Money Matters, Simplified.
White House refuses blanket ban on foreclosures
by Anter Prakash Singh - October 13, 2010 - comments
Obama administration is not very keen on imposing a ban on foreclosures as it feels that it could hurt the recovering housing sector and the investors.
The White House has declined to impose a nationwide ban on foreclosure following concerns about its possible effects on the recovery process going on in the housing sector.
With the demand for such a moratorium gaining momentum, the White House press secretary said that the House supports a multistate inquiry into the allegations of banks relying upon inaccurate papers for foreclosures.
Housing and Urban Development Secretary, Shaun Donovan said that investigations were initiated as soon as the allegations about the flawed documents.
The Federal Housing Finance Agency is also negotiating with title insurance companies to reach an agreement, ensuring that insurance policies continue for the foreclosed homes.
More institutions halting foreclosures
Meanwhile three more financial institutions have stopped foreclosure process in 23 states where a court order is required before a foreclosure.
Bank of America was the first to halt the process of foreclosures in all the 50 states.
These actions were taken after it was exposed that foreclosure documents were signed by bank officials without reviewing or verifying the information.
Although banks say that the problem with documents is only technical in nature and defaulting house owners would still have to face foreclosure, the lawyers representing these house owners term this as a fraud with the court.
Several governors, secretaries of state and members of the congress are coming forward in support of a nationwide ban on foreclosures.
Administration under pressure
Meanwhile, with more evidence coming to the fore that banks have used erroneous documents to get the houses vacated, the pressure is mounting on the Obama administration to halt foreclosures.
David Axelrod, a top advisor of the White House, acknowledged that the problem is serious and the faulty paper work is harming both the housing sector and the financial institutions.
But he questioned the need for a blanket ban on foreclosures and felt that foreclosures with correct documents should go ahead.
Demand for ban gaining momentum
Several governors, secretaries of state and members of the congress are coming forward in support of a nationwide ban on foreclosures.
Attorney Generals of nearly 40 States are likely to announce a joint inquiry into the allegations of inaccurate documents used in the foreclosure process.
President Barack Obama has only last week vetoed a bill that made it easier for the banks to approve foreclosure documents. The administration felt that such a bill could harm the customers.