White House Warns Against Broad Foreclosure Moratorium
The White House Tuesday rejected calls for a broad moratorium on home foreclosures, saying it feared such a step could harm the U.S. housing market and hinder a housing recovery.
"There are a series of unintended consequences to a broader moratorium," White House spokesman Robert Gibbs told reporters.
Disclosures that some big mortgage processors filed affidavits without proper scrutiny in thousands of foreclosure cases has drawn calls from some lawmakers and civil rights groups for foreclosures to be halted in all 50 states.
But it is not clear if any individual or single regulator has the power to impose a nationwide moratorium, with most mortgage regulation conducted on a state-by-state basis.
The health of the housing market is a major concern as the Obama administration tries to step up the economy's recovery from its worst downturn since the 1930s.
Gibbs said the administration is determined to "get to the bottom of" a problem of hasty foreclosures.
"We want to take the just and necessary steps to ensure that the process is being followed legally," he said. "At the same time, we don't want to see broader harm done to the housing market and to the housing recovery."
Lawmakers are acutely aware of voter angst over jobs and the sluggish economy with the Nov. 2 congressional election three weeks away, and regulators face heavy pressure to prevent a repeat of the 2007-2009 financial crisis that began when the U.S. housing bubble burst.
Temporary pauses in foreclosures have expanded among major lenders as the courts, lawmakers and state attorneys general investigate whether banks supplied shoddy paperwork to support evictions of delinquent borrowers.
But an investor group and industry experts warned Monday that a nationwide foreclosure moratorium could penalize pension funds, insurance companies and other investors and make new loans more expensive.
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