A broker takes up ARMS with us
TEXT OF INTERVIEW
Scott Jagow: Yesterday, we talked about adjustable rate mortgages as part of our series, Housing Madness. I asked for your stories about ARMS.
We got quite a few e-mails. One of them came from retired real estate broker Ann Hymes of Maryland. She made the point that adjustable rate mortgages aren’t the problem here.
Ann Hymes: I’m very much in favor of them — if, in fact, you understand the risk, and you can deal with that risk, and you’re willing to take the consequences, then I think it’s a very legitimate instrument.
In fact, Hymes recently got an adjustable rate mortgage by choice, because she couldn’t afford a fixed-rate deal on the home she wanted.
Hymes: And I took a loan that I would never have recommended to a client of mine. It was about 80 percent of my income.
Jagow: Why did you do that? Why did you feel you could take that risk?
Hymes: I think because I was able to cut back on so many other things in my life that I could therefore up the ratio a little bit — quite a little bit — on the housing expense. But to me, this whole financial crisis is about people who don’t have the information available to make that choice.
Jagow: Well, from your background as a real estate broker, how could we change the situation?
Hymes: Well, I’ve given that a lot of thought, especially with this bailout of such a huge megabank, because to me, the people who gambled and speculated, I don’t have sympathy for. But the others were the vulnerable — the people who didn’t have information, who signed things they didn’t understand, and really were victims of people in my industry, for starts, the realtors, and people who wanted to make a loan to get a commission. There needs to be a lot more thought given to regulation of loans. You know, it’s unconscionable that people signed onto these because they were so hopeful of being homeowners. They signed onto mortgages that they were doomed the day they signed their names.
Jagow: Ann Hymes from St. Michaels, Maryland. Thanks for writing in.
Hymes: Thanks for your call. Bye!
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