Arizona Sues Bank of America

December 21, 2010 at 7:31 pm Leave a comment

by: Maria Hass

The Dec. 18, 2010, edition of The Arizona Republic reported that the Arizona State Attorney’s office is filing suit against Bank of America for wrongfully foreclosing on many homes.
What are the positive and negative consequences of this action?
Positive:
1. Homeowners whose lives and futures were destroyed by the alleged “wrongful” foreclosure of their homes may see justice served. Although we don’t know how this case will end, at least these people now have some hope.
2. Lenders who foreclose on homes will be more careful about working within the guidelines allowed by law.
Negative:
1. This legal procedure will likely cost “average Joes” lots of taxpayer money.
2. This action may prolong the housing recovery if foreclosures are halted. The inventory of foreclosed homes increases and once they are dumped onto the market, it could cause further declines in home values.
Unfortunately, the government has not done anything effective to help homeowners truly save their homes for the long-term. It is hard to understand why the Obama Administration bailed out the lenders instead of the homeowners.
The actual solution is simple — allow homeowners to refinance their homes based on current home values, not the values of the boom years. Doing this would mean homeowners will no longer be upside down, will have equity in their homes and will start spending to help drive the general economy forward. Done correctly, the result would be a quick recovery for the housing market.

Entry filed under: Arizona Real Estate, Chandler Real Estate, Foreclosures & Short Sales, Phoenix Real Estate. Tags: , .

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