Buffett says misled mortgage borrowers need help

OMAHA, Nebraska (Reuters) - Warren Buffett said on Sunday he would favor government efforts to help homeowners struggling to make mortgage payments because they were misled about the terms of the loans, but oppose help for people who are hurting because their values of their homes has fallen.

Speaking at a news conference, the world's richest person also said he wrote Treasury Secretary Henry Paulson a letter in which he endorsed appending a one-page statement to borrowers' loan documents, headlined "WARNING" in red letters, describing the maximum rates the borrowers could face.

"I don't think we should be in the business that if you pay X for a house, your house is always going to be worth X or more," Buffett said. "We had a period where virtually every borrower (and lender) felt the house would be worth more three or six months from now."

Borrowers, he said, "shouldn't be penalized for being misled, but shouldn't be protected against mistakes."

He also said investors who did not understand the terms of the mortgage debt they bought also do not deserve government help.

(Reporting by Jonathan Stempel; Editing by Andre Grenon)