Letters: Mortgages are messy

As an alternative to columnist Peter Goldmark's sledgehammer solution to fixing the mortgage mess ["Clean up the foreclosure mess now," Opinion, Nov. 27], I would like to suggest the following:

Take the example of my son, who is exploring a refinance on his house. He bought his house four years ago with a mortgage loan carrying a 6 percent rate. If we assume a drop in the value of his home of 25 percent, he probably would not qualify for refinancing. If he could refinance now at a rate of 4.3 percent, the savings for him would be north of $5,000 a year in interest.

If a government agency could provide gap insurance coverage for the difference in the amount of money the bank would be willing to lend on the current value of the house, versus the amount needed to refinance the existing mortgage loan, everybody would benefit. The agency would charge a yearly fee, say $1,000, to provide the guarantee, which could be paid out of the refinance savings. The guarantee would remain in effect until loan-to-value reached the lender's normal advance rate on the appraisal at the time of the refinancing.

My son would have more money in his pocket to spend, some of which could be used to repay the mortgage loan faster and thereby reach that point when the gap insurance would no longer be required. My son would also have a smaller interest deduction and would pay slightly more in federal income taxes.

Bill Swift, Islip
 

I take exception with Peter Goldmark when he writes, "a family that's underwater has little incentive to keep paying."

A family underwater in most cases did not get underwater overnight. It may have children in school and have a bond with the community. I would think most of your "underwaters" would say, "I'll pay my mortgage until the day I die. I just want to raise my children here."

Scott Miller, Shoreham