From Bloomberg.com comes the story that the Obama administration is considering a ban on mortgage foreclosures pending review by the federal government's Home Affordable Modification Program. Such a plan would create lengthy delays in the foreclosure process (even before the bank could get to the point of encountering the normal delays resulting from bankruptcy, the usual sheriff sale process, PHFA, etc.).
The Treasury Department was quick to point out that nothing has been finalized, but even the beginning of discussion of such a program will have a negative impact on lending. Borrowers and investors have already complained that lending standards have tightened tremendously over the past few years. Serious discussion of any plan that would delay and increase the cost of foreclosure will make lenders more skittish about lending in the first place.
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