Dean Baker, co-director of the Center for Economic and Policy Research, said:
Several of the largest lenders, including Bank of America and JP Morgan, thought they had to slam on the brakes to make sure the foreclosure process is being dealt with correctly. If they are concerned, the rest of us should be, too.
A moratorium would give regulators an opportunity to review the procedures that each lender has in place. It would prevent them from moving forward until they could prove they were conducting foreclosures in compliance with the law. In this way, it would be very similar in purpose to the moratorium that President Obama imposed on deepwater drilling in the Gulf following the BP spill.
It is hard to find a good argument against a moratorium. The claim that it would be a disaster for the housing market is utter nonsense. Real-estate experts have been talking for the last two years about the huge "shadow inventory" of foreclosed homes that banks have held off the market. If the pipeline of newly foreclosed homes were temporarily stopped, they would just sell out of this shadow inventory.
Finally, there should be little doubt that government regulators need to play the role of ensuring that things are right. The alternative: "Trust the banks," is too silly to be taken seriously these days.
Peter Navarro, professor of economics and public policy at U.C. Irvine, said:
No moratorium WITHOUT a plan to force banks to renegotiate terms with mortgage holders. If Congress could reset the mortgages of all underwater buyers at today’s mortgage rates, that alone would eliminate the need for many foreclosures. But people can’t “refi” at new rates because they ARE underwater.
Justin Raimondo, editorial director of Antiwar.com, said:
If Congress passes a national moratorium on foreclosures, then why should anyone pay their mortgage? I guess this means that housing, like healthcare, is now a "right." So a bubble caused by government intervention -- thank you, Barney Frank and Alan Greenspan! -- is now to be cured by more government intervention. Funny how that works....
The title problems caused by securitization are one thing: they can be cleared up without a moratorium, which would kill the entire idea of property rights in this country.