The Wall Street Journal Editorial Board is not all happy (and rightfully so) with Biden’s plan to extend the foreclosure ban until 2022. (WSJ)
On Monday, Biden’s CFPB proposed an extension to the current foreclosure ban. The extension would “provide a special pre-foreclosure review period that would generally prohibit servicers from starting foreclosure until after December 31, 2021.” A number of borrowers could be exiting forbearance around the same time and they want to make sure borrowers aren’t rushed into foreclosure when a potentially.
The Wall Street Journal Editorial Board thinks this is a horrible idea:
- 2021 is not 2020. “Suspension of rent and mortgage payments was justifiable last spring when states locked down and some 22 million workers lost jobs. But the jobless rate has dropped to 6% from 14.8%, and employers are desperate to hire.”
- It’s distorting the market. “Home values have soared in the past year amid increased demand (see nearby), so some borrowers currently in forbearance could avoid foreclosure by selling. Government forbearance may be contributing to a housing shortage by keeping people in homes they can’t afford and limiting supply for potential buyers.”
The Editorial Board is arguing that ” the government is bludgeoning private businesses to fix a problem it created.” No one is saying the program should end immediately. However, the current program is set to expire in June. Let it end. According to the latest equity report from CoreLogic, in Q4 only 1.5 million homeowners were underwater. In 2021, we have seen over 1% appreciation a month on home prices. That number has undoubtedly dropped. Let the market work. For some, you are delaying the inevitable. For others, you are denying them a chance to see their own reality. If they can’t afford their house anymore they can sell it and possibly make some much-needed money.