The National Catholic Register’s Tom McFeely interviewed Sam Gregg, director of research at Acton, about President Barack Obama’s $75-billion plan to help mortgage holders at risk of default.
McFeely: What is your overall assessment of President Obama’s mortgage relief plan? Is it likely to work?
Sam Gregg: Without question, thousands are suffering as mortgage defaults rise across America. Their plight should not be trivialized. That said, I am deeply skeptical of the mortgage relief plan. I believe that it will be counterproductive and only harm those that it is intended to help.
First, we know that something like 55% of people who have defaulted on their mortgage and received a temporary reprieve typically re-default within six months. In short, this plan is likely to encourage people to stay in painful situations instead of moving on with their lives, rebuilding their credit, and investing their talent, time and energy in more productive activities.
Secondly, the plan will encourage some to stay attached to mortgages that are worth far more than the real value of the actual properties. Frankly, foreclosure or individuals renegotiating their mortgages with their banks would be better, and allow for a faster recovery of the housing market, which is truly in the interests of the common good.
Read “The Morality of Mortgage Relief” on the NCR site.