The foreclosure crisis has reached a new level as banks that have seized over 100,000 homes in September alone are now accused of engaging in illegal methods to repossess homes. The alarm over “robo-signing” and other illegal foreclosure tactics has risen so high that attorney generals in all 50 states have launched investigations into the alleged illegal foreclosure tactics used by mortgage companies. Many attorney generals, legislators and citizens are calling for a national moratorium on foreclosures, but President Obama’s administration has refused to institute any foreclosure moratorium. Opponents of a national foreclosure moratorium argue that any national moratorium on foreclosures could severely delay the recovery of the housing market and make it nearly impossible for underwater homeowners to sell their homes in a market where 40 percent of some communities’ home sales are comprised of foreclosures.
They suggest that we allow mortgage servicers to sort out their own foreclosure systems, find errors and then voluntarily report any foreclosure fraud to the proper of authorizes. But any of us who have dealt with mortgage companies know that they are reluctant to admit any flaws and some of the unscrupulous servicers have maliciously manipulated the foreclosure process and illegally seized homes because it benefits them financially. Are we to believe then that these same mortgage companies will be willing to turn themselves in when they find fraud? It’s not a realistic expectation. Instead, what will probably happen is that many homeowners will continue to face improper foreclosures while our federal regulators give mortgage servicers opportunity after opportunity to “play nice.”