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Don't 'fill the world with fools'

September 11, 2007

Re "Mortgage tightrope," editorial, Sept. 6

Herbert Spencer's words are the best response to your editorial and to the usual band of demagogues in Congress: "The ultimate result of shielding men from the effects of folly is to fill the world with fools."

Any sort of government rescue of defaulting sub-prime borrowers benefits the lenders too. But neither are the borrowers deserving of help. These are people who took on loans they could not ultimately afford with little or no down payment and hence have little or nothing to lose. They bet that escalating real estate prices would allow them to flip their houses before the bill came due. These were not houses purchased as homes but as investments. There is no good reason to shift this loss to taxpayers or responsible borrowers with some sort of bailout.

William Davis

Yorba Linda

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Exactly who is the government wishing to bail out? Certainly not the homeowner facing foreclosure, the so-called financially irresponsible borrower. There aren't financially irresponsible borrowers, only financially irresponsible lenders. The government wants to bail out banking and lending institutions. Sub-prime borrowers don't have enough cash in their properties to keep from walking away.

If the government is truly concerned about troubled homeowners, it should pressure banks to convert these loans (at low or no cost) to 40- and 50-year mortgages with no prepayment penalty. This could lower monthly payments and allow homeowners to keep their properties or bail out later when their financial situations improve. Only people living in the homes should qualify. Beyond that, the government should stay out.

John Hutton

Los Angeles

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Your editorial leaves out one important point. For every loan made, there was a real estate agent, a title company, a mortgage broker and others who were paid fees and who must be held accountable for their actions. Of course, people who took on loans without having to pass credit checks and employment verification must have known they were taking on a huge risk. However, the others who made money off these transactions should not walk away with clean hands either.

As far as who should be helped, those properties that are occupied by the purchasers should be first in line; speculators who bought with the hope of holding on for a few months and then selling for profit should be last.

Carol Marshall

Anaheim

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