Here's Steve Chapman, writing in Reason magazine, explaining it all:
Clinton has a stunningly simple solution, as stated in one of her TV ads: "freeze foreclosures" for 90 days and "freeze rates on adjustable mortgages." Those are a perfect answer, assuming this is the question: How can the government reward irresponsibility, discourage mortgage lending and raise the cost of financing a home?In short, when Hillary gets elected, there'll no longer be a need to make a mortgage payment ever again. The government will take care of things.
After all, it's easy to pass a law prohibiting lenders from foreclosing. But the first result of that would be a lot more borrowers deciding that paying the mortgage is no longer the highest priority. Those who have practiced strenuous frugality in order to meet their monthly obligations would get nothing, and those who behaved recklessly would prosper.
The second result would be to choke off the flow of credit. When a bank makes a loan, it needs some assurance of being repaid. When it isn't, foreclosure offers a way to minimize its loss. If Clinton blocks that option for a time, banks will be markedly less eager to offer loans—particularly for anyone with a less than perfect credit history.
Then there is the matter of the interest rates future borrowers will have to shoulder. Lenders offer adjustable-rate mortgages, which carry low rates in the early years, in the hope of reaping higher rates later on. If a President Clinton were to void the second part of these deals, many mortgage companies would stop offering the first part, in effect saying: Freeze this.
You see, actions - no matter how heartfelt - have consequences. A concept unknown to this woman.
I fear for my country.