Just say NO to a foreclosure moratorium

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Housing Wire has an excellent post on how poor an idea the whole concept of a foreclosure moratorium is for everyone involved. Let me toss my hat in the ring on this one. There is no benefit whatsoever to a foreclosure moratorium, zero. Let’s look at the problems that HW points to first:

Primarily, the move wonâ??t help any borrowers actually keep their homes, but will just postpone the inevitable.

Economically, as well, a moratorium also doesnâ??t save the economy from any suffering at all, since someone has to foot the bill for the extra six months of subsidized living.

Lenders, however, cannot voluntarily put a foreclosure on pause (even if they wanted to do so) â?? for one, they are bound by investor or insurer guidelines on when to initiate and when to complete a foreclosure…

These are all dead on. I actually think that starting the clock on the foreclosure process for these people is a GOOD THING. How can I say that? Because most mortgage lenders won’t consider loan modifications or negotiating short sales or any other type pre-existing remedies that they have available to them UNTIL the borrower goes delinquent. Most lenders are not negotiating changes to terms of mortgages in good standing – why would they?

So starting the process puts a definite timeline in place in which lenders have time to work and find sutible remedies. Lenders have enough REO – they don’t want more. Let’s get the clock started, get the loan modifications going, get short sales going if necessary – let’s get this over with. No need to drag out the pain. It might feel good for a bankrupt home owner to get 6 months free rent (because how many foreclosure people actually have equity?) but it doesn’t help in the long run.

The one part of the article that I don’t agree with is:

While weâ??re at it, letâ??s be honest here: Itâ??s not like two million troubled borrowers from sea to shining sea are somehow all the innocent victims here. …

The mortgage process is a complex one, yes, but IMHO understanding the type of loan youâ??re getting isnâ??t complex at all. From a consumerâ??s standpoint, this doesnâ??t require alot of work to understand. It really doesnâ??t.

I know plenty of ~~scumbags~~ loan officers who twisted the minds of people who had mounting bills, swimming in debt, missing mortgage payments who promised to save them and slammed them in to complex, confusing loans. I agree that it is not the case in all instances, but I know specifically of people in this industry whose SOLE JOB was to obfuscate and cloud the judgement and understanding of ~~suckers~~ customers. They told people neg-ams were fixed, they told them that prepays were waivable by their company when they weren’t – there was a lot of misinformation. Some people were victims to those predators, and should have some relief (through existing legal channels).