Securities trade group sees foreclosure halts hurting average American
The Securities Industry and Financial Association issued a brief statement Monday morning warning against growing calls to halt foreclosure nationwide. Tim Ryan, CEO of SIFMA, said such an action would be catastrophic to the housing recovery. Furthermore, the damage will also extend to the the average American wage earner, he said. "It must be recognized that the mortgage market, investors and the health of the economy are all inter-related," he said. "Investors in the housing market — including American workers with pension funds, 401(k) plans, and mutual funds — would unjustly suffer losses in their savings from these actions." Recently, several state attorneys general started calling for a moratorium on foreclosure. Several large servicers are voluntarily suspending foreclosures, as well, citing the need to review documents. Allegations have surfaced that foreclosure filings may be going through the system without adequate review. Despite the pressure to join the chorus, so far the Obama adminstration is resisting calls for a nationwide foreclosure moratoria. The trend to slow the foreclosure process greatly is already weighing on senior bond holders in securitizations. This development is one of the several ways the entire situation is negatively impacting the nascent private-label securitization rebound. Ryan is warning the increased uncertainty in the securitization market will only cause a tightening of secondary market liquidity, thus locking up the available credit to American consumers, and dragging down the economy as a whole. SIFMA wants to see all collateral mistakes in the foreclosure process corrected, but Ryan adds doing so needs 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." Write to Jacob Gaffney.