Acton Institute Powerblog

‘The Morality of Mortgage Relief’

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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.

John Couretas John Couretas is Director of Communications, responsible for print and online communications at the Acton Institute. He has more than 20 years of experience in news and publishing fields. He has worked as a staff writer on newspapers and magazines, covering business and government. John holds a Bachelor of Arts degree in the Humanities from Michigan State University and a Master of Science Degree in Journalism from Northwestern University.


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  • Tracy Jue

    I agree the buyers who have defaulted should not be provided Federal Assistance. Home buyers now have lots of options of saving their home with private companies help and now Federal aid with lower payments but in the long run the same buyers will be in the same place once their loan period completes. I see the same trap the buyers are now in. The interest rate will probably go up and payments will substantially increase. I like the statment in the artcle ” moving on with their lives, rebuilding their credit, and investing their talent, time and energy in more productive activities”.

  • Paul

    Just this morning Yahoo ran a video about a woman who bought a small house on the gulf coast of Florida for $39,000. She refinanced several times during the bubble days and now owes $147,000. She is playing games with the lenders, demanding to see the note, and will not pay until it can be produced. Helping this woman in no way represents economic justice or economic mercy. Justice would imply she gets what she deserves, that is, to be shown the door for using her home like an ATM machine. Mercy would imply that some standard of proper behavior had been breached and that the people in charge would give her a pass. I see no reason, economic or biblical, for allowing her to escape the consequences of her irrational behavior.

  • The situations that most of these people are in seems to be what foreclosure is designed for. The banks learn, the borrowers learn. Everyone ends up wiser healthier after the pain is over. Creating an “out” which bypasses the learning process just puts off the day of reckoning. It’s just kicking the can down the road. Obama has accused the Bush admin of doing this same thing, but he’s not stupid. He will enjoy high popularity among those who can bypass foreclosure via this type of “relief” which can be renewed over and over like all government programs. Call it livin’ in the “Virtual Projects”.