Mortgage Foreclosures

Utah has been one of the four states most flattened by the mortgage crunch, exceeded on a proportional basis only by California, Florida, and Nevada. It is true that in recent months the pace of foreclosures has slowed, although this seems due mainly to legal and accounting delays in the foreclosure process. Ten percent of Utah’s households – some 50,000 – are still either at least 30 days late on their payments or in some stage of foreclosure.

How would George Bailey, the fictional saint of the old mortgage industry, view the ongoing crisis and governmental response? Do you remember this movie dialogue?

Savings and Loan owner Henry Potter says to his employee Peter Bailey, “Have you put any real pressure on these people of yours to pay those mortgages?”
Bailey reminds Potter, “Times are bad, Mr. Potter. A lot of these people are out of work.”
Potter screams, “Then foreclose! “
Bailey says, “I can’t do that. These families have children.”
Potter responds, “They’re not my children.”
Bailey presses, “But they’re somebody’s children, Mr. Potter.”
Exasperated, Potter exclaims, “Are you running a business or a charity ward?”

Mr. Potter’s questions from the 1946 film It’s a Wonderful Life continue to haunt American politics. The contemporary mortgage crisis is now in its fourth year. It has destabilized the American and global economies, brought down vast banking enterprises, and seen millions of American households lose their homes.

It’s more like a complicated life.  Mortgage contracts are real.  But Congress, through Freddie Mac and Fannie Mae, invented an American Dream for many people that didn’t really exist.  Now those people find themselves upside down and in a dire financial predicament. So what do we do?  Foreclose or show mercy?

As Peter Bailey’s more famous son, George, would declare in another dialogue from It’s a Wonderful Life:

 Just remember this, Mr. Potter, that this rabble you’re talking about… they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?

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