A systemwide moratorium on foreclosures would be “catastrophic” and could damage the housing market and economy, warned Tim Ryan, president and CEO of the Securities Industry and Financial Markets Association.
“If mistakes have been made in relation to foreclosure processing, SIFMA firmly believes such mistakes should be corrected,” Mr. Ryan said in a news release issued Monday. “It is imperative, however, that care be taken in addressing these issues to ensure that no unnecessary damage is done to an already weak housing market and, in turn, that there is no further negative impact on the economy.”
Bank of America announced Friday that it had stopped foreclosure sales nationwide, pending a review of the propriety of foreclosure documents. Lenders including J.P. Morgan Chase and Ally Financial have stopped evictions in 23 states where courts supervise home seizures. They’re checking allegations that employees used unverified or false data to speed the process.
Among other lenders that have postponed action, Litton Loan Servicing, a mortgage-servicing business owned by Goldman Sachs Group, said late last week it’s halting some foreclosures to review how they’re handled, and PNC Financial Services Group halted sales of foreclosed homes for a month to review documents, according to an Oct. 4 memo.
Bloomberg contributed to this story.