The Catholic Church insists that God both declares and makes us objectively righteous by pouring his grace and divine life into our souls. This is not a mere covering or imputation of something; it is a renovation of the whole man. Paul said that all who are baptized into Christ have put on Christ, and are a new creation. Not an old creation with a tarp on it, a new creation. Cleansed. Filled with new life. God's sons and daughters.
Not "snow-covered dungheaps", as Luther wrongly said.
How do you like that, we actually agree about something. The fact that Luther could be wrong about something doesn't condemn Lutherans does it? From my perspective it only shows he was a fallible human like the rest of us.