At least 40 states' attorneys general across the country will launch an investigation into the mortgage servicing industry today, which will possibly result in a push for a national moratorium on foreclosures. If they do, it comes as a response to recent announcements by several major banks, who admitted submitting fraudulent or erroneous documents in their foreclosure programs as they worked through massive amounts of foreclosure paperwork.
Even though the White House has said it wouldn’t back a national moratorium, we wanted to explore the ripple effects that such a move would have on the housing and lending markets. Chris Mayer, senior vice dean of Columbia Business School and Paul Milstein Professor of Real Estate, says a moratorium alone might not cause too many problems. But if the attorneys general decided to legally challenge the way foreclosure sales are securitized, the entire housing industry could, theoretically, screech to a halt. Dave Halpern, a real estate agent at Louisville Short Sale Experts, gives the perspective from the real estate industry.