Foreclosures

The conventional wisdom is that a slowdown in foreclosures will delay a recovery in the housing market. According to the banks, employees who sign affidavits in foreclosure proceedings swearing to the truth of the facts legally necessary to evict a soon to be former homeowner shouldn't have to read what they sign, let alone actually know that what they're signing is true. In fact, the banks even hint that the states who require court proceedings for foreclosures are to blame for putting the banks to the trouble.

In the first place, the "robo-signing" fiasco is the banks' own fault. They have lawyers, they have staff, they have both the knowledge and the means to file carefully prepared, lawful affidavits.

Second, before taking someone's home, they have a moral and a legal obligation to check the facts. It is hard to believe that 100% of these homes would have been foreclosed upon anyway. You can't be both sloppy and accurate.

Third, a slowdown in foreclosures is not necessarily a bad thing. If speeding foreclosures is good, why not foreclose on all the delinquent mortgages ASAP and dump the homes on the market at once? Of course this would cause home prices to fall off (another) cliff, more homeowners would be underwater, nearly all sales would be foreclosures, and there would be more delinquencies and more foreclosures in an ever-worsening cycle. Slowing foreclosures would reduce the downward pressure on home prices, improve the prospects for ordinary home sellers, allow the slowly recovering economy to generate more buyers, and avoid increasing the number of underwater homeowners and foreclosures.