Do you favor a nationwide moratorium on new foreclosures until banks and servicing companies clear up questions about the processes they have followed in foreclosing on homeowners?
No. It is vital that foreclosure sales proceed with as little disruption as possible. Their clearance is critical to reduce the overhang of unsold homes now weighing on bank balance sheets, precluding a clear floor for home prices, and blocking new construction. Foreclosures have recently accounted for about one-quarter of all sales, with investors providing much of the demand. Rather than now halting sales of new foreclosures, banks should complete a speedy review of all foreclosure sales now in escrow, while they quickly implement and communicate improved procedures for processing future foreclosure sales. Banks also need to swiftly work with title insurers to indemnify them from foreclosures errors.
Discoveries of paper work errors have been one other hurdle that has emerged as a threat to the restoration of health to the housing market, the financial system, and the economy at large. Potential damage should be contained to the greatest extent possible.