reward responsibility
To the editor:
While I empathize with homeowners who were victimized by subprime mortgages, I am opposed to the government bailing them out of their dire situation. When we make bad financial decisions in life, we have to pay the price. That's how we learn.
If I am taken to the cleaners buying a car, should the government compensate me for my misfortune? Of course not.
I am not a subprime mortgage victim. I purchased a home in 2005, when prices were high. I obtained a 30-year, fixed-rate mortgage at a very good rate from a reputable lender. I did this by having good credit, putting more than 20 percent down and paying extra "points" to reduce the rate.
Since then, housing prices have declined to the point where I am close to being upside-down, owing more than the house is worth.
Republican Sen. John McCain said in the latest presidential debate: "I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes, at the diminished value of those homes, and let people be able to make those payments and stay in their homes."
This would be a gift from the government. If subprime loan victims receive a gift, then I should receive one as well. Fair is fair. I played by the rules, and now I have been victimized by falling home prices, largely because of the subprime mess. I am as deserving of governmental assistance as the subprime victims.
Roger Witcher
LAS VEGAS
Ho-hum debate
To the editor:
Tuesday night's series of stump speeches left me with the vision of two men shadow boxing in a ring. Not only was there wincing fallout from a weak moderator, there was little news about either candidate.
Some may have caught the fact that Sen. Barack Obama "may" deal with the Social Security crisis in his first term, and that vice presidential nominee Joe Biden's home state of Delaware is a refuge of sneaky corporations. They may have also noted that Sen. Obama is not opposed to intruding into foreign lands with our troops and tax dollars.
Moreover, others may have caught Sen. John McCain's inattentiveness when Sen. Obama offered a glass jaw and contradictory verbiage about government when he suggested its role was to appraise houses.
Missing completely were questions critical to our country, including queries about human rights for babes in the womb and immigration, just to mention two. If this is the state of debates in the 21st century, I'll turn to sitcoms.
However, one thing is certain: We have a clear choice come November. We can elect an Obama-Biden-Pelosi-Reid-Dodd-Frank ticket, or we can at least ensure there is some balance of power until we the people genuinely immerse ourselves as members of a democracy, do our homework, and promote and support our own candidates, not those chosen from a small, stagnant pool.
If we fail to do so, we have no one but ourselves to blame.
Patricia Hershwitzky
LAS VEGAS
