Earl Grey

I can access the squirrel mail for the domain but the inbox is always empty. I've sent mail to anything@statuesofremembrance.com which should be caught by the catch-all and get the following in the message that bounces back:

----- The following addresses had permanent fatal errors -----
<anything@statuesofremembrance.com>
(reason: 451 4.0.0 /etc/sendmail.cf: line 86: fileclass: cannot open '/etc/mail/local-host-names': World writable directory)

----- Transcript of session follows -----
... while talking to meridious.t2secure.com:
>>> QUIT
<<< 451 4.0.0 /etc/sendmail.cf: line 86: fileclass: cannot open '/etc/mail/local-host-names': World writable directory
<anything@statuesofremembrance.com>... Deferred: Broken pipe
Should I just change the permissions on /etc/mail/local-host-names to be world writable and could this action have any negative consequences?