A top White House adviser questioned the need on Sunday for a blanket national stoppage of all home foreclosures, even as pressure grows on the administration of US President Barack Obama to do something about mounting evidence that banks have used inaccurate documents to evict homeowners.
“It is a serious problem,” said David Axelrod, who contended that the flawed paperwork is hurting the US housing market as well as lending institutions.
However, he added: “I’m not sure about a national moratorium because there are in fact valid foreclosures that probably should go forward” because their documents are accurate.
Axelrod said the administration is pressing lenders to accelerate their reviews of foreclosures to determine which ones have flawed documentation.
“Our hope is this moves rapidly and that this gets unwound very, very quickly,” he said.
With the reeling economy already the top issue on voters’ minds, the doubts raised over foreclosures and evictions are becoming a political issue with the approach of Nov. 2 elections.
Underscoring those pressures, two leading lawmakers took opposing stances on the wisdom of a moratorium.
Representative Debbie Wasserman Schultz of Florida, a top House Democrat, said she backed a foreclosure moratorium and government talks with the banking industry to come up with ways to let lenders reshape troubled mortgages. She said the foreclosure problem has been “extremely vexing” in her state.
The No. 2 House Republican, Representative Eric Cantor of Virginia, said a national moratorium would remove the protections that lenders need.
“You’re going to shut down the housing industry” with a national stoppage, Cantor said. “People have to take responsibility for themselves.”
In recent days, Senate Majority Leader, in a tough re-election race in Nevada, which has one of the highest foreclosure rates in the US, urged five large mortgage lenders to suspend foreclosures in his state until they establish ways to make sure homeowners don’t lose their homes improperly. Attorney General Eric Holder said that the government is looking into the matter, and Democratic lawmakers urged bank regulators and the Justice Department to probe whether mortgage companies violated laws in handling foreclosures.
The attorneys general of up to 40 states plan to shortly announce a joint investigation into banks’ use of flawed foreclosure paperwork, a person familiar with the investigation told reporters on Saturday.
On Friday last week, Bank of America became the first bank to halt foreclosures in all 50 states. Three other institutions — JPMorgan Chase & Co, Ally Financial, GMAC Mortgage unit and PNC Financial — have stopped foreclosures in the 23 states where foreclosures must be approved by a judge.
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