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How to Handle Mortgage Crisis: Survey Says, ‘Don’t Help ‘Em’

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RISMEDIA, Jan. 25, 2008-A new Wall Street Journal Online/Harris Interactive Personal Finance Poll finds that a plurality of U.S. adults say the government should not provide financial assistance to borrowers who can no longer afford to pay their mortgages to keep them out of foreclosure. Only one-quarter agree that the government should provide financial help for mortgage holders, while 42% disagree (including 22% who strongly disagree). However, a majority (64%) agree that mortgage brokers should be better regulated, with 41% strongly agreeing.

These are just some of the results of an online survey of 2,082 U.S. adults ages 18 and over, of whom 1,331 are homeowners, conducted by Harris Interactive® between December 10 and 12, 2007 for The Wall Street Journal Online.

When asked who is most responsible for the trouble in the housing market and mortgage business, half (52%) say mortgage lenders and brokers, while 21% say government regulators, 16% say home buyers and 11% say someone else. Nearly half (48%) also say direct lenders are most responsible for making sure borrowers are able to pay their mortgages and should be required to modify loan terms for mortgage holders who couldn’t afford their current terms. By comparison, 15% disagree and 24% say they neither agree nor disagree.

U.S. adults are divided on whether direct lenders are not responsible for borrowers who “invested recklessly or bought more house than they could afford,” with 34% agreeing, 35% disagreeing and 21% saying they neither agree nor disagree. Twenty-two percent say a freeze on rates on adjustable mortgages will unfairly penalize mortgage investors, compared with 31% who feel it won’t. Thirty-seven percent say that a rate freeze will unfairly reward borrowers who made bad financial decisions, compared with 21% who disagree.

Despite indications of a wave in home foreclosures, only two percent of U.S. adults say they have missed several mortgage payments or have been in the foreclosure process, while seven percent say they expect to have difficulty obtaining a mortgage or refinancing a mortgage. Furthermore, 14% plan to delay the sale or purchase of a home, while two percent plan to lower the asking price of the home they are selling.

Nearly half (48%) of homeowners say the value of their home increased at least moderately in 2007 and 41% are optimistic that its value will increase over the coming year. Only 15% of homeowners responding to the poll believe their home’s value will decrease in the coming year, including one percent who think it will decrease significantly.

When asked about their current or most recent mortgage, 58% say that they do not consider it to be “subprime”, with almost one-third (31%) indicating that they are not sure if their current mortgage is considered to be subprime. Among those with household income less than $35K, 47% are unsure whether their mortgage is subprime, compared with 21% of those with income $75K or higher.

About half (47%) of U.S. adults who have a mortgage on their home say they obtained it through a direct lender, while nearly one-third obtained their mortgage from a mortgage broker. Homeowners with higher incomes are more likely to say they obtained their last mortgage through a direct lender and those with household income less than $35K are more likely to have used a mortgage broker.

Eight percent of mortgage holders say they chose their particular mortgage because of “speed or less paperwork,” while another eight percent cited easier qualification. Only six percent say “it was the only loan they qualified for” and four percent say they didn’t mean to choose that particular mortgage. Seven percent of mortgage holders believe they were misinformed or otherwise misled by their mortgage broker or loan officer about the terms of their loan, compared with 85% who feel they weren’t misled or misinformed. Among younger mortgage holders ages 18 to 34, 13% believe they were misinformed and 17% say they aren’t sure.

Peggy Lebenson, senior vice president for Financial Services at Harris Interactive, comments, “Even though the sub-prime crisis directly affects only a small proportion of Americans, the damage to Americans’ trust of direct mortgage lenders is widespread and may long outlast this crisis. Direct lenders should reach out to their customers and potential customers now to begin to restore their trust.”

This survey was conducted online within the United States between December 10 to 12, 2007 among 2,082 adults (aged 18 and over), of whom 1,331 are homeowners. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents’ propensity to be online. Bases for certain questions in the study were reduced due to a programming issue.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words “margin of error” as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Interactive surveys. The data have been weighted to reflect the composition of the U.S. adult population. Because the sample is based on those who agreed to be invited to participate in the Harris Interactive online research panel, no estimates of theoretical sampling error can be calculated.

For complete survey results, see www.harrisinteractive.com.

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