Last thing housing market needs is a foreclosure moratorium

Calls for a nationwide foreclosure moratorium have been increasing, however the White House and the housing industry are against it. Even though such an action is just talk at this point, some large lenders have voluntarily frozen foreclosures anyway. A badly damaged real estate market could be hurt further by a foreclosure moratorium, according to housing industry insiders and also the Obama administration.

Probabilities for a foreclosure moratorium are narrow

A foreclosure moratorium is showing up in lots of headlines, but probabilities of it happening are unlikely. All around the U.S. we have seen lots of foreclosures completely stopped already because that’s what mortgage loan providers and government officials thought should happen after the practices within the mortgage servicing industry were discovered. Based on ABC News, U.S. lenders were signing foreclosure documents right and left. The companies wouldn’t even take the time to look at them. In many cases, mortgage servicing employees signed foreclosure documents without reading them. As a result, JPMorgan Chase, Ally Financial’s GMAC, Bank of America and Goldman Sachs have suspended tens of thousands of foreclosures. Bank of The United States, the largest United States lender, has suspended all United States of America foreclosures.

Many things are wrong with a foreclosure moratorium

Attorneys general in 40 states today announced they’re investigating the mortgage servicing industry. A foreclosure moratorium could likely hurt right now though. That is what many government officials and real estate industry specialists believe. The delay on 30 percent of homes in the real estate industry getting foreclosed on will harm the economic recovery severely, accounts ABC News. This is what Lawrence Yun, chief economist for the National Association of Realtors, said. He explained that foreclosures need to get off the sector rather than just sit there. This is how the economy will heal naturally. Based on Bloomberg, the foreclosure moratorium just means homes are empty longer thus making them lose lots of value. This is what Treasury Secretary Timothy F. Geithner told Charlie Rose.

Advantages of foreclosure moratorium are restricted to certain individuals

Any homeowners being foreclosed on would probably do much better if a foreclosure moratorium were put into action. Homes being foreclosed typically have not made payments in over 18 months though, based on Kelly Campbell at U.S. News and World Record. Individuals would just get to stay in their homes for free longer with a foreclosure moratorium. There are also the individuals who can afford to pay each month for a home. They want the paperwork to go through so they can move in but everything is stopped. Plus, banks servicing the bad loans can’t get their collateral. Homeowners and working class individuals would most likely rather get new regulations and more bailouts by paying higher taxes and fees in order for things to get better, claims Campbell.

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