Government Moves Toward Foreclosure Moratorium

Despite concerns about its impact, some legislators are pushing for a nationwide moratorium on foreclosure sales.

U.S. Rep. Edolphus Towns, a New York Democrat, who is chairman of the House Committee on Oversight and Government Reform, said the top 10 mortgage lenders should immediately suspend foreclosure proceedings in all states.

"The implications of ignoring the foreclosure problems are far too great to be ignored," he said Friday.

Other legislators are moving to revive cramdown legislation, which would give judges the power to reduce mortgage principal to market value. The controversial bill had passed the House but was stuck in the Senate.

The Mortgage Bankers Association of America and the Financial Services Roundtable said Friday in a joint statement that after reviewing paperwork, banks are reassured that nearly all foreclosures are legitimate.

"Calls for a blanket national moratorium on all foreclosures are a bad idea and would cause significant harm to communities at risk, the unstable housing market and the fragile economy," the statement said.

Source: The Wall Street Journal, Ariana Eunjung Cha, Steven Mufson, and Jia Lynn Yang (10/09/2010)- AS POSTED ON REALTORMAG.COM