Several Oregon politicians are backing a foreclosure freeze, but many real estate professionals make the case that a moratorium could do more harm than good.
Several Oregon politicians are backing a foreclosure freeze, but many real estate professionals believe a moratorium could do more harm than good.
Sen. Jeff Merkley, Sen. Ron Wyden and Rep. Earl Blumenauer have called for a stop on foreclosures in the remaining 27 states that Bank of America, Ally Financial, and JPMorgan Chase have not already halted foreclosure proceedings in.
Market observers and people in the business worry this could further delay the recovery process for the housing market.
“This is going to really slow things down,” said Gerard Mildner, associate professor of real estate finance at Portland State University. “People are painting this issue as a sob story because people are going to lose their homes, but for the most part it’s just delaying the inevitable.”
The problem, according to Mildner, is that the number of homeowners receiving default notices is continuing to increase. This adds to what industry professionals call shadow inventory – homes stuck in the foreclosure process.
As long as banks slowly release foreclosed homes into the market, prices are relatively unaffected. But if banks were forced to release large numbers of those homes at one time, then a spike in supply could sharply drive down prices.
Read more at the Daily Journal of Commerce.
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