The slowdown in foreclosures by banks appears to be creating a whole new set of problems, according to an article in today’s New York Times. “This crisis takes a situation that’s already bad and kind of cements it into place,” said Joshua Shapiro, chief United States economist for MFR Inc., an economic consulting firm.
With the sudden halt of foreclosures, new buyers who were in the process of preparing to move into foreclosed homes now find themselves in limbo. Amanda Ducksworth was supposed to move in to her new home this week, a three-bedroom steal here in central Florida with a horse farm across the road. Instead, she is camped out with her 7-year-old son at her boss’s house.
Like many buyers across the country, Ms. Ducksworth was about to complete the purchase of a foreclosed house when it suddenly went off the market. Fannie Mae, the giant mortgage holding company that buys loans from commercial lenders, is pulling back sales of homes that might have been foreclosed in bad faith.
There has been no foreclosure halt in California – yet. But some in government, including Nancy Pelosi, are calling for an investigation into foreclosure fraud.