ABA Tells Congress a Foreclosure Moratorium will Hurt Housing
The American Bankers Association is warning congressional leaders that a nationwide moratorium on foreclosures would "further depress home prices and disrupt an already fragile economy."
The letter signed by ABA president and chief executive Edward Yingling urges ranking members of the House and Senate banking committees to resist calls for a moratorium.
The Obama administration is opposed to a moratorium but Congress will likely face pressure to act when the lawmakers return Nov. 15 after the elections.
The ABA president noted that several major servicers have stopped foreclosures to review and, where necessary, correct their foreclosure processes.
But Yingling stressed the suspensions are "voluntary" and "appropriate" for any institution that faces such problems.
"It makes no sense to require all institutions to suspend foreclosure activity," the ABA CEO says in the Oct. 13 letter.
"A moratorium would harm lenders who are legitimately trying to collect on their collateral," he added. It would also harm borrowers trying to purchase previously foreclosed properties and communities plagued by foreclosed homes that would be left in limbo.
A nationwide moratorium will only make an "already troubled housing market and the overall economy worse," ABA warns.