The right to a house that never loses value

To the editor:

I have no problem with renegotiating mortgages by extending their terms so that the payments will be lower. I have no problem with encouraging people to stay in their houses, rather than walking away from them. I have no problem with the government making the banks whole or partially whole by sharing in the cost of lowering interest rates on mortgages, or converting adjustable-rate mortgages to reduced, fixed rates.

I do have a problem with the government getting involved in setting the prices of houses that have dropped in value. When people bought those homes, they made a choice to pay the asking price with no guarantee the home's value would go up. Now they want such guarantees.

Since time in memoriam, people sold houses for less than they paid. That is the functioning of a free market. House prices fall for many reasons: neighborhoods change, houses need to be repaired or upgraded by the buyers, someone has to sell in a hurry, newer homes drive down the prices of existing homes, etc.

More than two years ago, my townhouse was worth more than twice what we paid for it. Not anymore. But we do not plan to sell it, so its current price is not an issue.

The government should not step in to make whole buyers who think they paid too much for their houses or bought houses they obviously could not afford in hopes that its value would keep rising.

I do have a problem with the Treasury and the FDIC setting up a $10 billion insurance fund and distributing payments to those who invest in mortgages if house prices continue to fall. That is what the interest rate paid is designed to handle. The higher the interest rate, the higher the risk.

I do have a problem with legislation that would permit bankruptcy judges to treat a portion of the mortgage amount that is greater than the current value of the home as unsecured debt that can be discharged.

What the government is doing is creating or prolonging the same problem that got us into this situation. In a few years, the government may have to step in again. What if home prices continue to fall? Is the government going to keep coming back to pick up the pieces? And why just for those with mortgages? Why not for everyone who sells at a loss? Why not treat homes like an investment, and if you sell at a loss, why not deduct it on your tax return? You have to pay taxes on the gains if you sell too often, or if it is not your principal residence.

People who bought houses with the anticipation they would go up in value obviously were not treating them as places in which they intended to live and instead are now treating them as investments that went bad.

If the government is going to do that for upside-down mortgages, why not do it for automobiles? People finance their cars and, not surprisingly, after a few years, are upside-down with those payments. Is there no end to where the government can step in, and what is to stop them from doing so?

A.L. Gersten

LAS VEGAS

In deep trouble

To the editor:

In response to the Review-Journal's coverage of President Obama's housing assistance and foreclosure prevention plan:

I purchased my home in March 2006. I went in with an interest-only mortgage of $375,000 and a second mortgage of $90,000. After one month, I paid off the second mortgage.

Now I'm upside-down on my first. It's not that we could not afford this home in the beginning. No one anticipated this problem, at least not in our generation. Now that we have lost all of our equity in our home and cannot refinance, what do we do now?

There has to be something done.

We are continuing to lose more and more of our home's value on a daily basis. It's not right. I blame the banks for getting us in this mess. They came up with these creative loans from the very beginning. Shame on them. They made all of their money already and are not satisfied.

I paid $75,000 in interest over only three years and can't even refinance now. How fair is that? I work with a lot of people who are in a lot of trouble right now.

Kathleen Vincent

LAS VEGAS

Fair housing act

To the editor:

I do not claim to be an economist, but I tend to side with those who have handled a mortgage responsibly -- it is unfair for them to continue to have their homes devalued and also help in a bailout for people who may not have made responsible choices.

I would recommend that instead of reducing mortgages, that the loans be amortized for longer periods -- 40, 50 or 60 years, and interest rates reduced to 4.5 percent. Also allow the responsible homeowners to apply for a 4.5 percent loan. This would, I believe, help stabilize home values. The borrower could later, when able, refinance for a shorter loan period.

June Oke

LAS VEGAS