CARS FOR COMMUNISM

In his review of The Forsaken: An American Tragedy in Stalin’s Russia (“In the Nightmare,” Sept. 29), Ronald Radosh writes that the book offers “a dramatic account of the previously unknown story” — that is, the story of the “thousands of American citizens who, during the Depression, sought employment and a better future in the ‘worker’s paradise’ built by the Russian Bolsheviks after the 1917 revolution.”

By and large the story is indeed “previously unknown,” but there is a literature on these events, and I have known about them since my teens (I’m now 46). Those interested in The Forsaken should also read several other books.

If I could make Coming Out of the Ice by Victor Herman compulsory reading for high schoolers, I would. This is a memoir by a man of amazing mental and physical fortitude. His father, an American Communist, went to the Soviet Union to set up a Ford plant, and brought Victor along. There, of course, Victor suffered inconceivable tortures.

Black on Red by Robert Robinson, also a memoir, is by a black American auto worker who thought living in the Soviet Union would vastly improve his life. Instead he encountered longer hours and blunter racism, and was grateful to leave before seeing the gulag.

Finally, there’s Dancing under the Red Star by Karl Tobien, about a woman who survived the gulag (she also went over with Ford).

It is vital, especially in light of our country’s political drift, to get this Stalin-era story out. Many of our youth, media, etc., are seemingly unaware of the unintended consequences of collectivism.

Victoria Moore Vero Beach, Fla.

AN INSIDER REPORTS

Stan J. Liebowitz says that relaxed underwriting standards led to the housing bubble (“Anatomy of a Train Wreck,” Oct. 20), and he is correct. I saw the change from within the industry: I worked for Herb and Marion Sandler’s World Savings and Loan from 1994 to 1998. World Savings was the pioneer of so-called liar’s loans (we called them “no income verification” loans).

These loans were not sold into the secondary market (Fannie and Freddie) because they did not fit underwriting guidelines, but nonetheless they were the highest-performing loans in World Savings’s portfolio. The reason? In order for World Savings to agree to a loan without income verification, the borrower had to meet other criteria that were very strict.

The borrower’s credit had to be excellent. A credit score was not used — the underwriters looked at all the details on the credit reports. When assessing the value of a borrower’s collateral, staff appraisers did not “shop” for the highest number. Finally, World Savings required a low loan-to-value ratio — at least 80 percent, but usually 75 percent or lower.

These loans were something of a niche product for World Savings, marketed primarily to self-employed individuals and those who got income mainly from tips. But since these loans were so profitable, other lenders with looser underwriting guidelines began competing for them. Tragically, lenders started selling these loans on the secondary market — transferring their risk — and underwriting standards eroded further.

In limited use, and when lenders used strict guidelines for the other variables, “no income verification” loans were fine. Once lenders started ignoring the other variables, these loans became suspect and contributed to the bubble.

Tom King Flower Mound, Texas