A letter to Senator Dodd about the sub-prime problems

30 03 2007

Senator Dodd,

You have been stating that the “sub-prime’ loan problem was caused by predatory practices.  I will argue that the borrowers signed the loan docs knowing that the rates would jump when the fixed period was over and that they planned to refinance or sell prior to that time. 

While housing was rising in price at a humongous rate this was not a problem.  The fact that these people did not see the end of the housing boom approaching is the cause of the problem. 

I do not believe that we, the people of the US, should bail out these people, nor should we bail out the mortgage companies. 

Rather than changing the rules on financing how about enforcing the rules that we have now?  Rule Z, I believe, is the rule that requires full disclosure at the time of applying for a loan. 

I need to disclose that I do have a variable rate mortgage on my property.  I am planning on refinancing prior to the loan going variable.  If I cannot refi then I must be prepared to pay for the loan at the new rate.  I knew this going in and plan to live with the consequences of my actions. 

I have given you my phone number and address; please feel free to contact me if you would like to discuss this situation or any other. 

Sincerely, 

Clayton Gradis

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