A week or so ago, Bank of America announced it would put a hold on its foreclosure proceedings while it reviewed the processes that moved the foreclosure claims past lawyers, whose signatures were required. Other financial institutes followed suit. The decision came in the midst of growing fears that the foreclosures on tens of thousands of homes had taken place without real human oversight of the paper trail legally required for the process. Today Bank of America announced it would return to the process in at least 23 states, confident that their materials in those states were being properly vetted. How have politicians and neighborhood associations responded to the hold and release?
Bank of America puts many foreclosures back on line.
The political will for a national moratorium has clearly weakened, as the Obama White House has made clear statements that the administration will not support a straight-up moratorium. Such a move, officials fear, would stymie the necessary (if unfortunate) process of getting un-owned homes back on the market and thus clarifying what the supply in the market is. The argument against a general moratorium is that until the market knows how many homes will be foreclosed, people in that market will wait to buy homes on the assumption more houses will become available (thus driving down prices still further).
From Reuters:
White House spokesman Robert Gibbs signaled on Tuesday the administration’s wariness of backing populist calls to halt evictions, which could undermine efforts to persuade skeptical voters that it rescued the economy from a complete meltdown.
“There are a series of unintended consequences to a broader moratorium,” Gibbs told reporters.
Maryland, by the way, is one of the states that will still see a moratorium on foreclosures.
Though Bank of American and GMAC have begun the processes again, some of the attorneys general of the twenty-three states who will see the moratorium lifted are still pursuing irregularities. DemocracyNow! is reporting that the office of the Attorney General in Florida is pursuing a case of staff in a so-called ‘foreclosure mill’ were bribed with houses and cars to expedite, even modify, documents to increase the rate of foreclosures in the state.
We discussed last week the suspiciously quick passage of a bill through Congress that would accept any notary public‘s signature, even an electronic one, to be valid in all 50 states. Suspicions abounded that banking lobbyists drove the bill through precisely to avoid the moratorium. Recent reporting has shown that the origins of the bill are beyond repute (a memorial to President Calvin Coolidge, who began his career in Vermont as a notary public). But many are still curious why the bill sat for weeks before being shuffled through in the final moments before Congress went on its election-season recess.
A floor for the housing market has got to be found. As long as there is uncertainty about how many more homes will end up in foreclosure, prices will continue to fall because purchasers will keep waiting for more supply to outrun demand. But so too are many distrustful that the larger banks are paying attention to the laws that govern foreclosure proceedings. Therefore, we have the unenviable situation that we still are not sure of the extent of the foreclosure crisis and we still do not trust the institutions either pursuing foreclosures or the institutions guarding against overzealous lenders. We have a case of a moratorium in fact, if not in practice.
