A blanket foreclosure moratorium has been getting a lot of media attention lately, but entities with the power to impose one say they won’t. A foreclosure moratorium has not been announced, but numerous mortgage lenders have imposed what amounts to a voluntary moratorium by suspending foreclosure proceedings on their own. Both the housing industry and the govt have said that a foreclosure moratorium would be a major hit to a vulnerable real estate industry struggling to recover from the economic recession.
Most likely not a foreclosure moratorium within the near future
There are a lot of rumors spreading about a possible foreclosure moratorium. This really seems like just a rumor as it will not probably actually happen. The response by mortgage loan companies and government officials to the shoddy, shady practices of the mortgage servicing industry has already stopped foreclosure proceedings across the United States. There were a few United States loan providers that said in court that they signed off on foreclosures without even reviewing any of the info in them, accounts ABC News. In many cases, mortgage servicing employees signed foreclosure documents without reading them. As a result, JPMorgan Chase, Ally Financial’s GMAC, Bank of The United States and Goldman Sachs have suspended tens of thousands of foreclosures. Financial institution of The United States, the largest United States of America lender, has suspended all U.S. foreclosures.
Many things are wrong with a foreclosure moratorium
Attorneys general in 40 states today announced they’re investigating the mortgage servicing industry. Meanwhile, housing industry experts and govt officials are saying that a foreclosure moratorium could hurt, not help. Lawrence Yun, chief economist for the National Association of Realtors, told ABC News that delaying closure on 30 percent of the housing market could hold back economic recovery. He explained that foreclosures need to get off the industry rather than just sit there. This is how the economy will heal naturally. Bloomberg reported that Treasury Secretary Timothy F. Geithner told Charlie Rose a foreclosure moratorium would leave homes empty longer and further drive down real estate prices.
Benefits of foreclosure moratorium are restricted to certain people
Any homeowners being foreclosed on would probably do much better if a foreclosure moratorium were put into action. At United States News and World Record, Kelly Campbell had something to say. She said that if a homeowner hasn’t made a payment in over 18 months then that is usually when the home is finally foreclosed on. A foreclosure moratorium would make people irresponsible just a little longer. They get to stay in their homes for free longer. But buyers who have put money down and are waiting for the paperwork to go via are left high and dry. Also, banks can’t get their collateral as they are servicing the bad loans nevertheless. Campbell writes that ultimately homeowners and working class individuals would pay the price with higher fees and taxes to support new regulations and more bailouts.
Citations
ABC News
abcnews.go.com/Business/nationwide-foreclosure-probe/story?id=11864199 and page=2
Bloomberg
bloomberg.com/news/2010-10-13/geithner-says-foreclosure-moratorium-would-be-very-damaging-.html
U.S. News and World Report
money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2010/10/13/who-loses-in-a-foreclosure-moratorium
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