White House: No Need For National Foreclosure Moratorium
WASHINGTON — A top White House adviser questioned the need Sunday for a blanket stoppage of all home foreclosures, even as pressure grows on the Obama administration 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 nation's housing market as well as lending institutions. But 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.
Rep. Debbie Wasserman Schultz of Florida, a top House Democrat, said she backed a foreclosure moratorium and government talks with the banking industry to concoct ways to let lenders reshape troubled mortgages. She said the foreclosure problem has been "extremely vexing" in her state.
The No. 2 House Republican, Rep. 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 Harry Reid, D-Nev., in a tough re-election race, 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 announce a joint investigation soon into banks' use of flawed foreclosure paperwork, a person familiar with the investigation told The Associated Press late Saturday.
On Friday, Bank of America became the first bank to halt foreclosures in all 50 states. Three other institutions – JPMorgan Chase & Co., Ally Financial's GMAC Mortgage unit and PNC Financial – have stopped foreclosures in the 23 states where foreclosures must be approved by a judge.
President Barack Obama vetoed a bill last week that would have made it easier for banks to approve foreclosure documents, which the White House said could hurt consumers.
Axelrod spoke on CBS' "Face the Nation" while Wasserman Schultz and Cantor appeared on "Fox News Sunday."
(This version CORRECTS institution's name to Ally Financial.)
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ALAN FRAM 10/10/10 07:22 PM ET Associated Press