The sub-prime ‘fiasco’

Re “Sub-prime trust,” editorial, Aug. 11

Your editorial backing the Bush administration’s decision to oppose the removal of limits on Freddie Mac and Fannie Mae is flawed and ill-reasoned. With a portfolio limit in place and artificially maintained by federal mandate, Freddie Mac and Fannie Mae have not kept up their end of the mortgage cycle. Others in the private sector have stepped in to fill the vacuum. These are the same brokerages that perform this function for the sub-prime mortgage market. With the meltdown of the sub-prime brokers in full swing, there is a significant portion of the premium market at risk because Freddie Mac and Fannie Mae could not provide the secondary market. This fiasco will make a great chapter in the next generation of economics textbooks for what government should not do to punish corporations attempting to do business in our robust economy.

Thomas E. Nefcy

Calabasas

“Sub-prime” is a polite cover for scandalous mortgages. Selling homes under sub-prime mortgage terms was an obvious scam that victimized the buyer and, in many cases, the lending agencies and other financial institutions as well. The consequences could easily be foreseen. Mortgages were soon regularly renegotiated to meet monthly payments, each time extending private debt. News media were more concerned than any federal regulatory agency. Everyone should have a home, but selling houses under these terms was irresponsible. Washington was then and is now obligated to deal with this under the preamble to the Constitution, which mandates that government “promote the general Welfare.”

Robert Sollen

Carpinteria

Re “The mortgage meltdown,” Aug. 11

As a lifelong apartment renter, I have no sympathy for the thousands of recently-axed, random-dial mortgage and loan telemarketers, like those who would call or leave long messages on my answering machine asking if I would like to refinance. For many of these poor phone jockeys, I predict that their new sales pitch will be, “Would you like fries with your order?”

Robert Leslie Dean

Los Angeles