rssThe Obama Administration Against a Foreclosure Moratorium
Monday, October 18, 2010 at 11:00 am
- 21 Comments
Today, the Obama administration lays out the case against a nationwide foreclosure moratorium. In the Huffington Post, Shaun Donovan, the Secretary of Housing and Urban Development, argues that the government is investigating the foreclosure fraud crisis and that a moratorium would prove counterproductive in terms of helping homeowners in the meantime — only driving down home values in areas hit hard by foreclosure:
[B]anks must follow the law — and those that haven’t should immediately fix what is wrong. Given the problems that have already been found and admitted to by some servicers, the Obama Administration fully supports the voluntary moratoria that are already in place and others should they be deemed necessary. Some have suggested, however, that all foreclosures in every state, under every servicer, should be stopped. But a national, blanket moratorium on all foreclosure sales would do far more harm than good — hurting homeowners and home-buyers alike.
Though a few politicians and many housing advocates are calling for a blanket moratorium, it seems unlikely now. But the situation does underscore that the Obama administration could do more, much more, to help families underwater, in foreclosure and otherwise hit by the housing crisis. Towards the end of the piece, Donovan writes:
By the time the home gets to foreclosure, it’s often too late to help families stay in their homes — they may be too far behind or in some cases, they’ve already left the home. Banks need to provide more help, more people, more resources to those families facing a crisis long before they ever get to a foreclosure — so more families can keep their homes. And where foreclosure is not avoidable, having been processed legally and appropriately, banks should help families transition to sustainable housing situations with dignity.
Two things here: First, there is ample evidence that banks are not following and have not followed the proper process for dealing with homeowners in default. Banks are usually contractually obligated to provide a number of alternative solutions to homeowners behind on their mortgages. In recent years, though, servicers have tended to rush homeowners straight to foreclosure. The administration should make sure servicers and lenders are following the preexisting guidelines.
Second, it is all well and good for Donovan to say that the banks should “help families transition to sustainable housing situations with dignity.” But the administration can do more to make sure that happens. It could, for instance, push for right-to-rent legislation to move out of Congress. And the Treasury has spent only a fraction of its Home Affordable Modification Program funding –funding it could be using to provide incentives for banks to keep families in their homes, by improving and expanding HAMP and related programs.
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21 Comments
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Comment posted October 22, 2010 @ 1:08 am
Many politicans mostly democrats never get tired of bashing big business the like the lets go get them attitude it plays well with the ignorant and uneducated. Meanwhile the usual recepients of this robin hood approach spur them on. But for once try some simple math Many articles say 1 out of 179 houses in CA and one out of 70 in Nevada are in foreclosure. Try dividing 179 into a million..give up. I will do it It is 5 500. So 995 thousand are paying their bills and 5500 are not. The real crisis is the fact that many houses have lost 1/3 of their value and people were counting on that money to retire. Social Secutiy thanks to the democrats stealing 2 trillion from it pays almost nothing. stay tuned
Comment posted October 22, 2010 @ 4:13 am
I have paid my mortgage to my loan servicer, SAXON MORTGAGE SERVICES, INC every month, on time. I asked for a loan modification last year because my interest rate was high. I was put in a loan modification “trial period”, I made every payment and did so ON TIME. On 10/12, ironically the same day that “Foreclosure-gate” made news, I was sent a foreclosure notice stating that I have made NO PAYMENTS for a year. So who is stealing from whom??
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