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Thoughts on the Foreclosure Freeze?

My question to you: Why on earth would any mortgage lender actually lend money right now, when they can't enforce the collection of their loan? As anyone who's tried to get a loan recently can tell you, it's d@mn hard to get a loan right now, because so many banks have been burnt so badly by defaulting borrowers. So, unless all you socialists want to start buying real estate in cash (which I doubt you do), the bottom line is that it must remain safe for banks to lend mortgages, which means they have to be able to foreclose when deadbeats stop making their mortgage payments.

I call shenanigans on your argument, for three reasons: 1. Housing prices would plummet around the country, if no financing were available and the only home buyers were cash buyers. This is a problem not only for homeowners, but also for real estate investors, real estate agents, mortgage brokers, and every other single person in the real estate field, not to mention Wall Street would collapse as every real estate and mortgage related security basically dissolved.  2. If you think we have class stratification now, with only middle and upper classes able to buy real estate, think of how much smaller the percentage of American homeowners would become if only cash were available.  3. Who would buy up homes? Investors, many of whom are foreign, which concentrates American assets in the hands of a few wealthy individuals and overseas speculators. Liberals should stay away from economic policy and stick to social issues, where they actually have an argument.
Despite your fiscal-conservative-rhetoric, that is all true. But here's a counter question: would it be such a bad thing, if people were forced to buy houses in cash? Maybe our economy wouldn't be in tatters if less people borrowed, and more people only bought what they could afford? That's certainly the case with many businesses, who were over-leveraged and under-capitalized.
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