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Bailout Backlash

This article is more than 11 years old.

Leaders in the US Senate hope to pass a bill this month designed to stave off home foreclosures, which are now at their highest nationally since 1979.

The proposal has strong support from Democrats John Kerry and Edward Kennedy, and many Republicans. But it's getting some surprise resistance from Massachusetts renters... and even homeowners. WBUR's Curt Nickisch reports.

TEXT OF STORY:

CURT NICKISCH: The basic idea of the bill is for homeowners who are in trouble to be able to refinance and have lower payments. The government would back those new mortgages so lenders go along. The bill's sponsor, Massachusetts Congressman Barney Frank, says it's good for the country.

CONGRESSMAN BARNEY FRANK: The economy has to some extent been taken hostage by irresponsible acts by a lot of people. Lenders, borrowers, etcetera. I think to get out of this we have to pay a certain amount of ransom.

NICKISCH: The bill could cost taxpayers almost three billion dollars, and put them on the hook for billions more if the housing market falls further.

DEVIS MYTEVELI: This burns!

NICKISCH: It burns Devis Myteveli from Somerville. He's one of more than one thousand Massachusetts residents who've signed an online petition, run by a former Senate Republican and free market advocate. Myteveli signed it to oppose the bill that would help delinquent borrowers.

METEVELI: The benefit ends up with the homeowner, and the cost is spread out among everybody. I don't get to rent out his bedroom for one night just because I bailed him out, do I?

NICKISCH: Myteveli takes it personally because he wants to be a homeowner. He emigrated from Albania with the dream of the white picket fence. But during the housing bubble, prices were going up much faster than he and his wife could save for a down payment.

MYTEVELI: And then we see people that I know for a fact are in jobs that pay not as well, and there they are, seeming to us to afford these very nice places to live. What's going on? What am I doing wrong?

NICKISCH: When the bubble burst, Myteveli felt vindicated for not overextending and buying. But now he feels like his taxes will reward people who did. And: prop up housing prices, keeping that white picket fence out of reach for him and his wife and their baby on the way.

MYTEVELI: I do have sympathy for people that are foreclosed upon. But in the end, well, I hate to be the bad guy saying you should've done the math. But they should've done the math.

NICKISCH: And many who already have the white picket fence say the same thing.

KAREN FORTIER: We like this little spot. Lots of birds and room for me to garden...

NICKISCH: Actually, it's a split rail fence around the modest home of Karen and Ron Fortier in Amesbury. They bought way out from Boston to save money. Put twenty percent down, paid more for a conventional loan. Karen says no one's helping them pay their mortgage.

FORTIER: I know a woman whose husband HAD to live in a particular neighborhood. Their house is getting ready to be foreclosed on. If your goal in your life is to live in a neighborhood with million dollar homes because you look good, well, that's not my problem.

NICKISCH: Of course most people facing foreclosure are not living in million dollar homes. Nicholas Retsinas thinks there is merit in helping sub prime borrowers get better terms. He runs the Joint Center for Housing Studies at Harvard. But Retsinas says Congress shouldn't bail out speculators who were just trying to get rich quick, either.

NICHOLAS RETSINAS: How the government threads that needle, to distinguish between the deserving and the undeserving, is going to be a real challenge.

NICKISCH: No matter where Congress draws that line, it'll be over the objections of many Massachusetts renters and mortgage payers who feel that by rewriting home loans, Congress will be rewriting the terms of the American Dream.

For WBUR, I'm Curt Nickisch.

This program aired on June 9, 2008. The audio for this program is not available.

Curt Nickisch Twitter Business & Technology Reporter
Curt Nickisch was formerly WBUR's business and technology reporter.

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