By now, most everyone has read the news. From PBS NEWSHOUR,
Talk of a nationwide moratorium on selling foreclosed homes ran into new opposition today, as the securities industry warned against serious damage to the housing market.The warning came from the Securities Industry and Financial Markets Association. It said imposing a moratorium would be — quote — “catastrophic.”
Last week Bank of America, the nation’s largest, acted on its own to halt foreclosures in all 50 states. The bank is an underwriter of the “NewsHour.” Three other banks, Ally Financial, J.P. Morgan Chase, and PNC Financial, have imposed partial freezes in 23 states where foreclosures must be approved by a judge.
All of the banks acted after allegations of improprieties, including so-called robo-signing, in which processors signed documents they never read.
At first blush – some may think that this would be a good thing, for everyone. I don’t think so. Think about a dental care; yes, dental care. Here’s why.
Right now there is already a large backlog of distressed properties on the market. “The Market,” when given time and room – will find its balance. It will find its price. The more artificial barriers are put up between the imbalance and balance, the more pressure will build up, the more you delay the inevitible, and the worse the eventual outcome will be.
Like going to the dentist when you have tooth pain – the longer you delay fixing the problem, the greater the pain and damage in the end.
There are problems, and the reasons will come out in due time – but what we should think about now is what impact this has on the market. One thing we know is that to get through this will take more time.
The banks are in trouble in large part due to two things; the amount of paperwork combined with the number of foreclosures. You can’t train experts overnight. This isn’t just a foreclosure problem though – those who have bought foreclosed houses need to look over their shoulders.
FHFA, the regulator of Fannie and Freddie, is overseeing talks between other lenders and title insurers about a similar deal that covers other companies. It could be announced this week, according to an official with the American Land Title Association.”The title insurers are worried that claims for foreclosures aren’t done properly,” said Kurt Pfotenhauer, who heads the trade group. “It’s not been an area of systemic concern until now.”
How good is your title?
Now the twin forces of litigation and politics are weighing in.
Attorneys general from as many as 40 states are planning to announce a joint investigation into allegations of fraud in foreclosures this week, according to a person involved in the discussions who spoke on the condition of anonymity because the announcement had not yet been made.
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In Maryland, Gov. Martin O’Malley (D) and the state’s congressional delegation sent a letter to Maryland Court of Appeals Chief Judge Robert M. Bell on Thursday asking him to suspend all foreclosures in the state for at least 60 days.
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Wall Street and the White House also gave a thumbs down Monday to a total freeze on foreclosures nationwide, saying clearing up faulty paperwork could take as little as two weeks.
A complete halt would be “catastrophic” for the U.S. economy and hurt home sales, according to a statement from Tim Ryan, president of the Securities Industry and Financial Markets Association, Wall Street’s biggest lobby. A day earlier, David Axelrod, a senior adviser to President Barack Obama, also said a moratorium would damage the housing market.
While some homeowners have criticized the Florida Attorney General for not taking a more aggressive stand against servicers, Wiggins said McCollum did get involved months ago by filing lawsuits against the four foreclosure law firms thought to handle most of the lenders’ cases against Florida borrowers.
Three of those firms — Shapiro & Fishman of Boca Raton, the law offices of David J. Stern in Plantation and the Florida Default Law Group in Tampa — have fought state subpoenas. McCollum’s investigation took a hit last week when a Palm Beach County judge ruled in favor of Shapiro & Fishman, saying the state’s request was too broad, and that The Florida Bar had jurisdiction over attorney conduct.
McCollum fired back on Monday, asking Palm Beach County Judge Jack Cox to rehear the case on the grounds that the foreclosure firms were being investigated for allegedly creating improper documents to hasten the foreclosure process — constituting fraud, which would be handled by the Attorney General.
What can the homeowner or homebuyer do? Be smart, use a professional, and make sure to cover yourself as much as possible from harm that could come to your title.
There are still great opportunities out there – just make sure you are playing smart and are with the right team.
My Agent Greg 