Foreclosure Halt – What does it mean?

Many of the major lenders have now halted foreclosures in all 50 states.  Does anyone know what this actually means to homeowners and to the housing market?

Imagine what this will do in states like Arizona where 42% of their homes sales were foreclosures in the last quarter.

I was told that as many as 51% of all foreclosures were processed with faulty paper.  I actually expect that number to be higher because of how quickly loans were sold and resold in the past 7 years.  There were not enough processors to keep up with all that data.  And Countrywide (have any of you tried to deal with them before?) probably has 100% faulty paper.  Bank of America is still reeling from that merger.

So now what? What will the banks do with all the properties that have bad paper?  What if they find that they actually cannot foreclose on a property?  And people in the houses are not making payments?  It could be that the homeowners will find out no one knows to whom they should be making payments.

Here are just some who will be effected by the fallout of this latest housing turn-of-events:

• Buyers who were already in process of purchasing a foreclosure.
• Contractors who were going to repair the home.
• The manufacturing and supply chain of material needed to renovate repurchased foreclosed houses.
• Movers
• Closing attorneys
• Appraisers
• Title Insurance companies
• Materials retailers and wholesalers and manufacturers
• Neighborhoods suffer more blight for an additional extended period of time.
• Owners who moved away and have to maintain the house.
• Owners who have to pay insurance on an unwanted home.
• Realtors, especially those who rely heavily on listing REO’s.

Good grief.  Can this market really continue to get worse?  (Don’t answer that.) Would it be better for the government regulators to just back off and let the market correct on its own?  Can it?

My concern now is that the banks who created this mess are the ones managing it – halting foreclosures or not.  The banks and the government continue to change rules and regulations as fast as we all get around to knowing about them.  This is a spiral that is out of control.  How and who will reign it back in. The banks who created it?  The 535 members of Congress who’ve been doing such a great job with our economy?

I doubt, very strongly, that the banks will be the ones to suffer.  Want a good predictor of the future?  Look at the past.

What’s your opinion of what’s going on?