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Donna Schifano's Blog

By Donna | Property Manager in Cambridge, MA

Moratorium on foreclosures

Obama administration does not support U.S. moratorium on foreclosures

By Ariana Eunjung Cha and Dina ElBoghdadyMonday, October 11, 2010

The Obama administration does not support a nationwide moratorium on foreclosures at this time, Federal Housing Administration Commissioner David Stevens said Sunday in an e-mail response to questions.

"We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market," he said.

With approximately one in four homes sold in the second quarter in foreclosure, administration officials worry that a moratorium could have a significant impact on the economic recovery.

"While we understand the eagerness to make sure that no American is foreclosed upon in error, we must be careful not to over-reach and apply a remedy that will make the underlying problem of foreclosures worse," he added.

Stevens's comments echoed those made earlier in the day by White House senior adviser David Axelrod, who on CBS's "Face the Nation" outlined the administration's current thinking about the issue as pressure from Congress, labor unions and consumer groups mounts for the federal government to take action.

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Calling the growing evidence that lenders have used inaccurately prepared and even fraudulent documents to foreclose on homes a "serious problem," he said it had already "thrown a lot of uncertainty into the housing market that is already fragile."

"I'm not sure about a national moratorium, because there are, in fact, valid foreclosures that probably should go forward, and where the documentation and paperwork is proper," Axelrod said.

He said the administration is "working closely" with mortgage companies so that they "expedite the process of going back and reconstructing these and throwing out those that don't work."

The foreclosure mess has become a hot-button political issue with midterm elections coming up. Many influential Democrats including House Speaker Nancy Pelosi (Calif.) and Senate Majority Leader Harry M. Reid (Nev.) have called on the government to take more aggressive action.

On Sunday, Rep. Eric Cantor (Va.) became one of the first Republicans to speak out. Appearing on "Fox News Sunday," he warned that freezing the foreclosure process would hurt an already struggling housing market.

"If you impose a moratorium on foreclosures, what you're telling people and institutions that lend money is they do not have the protection to take the risk they need to," Cantor said.

On the same show, Rep. Debbie Wasserman Schultz (D-Fla.) said she backs a foreclosure freeze.

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