Thursday, October 7, 2010

Obama Vetoes Foreclosure Bill

President Obama (pocket) vetoed a bill today that would have speeded up the foreclosure process for banks and law firms struggling under the weight of hundreds of thousands of forced sale proceedings.  The bill itself is rather simple, allowing for the out-of-state recognition of notarized documents, but the veto sure wasn't.

Of course, it is a political election year act.

Yes, there have been "improper acts" by lenders who rush through proceedings without dotting every I and crossing every T.  Some of the sales themselves have been fraudulent, of this I am very sure.

But the act is NECESSARY.  No one believes that the foreclosure process is without economic pain, especially for the homeowner losing their place to live.  But the act is NECESSARY to get properties out of the hands of people that cannot afford them or made extremely bad choices in the first place buying them.

It's hard not to be sympathetic towards mortgagors in foreclosure.  But keeping them in homes they cannot afford is tantamount to giving many irresponsible buyers a free pass at home ownership at the expense of those who played by the rules, bought reasonable properties at decent prices, and sacrificed to make large down payments.  The issue isn't the property itself, it is the people who wanted it without being reasonable or prudent.

The bill Mr. Obama vetoed was NECESSARY.  All the political grandstanding and electioneering just means the U.S. residential real estate crisis will linger, lasting longer and digging deeper than it should have in the first place.  Freezing foreclosures will simply freeze the problem in place instead of letting the system play out, however cruel that sometimes can be.

What Mr. Obama's pocket veto today really demonstrates is not how his administration cares about homeowners in foreclosure but how inept the U.S. Congress has become. The world's most distinguished deliberative body is passing bills without even knowing the consequences of their actions---and then leaving town to campaign for reelection which, of course, most do not deserve.