The Foolish Foreclosure Moratorium (Why it's shortsighted and will do more economic harm than good)

The American ^ | 10/13/2010 | Peter Wallison

[Mr Rogers]

There is a huge difference between admitting that the banks need to clean up their paperwork so it can be supported in bankruptcy court, and claiming they are trying to “...steal property from persons who either do not owe any money on it or who are current on their loans.”

The folks getting hit by foreclosures OWE money. They are NOT current on their loans. Where the banks have screwed up is in using electronic tracking where some states require paper. But the owners are not folks who own their own homes, and suddenly have a bank pretending they owe money...

[Mr Rogers]

Anyone who buys a house without insuring the title is too stupid for me to care about...

[moehoward]

Unless they pay cash, or go with some ‘owner financing’ scheme, it’s a requirement.

Other than that, I’d agree that anyone who blindly pays cash for real estate these days, is indeed too stupid to care about.

[Notary Sojac]

the best possible thing to do is get these foreclosures finished as quickly as possible and get the properties back on the market.

I agree with you.

The problem is that the banks holding the mortgages have a vested interest in letting the properties slowly trickle onto the market.

It's the only way they can avoid revealing how over-valued their mortgage portfolio is, and how insolvent they are.

The consequences of housing finally reaching a market clearing price would be far worse for the banks than allowing the deadbeats to stay in the homes a while longer.

So when Harry Reid calls for a national foreclosure, I suspect the banking industry will reply... "Oh Lawd, Senatuh, don' throw us in that briar patch!!

[Bean Counter]

As a paralegal, you probably understand the problem here better than any of us. As I understand it, the large banks (Chase, Wells Fargo, BofA, et al) set up foreclosure shops to try and clear as many of these defaulted mortgages as possible. In the States that require some sort of judicial review, they tried to get by with hiring people with little or no experience to process paper that rightfully ought to be prepared, reviewed and submitted by a paralegal at a minimum. In some States an attorney could be required depending how complex the foreclosure is.

I’m not making excuses for anyone here. Process is process and every State is different. But at the same time Fannie Mae and Freddie Mac have been pushing the banks to foreclose as quickly as possible.

This is also a good distraction 2 weeks before the election, to keep people from talking about HAMP mortgage modifications that the Treasury has been bonusing Fannie Mae employees on. What has been happening is that people apply for a temporary 90 day mortgage modification from Fannie, they pay a reduced payment for three months, then the Bank lets them know they really didn’t qualify, are now in default, and owe back interest and penalties. That is potentially a much larger scandal than this one, and would make one hell of a statement about this Regime, if the media ever gets around to reporting on it.