The news of major banks halting home foreclosures will have an adverse effect not only on the tepid recovery, but also on the entire economy. Yes, the longer the banks delay home foreclosures, the later the ‘real’ housing recovery can start.
Housing has generally represented 17-18% of the nation’s economy, as measured by Gross Domestic Product. With almost a fifth of the economy enduring pain as a large number of foreclosures grind through the system, the new normal of higher unemployment and slow growth appears to be the most likely course of the economy.
The delaying of home foreclosures exasperates the big problem of many gaming the system at the expense of Joe tax-payer. Deadbeats are collecting rent or living in properties that they have the money to pay for but don’t make the payments.
The National Banks as they are, have very little incentive to move these properties through to sale. Perhaps the Government should hire some of the unemployed to work on getting these foreclosed properties ready for investors to buy and turn into rental housing.
