The chances of a full-blown Foreclosure Moratorium are slim and none despite all the retoric and hopes from many politicians desperate for re-election. According to an internal communication sent to Bank of America's REO Vendor Partners, BOA's delay in foreclosure action is likely to be brief...less than a month and only to confirm the process is sound.
Because there is much confusion about what the latest issues are and most people don't read beyond the headlines, this most recent cry for taking the foot off the accelerator of foreclosure auctions is likely to fall on deaf ears.
First, since when has the government ever been able to force lenders to incur additional financial losses without compensation? It would certainly extend the red ink if lenders were prohibited from foreclosing, taking possession and turning those non-performing loans into real estate and that real estate into recovered proceeds upon re-sale.
I take it that the government is done with hand outs so it would likely have little jurisdiction or ability to force an across the board moritorium even if it could.
Also weighing on the minds of all would be the effect of delaying more inventory from clearing out of the system. Right now estimates are that we have 3 years of REO inventory. Tack on delays from a moratorium and the economic effect would be likely worse.
The internal memo from Bank of America in essence assured its vendor partners that the delay was temporary and then further explained the real issues. While I can't re-post that without permission, the highlights touch on a few key points...
First, Bank of America will review foreclosure documents in all states, and as of Oct. 9, they stopped all foreclosure sales until assessments are done.
They reiterate that there is no moratorium...simply they intend during review to continue the foreclosure process on delinquent borrowers, but not proceed to judgment or with a foreclosure sale at this time. The expectation of timeframe for this assessment to be complete is likely short...probably no longer than November 1, 2010.
For those homeowners who aren't candidates for modifications or short sale, this will likely only give another 30 - 90 days of delay to the inevitable. And so it appears to be much ado about nothing. For more information about Metro Atlanta Foreclosures or questions about this post, contact me at info@atlanticrealty.net or visit our website at www.atlanticrealty.com
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