Money Matters - Simplified

Foreclosure delay may hurt housing market--Caldwell

Prices of houses may come down if foreclosure process will linger on for long, particularly in case of vacant homes. The doubtful title and status of these homes might also dissuade the prospective buyers.

Phyllis Caldwell, chief of the Homeownership Preservation Office has warned that any delay in the sale of mortgaged properties caused by investigations and revaluation of allegedly faulty foreclosure documents could initiate a downward trend in the housing market.

Caldwell expressed these fears in front of the Congressional Oversight Panel, stating that it could take months for the mortgage service providers, law enforcement agencies and courts to review foreclosure documents.

All this is likely to obstruct foreclosure work and discourage prospective buyers.

Foreclosed homes account for 25 percent of the total home sales and any delay in foreclosure is not good for both the buyers and sellers. Any such pressure will have an adverse impact on the housing market, both in short term as well as in long term.

Home prices may plunge again
Prices of houses may come down if foreclosure process will linger on for long, particularly in case of vacant homes. The doubtful title and status of these homes might also dissuade the prospective buyers.

Foreclosed homes account for 25 percent of the total home sales and any delay in foreclosure is not good for both the buyers and sellers. Any such pressure will have an adverse impact on the housing market, both in short term as well as in long term.

Ongoing inquiry could delay foreclosures
At present, the offices of attorney generals of all the 50 states are conducting a joint inquiry into the allegations that mortgage service providers have filed faulty papers.

With uncertainty regarding the foreclosure procedures, the investors fear more problems may be lurking around the corner.

The administration administration has responded to the foreclosure problems. The major banking regulators like the Comptroller of Currency and the Federal Deposit Insurance Corporation are closely examining the foreclosure procedures.

Caldwell said, “The issues that have been alleged raise significant questions about the accuracy, fairness and even legality of several mortgage processes. We are working to address those issues that are problematic, and to clarify for the public those issues raised that are not in fact problems.”

She expressed faith that although in near future the number of houses available for sale may decrease due to these investigations, most of these houses will eventually be available in the market.

The Treasury’s Housing rescue chief reprimanded those mortgage service providers who have been accused of filling faulty papers. These include Bank of America, JPMorgan Chase and Ally Financial.