How the Ancient Greeks Solved Their Mortgage Crisis

Published on June 8th, 2017 by Saeed Baeshen

Two and a half thousand years ago, the fields of Attica bore thousands of stone pillars inscribed with the first known mortgages in human history.  These pillars displayed the name of the lender, the true owner of the land on which the pillar stood, as well as the amount owed, the interest rate, and the date by which payment was due.  With the first mortgages came the first mortgage crisis.How the Ancient Greeks Solved Their Mortgage Crisis

Famed sociologist Friedrich Engels wrote about these mortgage pillars in The Origin of the Family, Private Property, and the State, stating that they “…created a new customary law to secure the creditor against the debtor and to sanction the exploitation of the small peasant by the possessor of money.”  This time period, around the 7th century BC, is identified with the earliest cleavage of human society into classes (at least in Greece), and with it, the earliest example of class domination.

Engels continues:  “The fields not so marked had for the most part already been sold on account of unpaid mortgages or interest…the peasant could count himself lucky if he was allowed to remain on the land as a tenant.”  But the situation was even worse for some peasants:  “If the sale of the land did not cover the debt…the debtor…had to sell his children into slavery abroad.  And if the blood-sucker was still not satisfied, he could sell the debtor himself as a slave.”

Today, nearly all homeowners, especially low-income ones, are bound to a mortgage.  We write them on paper now, but the effects they have on debtors can still be oppressive and dehumanizing.  Homeowners unable to afford their mortgage payments are harassed, bullied, threatened, and ultimately may end up homeless.  Instead of selling their children into slavery, many struggling homeowners are forced to forego their children’s educations.

Ever since the housing market crash and financial crisis of 2007-2008, the situation has been especially precarious for those homeowners at the lowest income levels.  Lower-value homes are three times as likely to be underwater – meaning that the home value is less than the amount owed on the mortgage – as more expensive homes.  Naturally, this leads to foreclosures disproportionately affecting low-income and minority homeowners.

What these homeowners need is relief.  Not charity, but real debt relief.  Eliminating mortgage debt and preventing foreclosures leads to stronger, longer-lasting communities and a better economy.

What did the ancient Greeks do about the runaway mortgage abuse and crisis that enslaved so many people?

A legislator named Solon was given the power and responsibility to mediate disputes between poor debtors and wealthy creditors.  His reforms laid the foundation for Greek democracy.

Solon forgave all mortgage debt and tore down the stone pillars.  He also freed all who had become slaves through debt, and outlawed using people to secure debts.  Finally, he ended the use of tenant farmers, who were forced to work the land for their creditors and provide five sixths of their yield as rent.

The poor diacrii were liberated from their unaffordable debts, and tensions cooled, allowing Athens to become the most important city in the ancient Mediterranean world.  None of it would have happened if those unsustainable mortgage practices had continued.

Today, low-and-moderate-income families of America are just as in need of debt relief as the ancient Greeks were.  American Homeowner Preservation is using a method similar to Solon’s to provide it.

AHP purchases non-performing mortgages at big discounts, and does exactly what the ancient Greeks realized needed to be done to combat the ill effects of too much debt:  we relieve it.

By offering flexible modification options to families crushed by unaffordable debt, we are able to avoid foreclosures and keep families in their homes, benefiting families and communities.  We find sustainable, consensual solutions that allow us to do this while also providing a return to our investors.

It took the ancient Greeks until the indebted class was nearly ready to revolt to provide debt relief.   Hopefully Americans don’t wait as long to address the debt crisis.

Until they do, AHP is here to knock down the pillars.

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