Foreclosure Freeze Could Drag Down Property Values, Warns Housing Chief
Housing Secretary Shaun Donovan said Sunday that a national freeze on foreclosures would “do far more harm than good,” pushing back against those calling for a blanket moratorium following claims that lenders may have used faulty paperwork to evict homeowners.
Donovan called the alleged corner-cutting “shameful” in a column published Sunday, days after attorneys general in all 50 states opened probes into the matter. He backed banks that have imposed “voluntary moratoria” but stopped short of supporting a broader ban.
“A national, blanket moratorium on all foreclosure sales would do far more harm than good — hurting homeowners and homebuyers alike at a time when foreclosed homes make up 25 percent of home sales,” Donovan wrote in his Huffington Post Column.
Donovan explained that a blanket freeze could block first-time homebuyers from entering the market while ensuring that foreclosed homes stay vacant and drag down home prices in surrounding neighborhoods.
“Right now, families who have watched their home values decline over the last few years want nothing more than homebuyers … to buy the vacant homes in their neighborhoods,” he wrote.
Published October 17, 2010 FoxNews.com
Although the forclosure freeze can help many families continue to search for ways to save their homes, it may be hurting other families by prolonging a forclosure situation. In this case, it’s the vacant homes that are distracting homebuyers and bringing down neighborhood values. The freeze shouldn’t be an issue if the homeowners are not in forclosure yet and are still living in their homes. They now just have more time for more options. Hopefully it will allow more time for a bank to approve a short sale and the value of the neighborhood will not be affected.
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