Mrs. Clinton,
I read on the Associated Press wire today that you have proposed a moratorium on mortgage foreclosures, as well as a freeze on adjustable mortgage rates.
The story reported that you admonished business leaders at the NASDAQ Marketsite in Times Square that "economic growth was only a success if it 'lifts up' hardworking families with fewer means."
On behalf of my very hardworking family, I urge you to drop your proposal. Because your plan will keep millions of potential homeowners like me from owing our own homes.
We didn't buy a house during the bubble. Even as our family income grew into six figures, we couldn't afford a house in our city (Pasadena, California), without resorting to an option ARM, a "stated income" loan for which we'd have to lie about our income, or some other risky mortgage package that millions of other Americans did take over the past decade.
Those people, the very ones facing foreclosure now, bid up the prices of homes in Pasadena, and communities around the country, to levels that even high-income Americans could not afford without turning to these so-called "suicide loans."
Friends and colleagues harassed us to buy. They told us to "buy now, or be priced out forever." They told us to take out a loan, any loan, "just to get in." Even if we couldn't afford the higher payments after the adjustable rate reset, these folks told us that rising home prices would provide us enough equity to make up the difference.
I took econ classes in college and I knew that this type of financial practices could not last. But millions of other Americans were bullied or frightened into taking on these crazy mortgages, so that they could live in their own home.
My wife and I would love nothing more to buy our own home, too, but we will not take a loan that resets to payments that we have no reasonable hope of making in the future. For our family of four to buy a 3-bedroom home in Pasadena on a traditional, 30-year fixed mortgage, even with our six-figure income, we need home prices to drop another 20-50 percent from their current asking prices.
That might happen if the market is left alone. But it certainly will not happen if people with incomes far lower than ours are allowed to remain in homes that they have no hope of ever affording.
I want to believe in the American Dream. I want to believe in, as your husband said in 1992, "the ideal that if you work hard and play by the rules you'll be rewarded." But I feel sick to my stomach that, thanks to the madness of Wall Street, not only will my family not get the chance to buy a home, but that our tax dollars might go to help those who took these awful loans that we, responsibly, refused.
Can you offer a plan for families like ours? A plan that prohibits banks and brokers from giving loans to people who cannot document an ability to make the necessary payments for the life of a loan. A plan that penalizes bond rating services for knowingly misstating the risk of included investments. A plan that would penalize speculators for leaving homes unoccupied for months while millions of Americans need a place to live. And a plan to help affected borrowers, not to avoid an inevitable foreclosure, but to move through that process swiftly, with counseling and relocation assistance, and without leaving their credit in ruins.
Families like mine are looking to politicians to reassure our faith that, indeed, people who play by the rules will be rewarded. My family played by the rules. We acted responsibility, when facing enormous pressure not to do so. I hope that you will reconsider your proposal, and instead think about hard-working, financially responsible families like mine.
Thank you,
Robert