Geithner Calls Foreclosure Moratorium ‘Very Damaging’

Treasury Secretary Timothy F. Geithner said a nationwide moratorium on foreclosures would hurt U.S. homeowners and real estate prices.

“A national moratorium would be very damaging to exactly the kind of people we’re trying to protect,” Geithner said in an interview on “Charlie Rose,” to air later today on PBS and tomorrow on Bloomberg Television.

“In neighborhoods that have been most affected by the foreclosure crisis, where you see lots of houses on the block empty, unoccupied, what it means is those communities would be living longer with houses unoccupied, with more pressure on their house price,” Geithner said.

Authorities in at least nine states have begun investigations into foreclosure practices at some of the nation’s largest lenders. A coalition of state attorneys general is planning to announce a multistate investigation tomorrow, according to Florida Attorney General Bill McCollum.

“We want to make sure we’re holding these services accountable, that they’re not causing any injustice to people who can afford to stay in their home, and we’re going to make sure we’re careful in doing that,” Geithner said, according to a transcript of the interview. “But we also want to make sure that we’re not going to make the problem worse.”

New York’s Probe

New York Attorney General Andrew Cuomo has requested information from Bank of America Corp., JPMorgan Chase & Co. and two other mortgage servicers as he probes the validity of documents used in home foreclosures.

Cuomo is looking into allegations of “robo-signing,” or the filing of affidavits that falsely attest the signer has personal knowledge of the facts in a foreclosure proceeding. Cuomo called today for a suspension of foreclosures in New York by mortgage companies involved in robo-signing until they make their procedures lawful.

Cuomo is demanding information from Bank of America, JPMorgan, Ally Financial Inc.’s GMAC Mortgage unit and Wells Fargo & Co. on how foreclosure documents are prepared, verified, attested to and notarized, and how New York homeowners are notified, according to a statement.

Bank of America stopped foreclosures in all 50 U.S. states last week. Lenders including JPMorgan and GMAC suspended evictions in 23 states where courts supervise home seizures. Wells Fargo said in a statement it has no plans to initiate a foreclosure moratorium.

Lenders took possession of a record 95,364 homes in August and issued foreclosure filings to 338,836 homeowners, or one of every 381 U.S. households, according to RealtyTrac Inc., an Irvine, California-based data vendor.

To contact the reporter on this story: Ian Katz in Washington at ikatz2@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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