A 90-Day Moratorium on Mortgage Foreclosures is a Dangerous Move
At least one presidential candidate is calling for a 90 day moratorium on mortgage foreclosures and has stated that we need to stop the bleeding of mortgage foreclosures right now and prevent anyone from losing their homes. He also stated that we need to tell the United States government to stop mortgage foreclosures until it decides what to do with the banking fiasco.
Unfortunately, many think tanks think this is a bad idea, especially conservative think tanks like the Hudson Group.Indeed another conservative think tank located in Washington, DC is afraid that if you tell people there will be a 90 day moratorium on mortgage foreclosures that people will stop paying their mortgages, which will lead to more defaults.
If there are more defaults it will be the taxpayer who takes the hit because the government has now partnered with many of the banks through the bailout program. In other words essentially the government owns the banks and they bought them with our money.
Many economists think that it is unfortunate that the mortgage companies gave homes to people who could not afford them or make the payments for no money down and that this was the reason there was a banking crisis and subprime lending fallout in the first place. Worse, letting people go without paying their mortgages will lead to more defaults.
Thus, if we allow people to not pay their mortgages for 90 days or three months, this will increase and compound in the already serious problems. So, those politicians who call for a moratorium in paying mortgages are condemning taxpayer's to more liability. Think on this.