How did we get into this housing mess?

Mr. Middle bought houses one on his left and right as long-term investments. He bought them for exactly $200,000 each, or a total of $600,000.

A couple of years ago, the prices of these homes skyrocketed to $300,000. Mr. Middle decided to unload both houses on his left and right, as he wanted to cash in on what appeared to be a housing mania.

On the left side the buyer, named Mr. Leftside, who went to a neighborhood bank that required a 20 percent down payment. The bank required a solid credit rating and verification that the buyer could afford the 30-year loan.

Mr. Rightside, went to a loan broker because the neighborhood bank refused to lend him the money without a sufficient down payment. The loan broker did not require the down payment, nor did he adequately check to see if Mr. Rightside had sufficient income to afford the home.

Both broker and buyer chose a variable low interest mortgage. Well, now two years have passed and all the homes that went from $200,000 to $300,000 are now priced back to the $200,000 level.

Mr. Leftside, has been making his payments. Unfortunately, Mr. Rightside is behind on three payments, as his mortgage rate increased and he is not able to afford it.

Keep in mind, no money has evaporated. Once upon a time, all three houses were bought by Mr. Middle for $200,000.

Mr. Leftside and Mr. Rightside each paid $300,000. Each has lost $100,000 in value.

The problem in our economy is what to do with the Mr. Rightsides of the world, who are behind in payments.

And what to do with banks holding the mortgage for Mr. Rightside's property?

Why should the taxpayer go to the rescue of these bankers and loan lenders, and pay any more than fair market value?

What we need to do is let the housing market unwind on its own. Given sufficient time and also having few new homes built, will bring the supply and demand of homes to a healthier level. The prices for homes will then reflect more realistic prices and expectations.

David Hrdlicka

Bartlett