Foreclosure Moratoriums

There has been a lot of talk about debate this week about the federal government issuing moratoriums on foreclosures following allegations of fraud.

Congress and the banking industry are of two minds of the issue of moratoriums.

Senate Banking Committee Chairman Christopher Dodd is planning hearings for November.

Dodd's expected hearing comes after three lenders, including Bank of America Corp., agreed recently to foreclosure moratoriums until they could determine whether or not employees signed off on affidavits without verifying the information in the paperwork. "American families should not have to worry about losing their homes to sloppy bureaucratic mismanagement or fraud," said Dodd.

(Source: Fox News)

The heads of prominent financial and housing industry groups wrote a letter to Congress this week.

"Calls for a blanket national moratorium on all foreclosures are a bad idea and would cause significant harm to communities at risk, the unstable housing market and the fragile economy. A foreclosure moratorium would not change the ultimate outcome for borrowers impacted by this situation," they said.

(Source: Fox News)

The fallout from the hearings and the market reaction could send shockwaves through an already shaky economy.