It will be costly to repair and it will hurt the housing market.
But how do we fix it? Are pocket vetoes, moratoriums and investigations the solution? Or do we pass constructive legislation to solve the problem?
At some point, Congress better start to understand the intense damage that it does when calling for moratoriums and investigations, not to mention a pocket veto of legislation to fix a problem with Title transfers. Congress and the Administration knew about this problem back in 2007 but chose ignore it (the Deutsche Bank and Ohio default cases).
Obama and Congress should not be acting as Robocop seizing the opportunity to slow down foreclosures even more. This is will add greater uncertainty in the housing and mortgage markets at a time where we need to be restoring confidence. Not to mention that this will be extremely costly to banks which are in poor shape to begin with.
Of course, there is no mention of Fannie, Freddie and the FHA that were aware of the document and Title issue, yet chose to purchase and insure trillions of dollars of mortgages without examining or spot-checking to see if the Title exists. They continue on their merry ways under the banner of “stabilizing the housing market” while at the same terror terrifying investors and adding uncertainty to the housing market.
Notice that the moratorium and investigations do not require that the GSEs cease purchasing and insuring loans which may have document defects. Instead, the Robocop solution is to halt foreclosures but permit the government to intervene in terms of mortgage purchases and insurance. Of course, this is the government’s main agenda: keep people in their homes at all costs – to the banks and taxpayers. And that cost is growing at breakneck speed.
Someone is going to have to pay for the lost income to the banks (since moratoriums could last for several years) and the decline in mortgage securities caused by the failure to pass the Robo Legislation and the calls for moratoriums and investigations.
Why didn’t the government fix this problem back in 2007 when it surfaced?
from the article
“The bill being vetoed, HR 3808, passed the House and the Senate unanimously, and wasn’t debated in either chamber.”
Getting paid $175K a year to not read bills I suppose.