Henry “Hank” Paulson was defending the FHA rate freeze at a speech on Monday, CNNMoney reported. The article points out that many detractors feel the freeze was too little, too late. Other opponents raised different concerns, to which Paulson had a response:

Others say adjusting mortgage contracts amounts to a bailout – free-market principles say that those to take on risk should suffer the loss when bets go bad.

Paulson fought back against critics Monday, saying the perception that his plan abrogates contracts is mistaken.

“It does not,” Paulson said. “Mortgage servicers have contractual obligations to their investors, who are spread all over the world. Servicers will fulfill these contractual obligations by pursuing all loss-mitigation options when it is in the best interest of investors, as they normally would.”

Like Paulson, proponents of the freeze warn that without it we could face a domino effect that would lead to an all over economic meltdown.

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