The Perpetual Foreclosure Crisis
By Arnold Kling
The Obama administration, battling a foreclosure crisis that shows no signs of relenting, will step up pressure on mortgage companies to do more to help people remain in their homes, officials said Saturday.
This story was predictable. In fact, I have been predicting it. The attempts to relieve the foreclosure crisis will only serve to prolong it. We need to get more homes occupied by people paying market rents. That is instead of having them occupied by “owners” who are getting bigger and bigger mortgage subsidies and nonetheless are re-defaulting at high rates.
If policy makers had done nothing about the foreclosure crisis, it would be mostly behind us. Instead, it is mostly in front of us.