Mortgage News

Foreclosures Rise, Congressman Calls for Moratorium

Feb 9, 2009 - Foreclosure notices rose 18% in January, and a key member of Congress called for a moratorium on additional foreclosures this week until the Treasury Department can institute its financial stability plan.

RealtyTrac reported foreclosure filings for January, which included default notices, auction-sale notices, and bank repossessions, totaled 274,399. One in every 466 U.S. housing units was the subject of a filing.

However, these figures are a 10% decline from December foreclosure filings. Experts say this decline reflects the Fannie Mae moratorium on foreclosure sales through January, along with Florida's voluntary 45-day freeze on all new foreclosure actions announced in December. In that state, all foreclosure activity fell 20% in January from December.

This effect has Congress and federal regulators calling for a blanket suspension of home foreclosures from financial institutions. At a hearing with the CEOs of eight major banks, testifying on how they were using the funds from the $700 billion bank bailout, Representative Barney Frank called for a voluntary moratorium on foreclosures until the Treasury department can implement their plan for helping troubled homeowners avoid loan default.

Frank, the House Financial Services Committee Chair, said the Treasury Department's $1.5 trillion financial stability plan includes $50 billion for a foreclosure prevention fund, in which some mortgages would be altered to cut monthly payments. He called for banks to cease foreclosures until this plan can be given time to work and save homeowners across the country.

The Office of Thrift Supervision also joined the call, asking federal and state-chartered thrift institutions to stop foreclosures on owner-occupied homes until the Treasury plan is finalized.
Foreclosures are gripping the country, especially in key struggling states, according to RealtyTrac. Nevada continued to have the highest foreclosure rate in the U.S., with one in every 76 housing units receiving some sort of foreclosure filing. California had one in every 173 housing units foreclosed, and Arizona reported one in every 182.


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