10:21 AM
Foreclosure halt would hit investors: SIFMA
Addison Ray
WASHINGTON | Mon Oct 11, 2010 12:11pm EDT
WASHINGTON (Reuters) - A U.S.-wide foreclosure moratorium would be "catastrophic" and could unjustly impose losses on investors in the housing market, a major securities lobbying group said on Monday.
The Securities Industry and Financial Markets Association said foreclosure processing mistakes should be fixed but warned against dramatic nationwide action.
"It is imperative, however, that care be taken in addressing these issues to ensure that no unnecessary damage is done to an already weak housing market and, in turn, that there is no further negative impact on the economy," SIFMA Chief Executive Tim Ryan said in a statement.
On Sunday, White House adviser David Axelrod said he was "not sure" about a national halt to foreclosures.
Disclosures that some big mortgage processors filed affidavits without proper scrutiny in thousands of foreclosure cases has drawn anger from Congress and advocacy groups, with some prominent lawmakers calling for foreclosures to be halted in all 50 states.
Bank of America (BAC.N), the nation's largest mortgage servicer, said on Friday it would temporarily halt foreclosures nationwide as it looks into reports of shoddy paperwork.
Other institutions, including JPMorgan (JPM.N) and Ally Financial Inc's GMAC Mortgage, have announced partial moratoriums but some leading mortgage servicers have said they have no plans for a systematic halt.
The health of the U.S. housing market is a key concern as the economy recovers fitfully from its worst downturn since the 1930s.
Politicians are acutely aware of voter anxiety as the congressional election looms on November 2 and regulators are under heavy pressure to prevent a repeat of the 2007-2009 financial crisis that began when the U.S. housing bubble burst.
(Editing by John O'Callaghan)
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