Foreclosure woes may hurt home prices -US official

WASHINGTON, Oct 27 (BestGrowthStock) – The U.S. Treasury’s housing
rescue boss said on Wednesday that reviews and investigations
into the use of faulty foreclosure documents will likely delay
the sale of thousands of distressed properties, exerting
downward pressure on home prices.

It may take several months for mortgage servicers, state
courts and law enforcement agencies to clear up questions over
foreclosures, Phyllis Caldwell, chief of the Treasury’s
Homeownership Preservation Office, told the Congressional
Oversight Panel .

Longer foreclosure timelines will push down prices,
particularly for vacant houses, and uncertainty over the status
and titles of already foreclosed homes may also discourage
buyers.

“This would hurt homeowners and home buyers alike at a time
when foreclosed homes make up 25 percent of home sales,”
Caldwell said in prepared testimony. “Together, these two
factors may exert downward pressure on overall housing prices
both in the short and long-run.”

All 50 states have launched a joint investigation into
whether mortgage servicers filed faulty affidavits in
foreclosure cases, threatening a new wave of problems for
lenders and placing a cloud over the long-delayed recovery of
the distressed U.S. housing market.

Caldwell said the Obama administration’s response to the
controversy is aimed at providing clarity. Major banking
regulators, including the Federal Deposit Insurance Corp and
the Office of the Comptroller of the Currency, are reviewing
foreclosure procedures.

“The issues that have been alleged raise significant
questions about the accuracy, fairness and even legality of
several mortgage processes,” she said. “We are working to
address those issues that are problematic, and to clarify for
the public those issues raised that are not in fact problems.”

Nonetheless, she said Treasury believes that while the
probes may in the near-term temporarily reduce the number of
foreclosed houses available for sale, most distressed
properties affected by the controversy will “eventually come
onto the market.”

Caldwell also scolded mortgage servicers that have reported
possible filings of faulty foreclosure affidavits, including
Ally Financial, JPMorgan Chase (JPM.N: ) and Bank of America
(BAC.N: ).

“The reported behavior of these mortgage servicers is
unacceptable,” she said. “Servicers must comply with all
applicable laws and regulations and be held accountable if they
do not. We are working with our partner agencies to ensure that
servicers improve their foreclosure processes.”
(Reporting by David Lawder; Editing by Leslie Adler)

Foreclosure woes may hurt home prices -US official