A Market Solution
To The Editor:
The prudent homeowner’s script is tragic. He faces now a seemingly insurmountable realty problem. He bought his house for, say, $400,000, with 90 percent financing, at an interest rate of 6 percent. But now his house has declined sharply in value, maybe down 30 percent, to $280,000. So the hapless homeowner finds himself stuck. Because of dramatic price decline, he can no longer rewrite his old mortgage for a lower interest rate.
But there’s another dramatic element in this economic slowdown story: the Treasury can now borrow for just 3 percent. So, we can use our national borrowing capacity to provide, or prudently subsidize, 4 percent mortgages, for 80 percent of current market values. This homeowner has been paying 6 percent on $360,000, or $21,600 interest per year. But now, in our new dramatic action, he can rewrite $224,000 of his mortgage for 4 percent, or $8,960 interest per year. (The remaining $136,000 of his principal balance remains, as a 6 percent second mortgage, an additional $8,160 interest per year ) His new total is now $17,120 interest, $4,480 per year less than before, saving this homeowner $373 every month!
Note this new national mortgage rewrite program requires no trillion dollar expenditure and no need for autocratic fiat to determine which homeowners deserve help – all credit-worthy ones will be allowed to rewrite their old conforming loan, resulting in a simple, steady style of stimulus. The homeowner above receives not just a onetime $600 tax rebate, but $373 off his mortgage payment every single month.
– Fred Meyer
University Real Estate, Cambridge
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Menino Column Did Mayor, Readers A Disservice
To The Editor:
I was surprised by the tone and approach of Scott Van Voorhis’s (Menino the Master Builder, 2/23/09) article, which I thought was a departure from the style Banker and Tradesman readers have come to expect, and a new foray into the “wild world” of Boston mayoral election year politics. I have followed Scott’s career as a journalist and have great respect for his work. However, as the CEO of Boston, the Mayor faces incredible challenges daily. Not to mention that each and every day he serves the public, he opens himself up to criticism by someone for action or inaction, or for a decision that may be unpopular.
A healthy debate on the issues presented in the story, and on ones accomplishments is what our system of government is based on. I think it is important to have that debate on a level playing field, affording each party a chance to respond quickly to any accusations. Articles like the one that was written, make it extremely difficult for the party who is the subject to respond quickly as B&T is a weekly publication. Banker and Tradesman is the news source for developers in the Commonwealth, and should be where debate takes place. Let’s have that debate in such a way that both sides are heard on the issues.
– Gregory P. Vasil
Chief Executive Officer, Greater Boston Real Estate Board
Editor’s Note: Mayor Menino was indeed given an opportunity to comment directly for the column, but he declined to speak with our writer.
Don’t Destroy Historic Character
To The Editor:
As a 35 year resident of Boston’s West End, I believe the idea of extending the financial district into the area where the North End meets the West End is not appropriate. (Mayoral Race Delays Gov. Ctr. Garage Filing, B&T March 2). It will replace the expressway barrier with enormous towers, recreating a barrier between the neighborhoods. It will add to the congestion in the transportation hub at this site, and it will cast “shadows” in the Green Way.
With the present economic situation, the rising vacancy in the retail and office space in the city, and the time it will take for the economy to recover, there is significant risk the project will fail. There is no assurance the financial industry will return to Boston to their pre-recession level, let alone require more office space.
The mass of the development will destroy the character of the Historical District, the one guaranteed viable industry in the city.
– Marlene Meyer
Boston
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Too Much Discussion
To The Editor:
The March 2 Advisory Board article, “Unbalanced Reporting Drives Down Home Sales,” is thought provoking, and public thinking is creating a terrible stench these days. I have no idea whether any of the information being published is accurate, and quite frankly I have stopped prognosticating because I have absolutely no idea what is going on or when it will end. I would like to maintain my glass-half-full optimism and say we are at the bottom and on the handicap ramp to recovery maybe by the third quarter of 2009, but when I think of all the “what if’s” I am reluctant to cast my vote.
This cycle we are in is not unlike cycles we have experienced in the past, and will experience again in the future. Even Alan Greenspan admitted that much.
There is a quote from the late Louis Rukeyser (Wall Street Week) that I love; essentially it says no matter what you do it will be wrong, but the worst mistake you can make is to do nothing. Right now, people are doing nothing, but thinking.
– Peter C. Fyler,
SplitRock Real Estate, LLC,
Martha’s Vineyard
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Column Was On The Money
To The Editor:
Thank you for an article (“Unbalanced Reporting Drives Down Home Sales,” B&T, March 2) that substantiates my beliefs. I think your premise goes far beyond the real estate market. I believe it applies to the stock market and to the economy in general. Fear has become a powerful motivator when it comes to businesses laying off. The media has created this atmosphere of fear that has started a process that is now feeding on itself. Please keep beating the drum – we need a little common sense being reported if we are ever going to find our way out of this.
– Dorothy Wilbur
Assessor’s Office, Stow
