Monday, August 4, 2008

Boston Globe reader: On the Bailout

A letter to the editor from a Boston Globe reader:

I have an idea for a piece the Globe should write ('Inside Congress’s housing repair kit,' July 31): an analysis of two buyers who bought roughly the same house in the same neighborhood for the same price (say $500,000) at the peak of the market. The first buyer does things the right way: 20 percent down, documents income, fixed interest rate, mortgage = 28 percent of monthly income. The second puts nothing down, lies about his income, gets a negative amortization adjustable rate mortgage that resets so that he now pays 40 percent of his income. Home prices drop 20 percent since they bought.

The first guy has lost all his equity. The second guy gets to participate in Barney Frank’s and Chris Dodd’s great bailout plan. He negotiates his loan down to $360,000 and gets a lower fixed rate than the first guy since his new mortgage is subsidized by the Federal Housing Administration (read: the US taxpayer). He is rewarded for stupidity and lying.

Do I have this right? Is this still the USA we live in?

I have never in my life been more sickened by a piece of legislation than this one.

What more could I say.