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November 4, 2010

Stemming the Home Foreclosure Crisis

Category: Home Foreclosure Crisis – admin – 2:26 am

Putting an end to the home foreclosure crisis should be a priority for getting the economy back on track, but not if it artificially pays for homeowners to live in homes they no longer can afford.  The recent revelations that big banks, mortgage lenders and mortgage service companies have used robo-signers to expedite the foreclosure process has created quite a scandal. Some of the same people who brought us the financial crisis and then paid themselves huge bonuses as a reward are now throwing homeowners out on the street, with insufficient or bogus documentation.  While it is true that many of these homeowners may have been struggling to keep their homes, but clearly they can no longer afford them.

httpv://www.youtube.com/watch?v=-wB1smUWrvw

Coming up with a new FHA mortgage program to help these homeowners hold on to a home they can’t afford for another year is not good for the economy or the mortgage industry. A Republican legislator in Virginia is pushing the state’s Republican attorney general to investigate one of the big mortgage servicers, and that’s just the beginning.

Although most would agree that a full-fledged foreclosure moratorium is a bad idea, Congress might be able to pass a set of standards that protected individuals’ property rights and due process in foreclosures, backed up with stiff penalties. Who but the banking lobby could oppose that?  Meanwhile, the Obama administration should quietly put an end to its well-intentioned mortgage relief program, a miserable failure. This article was originally published in Market Watch by WSJ.

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