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Responsible Consumers Decry Mortgage Bailout

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, host:

And I'm Melissa Block.

At the prompting of the Bush administration, the mortgage industry is pledging to help some struggling homeowners by freezing interest rates on their adjustable loans. That has come as welcome news to many borrowers. But there is a backlash from people who feel the assistance is unfair.

NPR's Chris Arnold has the story.

Mr. JOHN BAKER (Auctioneer): Good morning, ladies and gentlemen. My name is John Baker(ph)…

CHRIS ARNOLD: On Main Street in Brockton, Massachusetts, an auctioneer is in the midst of foreclosing on a nice looking, two-story house.

Mr. BAKER: …2007 at 10:00 a.m. The property behind us known and numbered.

Mr. ANTHONY GRINE (Brockton resident): I own the next door, I was curious.

ARNOLD: Anthony Grine(ph) is a neighbor who has wandered over in his shorts, even though it's a chilly day because he saw the foreclosure getting started. He says it's too bad. His neighbor was a nice guy, a contractor who put a lot of sweat equity into the house.

Mr. GRINE: I mean, I'm - truly, I just, anybody who gets, it's a sad thing in following who lost his house. And it's sad. But he signed the paperwork. He did the loan. He lost his house. I learned something from it.

ARNOLD: Grine doesn't think people like his neighbors should get some kind of special break, whether they paid too much for their house or just got into a loan that they couldn't afford because the interest rate shot up to 10 or 11 percent.

Mr. GRINE: If you sign anything, you read it. I mean, some - they have to take responsibility for your own actions.

ARNOLD: Grine isn't alone. At 20 miles away at a shopping center in Boston, fireman Ronnie Holmes(ph) is pushing his toddler in a stroller.

Mr. RONNIE HOLMES (Firefighter): I think they should have known better. If I, if I lost my job, my mortgage company isn't going to say, we'll forgive you on the loan."

ARNOLD: This is probably not the majority opinion around the country. An L.A. Times Bloomberg poll in November found that 58 percent of people favored requiring the industry to freeze interest rates for struggling borrowers.

But a vocal minority has been writing into blogs and news stations complaining about the president's plan or other efforts to cut borrowers deals that keep them in their homes.

Mr. IRA RHINEGOLD (Executive Director, National Association of Consumer Advocates): I'm actually pretty appalled by the backlash.

ARNOLD: That's Ira Rhinegold, the head of the National Association of Consumer Advocates. He thinks people just don't understand that there were scores of mortgage companies committing fraud and lying to borrowers. He says many fly-by-night companies and some big ones are out of business, and he says the terms were ridiculous, and that's why you have so many defaults.

Mr. RHINEGOLD: What would people's reaction would be if a car manufacturer made a million cars and 250,000 of those cars drove off the road?

ARNOLD: Rhinegold says there'd clearly be a design flaw like there is with these subprime loans. And at the shopping center in Boston, many more people we spoke with supported the idea of the government pushing the industry to restructure loans for people in danger of foreclosure.

Retiree Pat O'Leary(ph) and his friend Bob Patton(ph).

How do you think you should help them?

Mr. BOB PATTON (Boston resident): It's a great idea.

Mr. PAT O'LEARY (Boston resident): Great idea.

ARNOLD: But losing their homes, I mean…

Mr. PATTON: Everybody is losing their homes. And all the young people are losing every cent they have. I'd say yes, do it.

ARNOLD: Meanwhile, the industry is pledging to do more loan workouts.

Chris Arnold, NPR News, Boston. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.
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