1 This is in response to George Melloan's Business World column 'The Housing Market Is a Bigger Mess Than You Think' (op-ed page, Sept. 26).
2 In Houston, we have seen how bad the housing problem can become.
3 Unused houses deteriorate rapidly, affecting the value of nearby homes; in a domino effect, the entire neighborhood can fall victim.
4 At this stage some people just 'walk away' from homes where the mortgage exceeds current market value.
5 But most of them could have afforded to keep up their payments -- they chose not to do so.
6 The problem is so vast that we need to try innovative solutions -- in small-scale experiments.
7 Here are some ideas:
8 1) Foreclosed homes could be sold by the FHA for no down payment (the biggest obstacle to young buyers), but with personal liability for the mortgage (no walking away by choice).
9 2) Encourage long-term occupancy by forgiving one month's payment (off the tail end of the mortgage) for every six months paid; or perhaps have the down payment deferred to the end of the mortgage (balloon), but 'forgiven' on a monthly pro-rata basis as long as the owner remains the occupant.
10 3) Develop rental agreements with exclusive purchase options for the renter.
11 An occupant will, in most every case, be better for the home and neighborhood than a vacant house.
12 In this way, the house is not dumped on to a glutted market.
13 John F. Merrill
14 Houston
15 The Federal Housing Administration, Veterans Administration and the Department of Housing and Urban Development further aggravate the problem of affordable housing stock by 'buying in' to their foreclosed properties (of which there are, alas, many) at an inflated 'balance due' -- say $80,000 on a house worth $55,000 -- instead of allowing a free market to price the house for what it's really worth.
16 Worse, the properties then sit around deteriorating for maybe a year or so, but are resold eventually (because of the attractiveness of the low down payment, etc.) to a marginal buyer who can't afford both the mortgage and needed repairs; and having little vested interest that buyer will walk away and the vicious cycle repeats itself all over again.
17 Paul Padget
18 Cincinnati

But most of them could have afforded to keep up their payments - - they chose not to do so .
payments
What kind of payments?