Rumors are beginning to swirl that a national foreclosure moratorium may go into effect as a result of the use of so-called robosigners.
These employees/agents signed off on hundreds or thousands of foreclosure documents in a short amount of time, essentially proving they didn’t do their due diligence or follow protocol, causing a number of mortgage lenders to halt foreclosures.
The Texas AG, California AG and Connecticut AG have called for similar foreclosure freezes, and a number of other states have demanded a halt to all foreclosures, with the latest being Delaware, Iowa, Massachusetts, and North Carolina.
White House Opposes National Foreclosure Moratorium
However, White House senior adviser David Axelrod said the Obama Administration was opposed to a national foreclosure moratorium, noting that there are indeed valid foreclosures out there that need to be processed.
And additional freezes may simply extend the amount of time before we experience any sort of housing recovery.
At the same time, more than two-thirds of the U.S. state attorneys generals plan to launch a joint probe into the issue this week, according to a source who spoke to Reuters news service on Sunday.
And there are clearly political implications, as mid-term elections are coming up…Democrats want to keep people in their homes, while Republicans say a moratorium will undermine banks’ ability to protect themselves against risk.
I guess the big issue is ensuring mistakes aren’t being made while valid foreclosures are being carried out, and if these companies can’t handle the growing volume of foreclosures, they might need to stop everything until they’re 100% sure everything is error-free.
After all, we’re talking about people losing their homes.