Frantic Foreclosures Flawed

The lead story in today’s New York Times, “Document Flaws Lead to Turmoil on Foreclosures,” demonstrates the continued impact of the housing market on our economic recovery. It describes the approach to foreclosures in the last year as akin to an automobile assembly line, an approach that has led to legal difficulties with some of the home repossessions.

Apparently, lawyers in several cases failed to secure the necessary affidavits, and the new concern about cutting corners has led a major title insurance company to stop insuring titles to new owners of homes foreclosed upon by GMAC Mortgage, a major lender.

There is a silver lining to the story however as the increased care taken prior to executing evictions will reduce the overall number of foreclosed homes available for repossesion and lead to increased stability in the housing market. In addition, the time delay between defaulting on a mortgage and actual eviction will give distressed homeowners more time to raise the money needed to resume payments.

In fact, the new difficulties and requirements in the foreclosure process — the need to follow proper legal procedure, secure affidavits, etc. — may actually spur a recovery in the real estate market. That’s something we would all hope to see. You can’t handle people’s lives like an automobile assembly line.