If the Obama administration really wants to save the housing market, it should speed up the foreclosure process — not prolong the inevitable, experts say.I have long opposed the Obama administration's attempts to artificially keep delinquent borrowers in their homes (unless we are talking about currently unemployed borrowers, who may well have bought responsibly).
Four years into the housing crisis, the real estate market is still teetering on the edge. The Obama administration has tried one program after another to stem the tide of foreclosures with limited success. And it is continuing to look for ways "to ease the burden on struggling homeowners," though no new initiative is imminent, the White House said this week.
But some housing experts argue that the administration should go in a different direction than it has in the past. Instead, they say it's time to focus on pushing many of those delinquent borrowers through the foreclosure process and putting foreclosed properties back into use.
While some of the 2.2 million loans in foreclosure can still be saved, many are too far gone, they say. Some 37% have not made a payment in more than two years, while another 34% have not made a payment in 12 to 23 months, according to Lender Processing Services.
"Loans enter into foreclosure, but never come out," said Thomas Lawler, founder of Lawler Economic & Housing Consulting. "If this keeps going on, you have a continual overhang that never goes away."
That said, I am also opposed to artificially increasing the speed of foreclosures if it weakens private property rights. Banks should still have the burden of proving their right to foreclose on a property.
Theoretically, however, if it could be done without weakening private property rights, I believe getting the pain over quickly is better than dragging it out as long as possible.