Legal Commentary

A Moratorium On Due Process

By Big Tent Democrat

Atrios links to Felix Salmon's discussion of Tim Geithner's argument against a foreclosure moratorium:

I think it’s important to recognize, Charlie, that if you — a national moratorium would be very damaging to exactly the kind of people we’re trying to protect, because the consequence of that would be in neighborhoods that have been most affected by the foreclosure crisis, where you see lots of houses on the block empty, unoccupied, what it means is those communities will be living longer with houses unoccupied, with more pressure on their house price with the people still in their houses.

Salmon recognizes that foreclosure is in fact the process by which many of these homes are emptied. In response, Geithner argues:

First, at least 40 % of all homes in foreclosure are vacant. Delaying conveyance of title and resale has devastating impacts on neighborhood values and increases demand for municipal services.

Also, a blanket moratorium equally impacts the banks that are acting in accordance with the law increasing costs for servicers and investors. This threatens the safety and soundness of smaller community banks that are not part of the document problem and ultimately limits market liquidity preventing low and moderate income borrowers from refinancing or buying a house as investors are ever more hesitant to lend to all but the most pristine credit borrowers.

I don't have time for a detailed analysis, but let me quickly say this- that what bothers me is the moratorium on due process in foreclosures proceedings. If Geithner wants to allow foreclosures to proceed on uncontested foreclosures involving vacant properties, I personally would not object (others might have reasons why this is a bad idea, I'm not familiar with these arguments.)

But Geithner is dreaming if he thinks the main reason the properties have remained vacant is due to stumbling foreclosure processes. There are few new buyers for these properties because the economy is in the toilet, not because a couple of weeks ago people woke up to the fact that foreclosure fraud was going on.

Geithner is truly one of the most incompetent Treasury Secretaries we have ever had.

Speaking for me only

Full post as published by TalkLeft on October 13, 2010 (boomark / email).